Starbucks digital offering set for caffeine shot to stir global sales

Starbucks has signalled it is introduce mobile ordering in 2014, one of several digital marketing initiatives being prepped to stimulate slowing sales as a result of bricks and mortar retail sales shifting to online.

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Starbucks is to ramp up its mobile offering in 2014.

The coffee seller revealed global like-for-like sales were up 5 per cent for the three months to 29 December, 12 per cent higher than the $3,79bn (£2.3bn) reported in the same period a year ago, but short of analysts’ estimates.

Total sales were driven by a 5 per cent year-on-year rise across its Europe, Middle East and Africa region with the business claiming the $33m (£19.8m) generated in the period was “higher” than what it delivered for the entirety of its last fiscal year, but lower than sales predictions.

Starbucks said sales were challenged by the “seismic shift” affecting the industry, whereby retailers are no longer required to compete with stores on the other side of the street but on the other side of the country as well through ecommerce.

It is ramping up its investment across its “My Starbucks Rewards” scheme and mobile and social marketing initiatives to distance itself from competitors and pull consumers closer to the brand.

The business experimented with personalised promotions over the holiday period that included geo-targeted offers. Interestingly, it hinted at growing its m-commerce offering in the coming months adding it would look to replicate the success it has had in mobile payments with mobile ordering.

Speaking on a conference call to analysts yesterday evening (23 January) Howard Schultz, chief executive of Starbucks, said: “We have a full pipeline of new technological innovations introducing in the quarters ahead that will fully leverage these assets and provide us with even greater benefits into the future.

“We are just beginning to appreciate the full magnitude and possibilities of the Starbucks mobile payment platform opportunity. Holiday 2013 was the first in which many traditional bricks and mortar retailers experienced in-store foot traffic give way to online shopping in a major way. Customers research, compare prices and then bought the brands and items they wanted online, frequently using a mobile device to do so.”

Starbucks relies on premium pricing, sometime far beyond that of its cheaper rivals such as McDonald’s, but also faces increased challenges to its fledgling grocery and single-serve business from the likes of Costa and Cadbury-owner Mondelez in the UK. The retailer is bolstering its fledgling food business and single-serve products to ward off the advances and offer more choices to customers.

Schultz said “strong” customer response to food and beverage launches contributed to its earnings in the quarter.

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