How Starbucks is using technology to boost revenue

Starbucks’s desire to put technology at the heart of the brand is paying off as revenues grew throughout the fourth quarter, with the brand planning to roll out even more digital features in the near future.

In Q4, revenues were up 18% to $4.9 billion, while EMEA like-for-like sales increased 5%.

Speaking on a conference call last night (29 October) Starbucks’s CEO Howard Schultz said that consumers have reacted well to the brand’s digital innovations. In the US, mobile payment now accounts for 21% of all transactions in its stores.

Earlier this month, Starbucks launched the Mobile Order & Pay feature, which allows customers to buy without getting in line, in 150 UK stores.

“We have seen the pattern of accelerated adoption of Mobile Order & Pay with each successive region and market we enter play out over and over again,” he said.

“I’m pleased to report that we are seeing it again in terms of this pattern in the early days of our recent international launches of Mobile Order & Pay in both the UK and Canada.”

The brand is currently looking at partnerships to further monetise its digital platform and recently announced partnerships with The New York Times, Spotify and transportation app Lyft.

“Through these investments and the best-of-class mobile and digital experience that Starbucks delivers, we believe that we are building an unassailable position that will only strengthen and become more relevant as today’s increasingly mobile-first consumer economy evolves,” he said.

Starbucks’ COO Kevin Johnson said the brand is planning to add music and delivery features to the mobile app in the US in the upcoming weeks.

“We will launch a rich digital music experience, both in-store and out of store, integrated in our mobile app through our partnership with Spotify. Our digital momentum is real, and the roadmap for the upcoming year is bold. I’m convinced that Starbucks is doing something very unique and very special,” he said.

Even though Starbucks is increasing its focus on digital, Schultz emphasised that the app does not take away from the in-store experience.

“We’ve added this capability that provides significant convenience to the consumer, but we’ve done it in a way that does not take away from or prevent the full Starbucks experience. And thus far, I think we’re seeing great results, great reception, and we’re very confident that we’re on the right path,” he concluded.

Commenting on the results, CEO of retail research agency Conlumino Neil Saunders says the brand’s push for digital and in-store innovation will help boost profits. The brand’s new evening menu, which was introduced to a London store earlier this month, is particularly promising, he says.

“We are encouraged by Starbucks plans to increase the productivity of stores in another way by driving evening sales through offering alcoholic beverages and an enhanced food menu. In our view, they’re another example of why Starbucks outperforms: it evolves and innovates its in a way that’s relevant to customers,” he adds.

  • Hear all about the importance of innovating from the inside out at this year’s Festival of Marketing. Taking place on 11 and 12 November there will be 12 stages and hundreds of speakers. Click here for information and to book tickets.

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