Starbucks: Gift Card, Mobile Order Strategies Paying Off
The Starbucks gift card is the foundation the coffee chain's mobile and rewards strategy, and for good reason. In 2013, one in eight Americans received a Starbucks gift card as a holiday gift. In 2014, it was one in seven.
"We know that increased Starbucks Card sales drives My Starbucks Rewards membership and, in turn, traffic in our stores," Howard Schultz, chairman, president and CEO of Starbucks, said during a Jan. 22 conference call to discuss earnings for the company's fiscal first quarter, which ended Dec. 28.
The card is also the funding mechanism for payments made through the Starbucks mobile app, which is used for 16% of U.S. in-store sales. Starbucks is also set to expand its new mobile ordering and payment capability, which is supported in 150 stores today in the Portland, Ore. area. In the coming months, the program will expand to over 600 stores in the Pacific Northwest United States, with a national rollout to follow, Schultz said.
Starbucks will also add delivery in the second half of 2015, relying on both its own staff of baristas and a third-party service, Schultz said.
During the company's year-end earnings call in October, Schultz noted that the company's mobile app accounted for 90% of U.S. mobile payment volume in 2013.
Starbucks also announced the hiring of Kevin Johnson as its president and chief operating officer, effective March 1. Johnson, who has been on the Starbucks board for over five years, is the former CEO of Juniper Networks and the former president of Microsoft's platform division.
Starbucks' current COO, Troy Alstead, plans to take a yearlong leave, the company announced this month. This "coffee break" is an employee benefit Starbucks offers to long-term staff; Alstead has been with the company for 23 years. He became COO a year ago as part of a shift in Schultz's responsibilities as CEO. Prior to that change, Alstead was the company's chief financial officer.
In introducing Johnson, Schultz highlighted his "mobile and digital expertise." Johnson's hiring was independent of Alstead's decision to take a sabbatical and "is not part of some unannounced succession arrangement," Schultz said.