Starbucks Focuses on Digital Innovation to Counter Shuttering of Teavana

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Starbucks Focuses on Digital Innovation to Counter Shuttering of Teavana

By Dorothy Creamer - 08/04/2017
During a recent Q3 Earnings Call, Starbucks executives revealed that the company plans to move forward with “a new generation of digital innovation,” as businesses across industries seek to enhance physical experiences with complementary digital experiences.  Kevin Johnson, president & CEO acknowledges that in order for any business to survive – and ultimately thrive –  there are “transformative elements” required: “an emerging digital and mobile relationship with customers that is threaded into a branded and immersive experiential retail destination.” 

Johnson stressed the importance of being agile and cautions that companies that aren’t will struggle. “The evidence is clear that the pace of retail transformation is accelerating with a common theme: extending the in-store experiences to include relevant digital scenarios,” Johnson says.

Starbucks is committed to expanding its own digital capabilities, but will continue to explore partnerships with third party digital companies.

Johnson believes these partnerships will enable Starbucks to leverage its brand, global retail footprint, and customer base to extend its reach, “including into payments, loyalty and social gifting among others, just as we are doing with great success in China with Tencent.”

Recently, HT’s sister publication, RISNews, reported on how Starbucks is bolstering its digital innovation, highlighting the company’s renewed focus on improving its loyalty rewards and ordering capabilities.

RIS reports that the first phase of the platform rollout is expected to give Starbucks the ability to flexibly change and configure rewards programs and become more nimble in creating new benefits for its customers. The tech will also allow Starbucks to award exclusive benefits to subsets of customers. The first application of the new technology will support the rollout of Starbucks Rewards in Japan this fall, with other markets following thereafter.
 
The second phase will focus on new ordering functionality, a move the brand believes will result in digital relationships with a new pool of customers with Starbucks accounts and payment credentials on file, expanding the number of guests the company can target with offers.
"This fundamental modernization of our technology stack will replace legacy rewards and ordering functionality with the new scalable cloud-based platform for rewards and ordering, improved customer data organization, and tighter integration with store-based operating systems, including inventory and production management," said Matt Ryan, Global Chief Strategy Officer.
 
"New ordering capabilities also means transforming our store operations," Ryan notes. To that end, Starbucks is adding the Digital Order Manager (DOM) present in 1,000 of its busiest Mobile Order & Pay stores, as well as making improvements to its inventory management technology. The company is also working on tools that will enable associates to recognize customers that deserve differentiated treatment, such as shoppers celebrating birthdays or regular customers from one store who show up at a new store.
 
Starbucks will also test a guest checkout feature for first-time users of the app early in 2018. To read the complete story from RIS News, click here.