Mobile payments now account for 25% of transactions at Starbucks Corp.’s U.S. locations, up from 20% a year ago, but a recent 1% decline in transactions had Starbucks executives fielding questions from analysts Thursday about what caused the slippage.
Nothing to worry about, folks, was the message the brass tried to convey at the Seattle-based coffee giant’s conference call to review results for fiscal 2016’s fourth quarter ended Oct. 2. The decline, according to company president and chief operating officer Kevin Johnson, was the result of customers consolidating formerly separate orders onto one ticket in order to take advantage of the restructuring of Starbucks’ loyalty program “rather than an actual decline in traffic in our stores,” he said.
Under the new My Starbucks Rewards plan that took effect in April, customers earn more “stars” based on the value of their orders, not the number of purchases they make as under the old plan. That change prompted some customers, including groups of people, to put formerly separate purchases onto one ticket paid by a rewards plan member.
Despite explaining that nuance and even though Starbucks reported a 4% increase in same-store U.S. sales and 6% growth in average tickets, Johnson and Matthew Ryan, executive vice president and global chief strategy officer, faced several more queries about transaction drop-off and the loyalty program. One analyst wondered why mobile payments, even though they were up 5 percentage points from 2015’s last quarter, hadn’t increased their share from the third quarter. The loyalty program change accounted for part of that, Ryan said.
Another analyst observed that, based on his conversations with family and friends, only a small number of Starbucks customers actually belong to My Starbucks Rewards. As of the third quarter, the program had 12.3 million active U.S. members, and membership was up 18% in the fourth quarter. But Ryan indicated the program still has plenty of upside. “We know that very few of our customers, relatively speaking, have become members, and that to us represents an enormous opportunity moving forward,” he said.
Ryan predicted that the program will grow as customers get familiar with the new plan and Starbucks adds new features. He also said that Starbucks saw no attrition in so-called “disadvantaged people” during the rewards program conversion. In this context, the disadvantaged are those customers who will earn rewards more slowly than they did in the past, typically those who are relatively infrequent, low-ticket Starbucks visitors.
Including the 25% share from mobile devices, some 33% of Starbucks’ U.S. tender now comes from the Starbucks mobile app and closed-loop prepaid cards registered for My Starbucks Rewards. Unregistered prepaid cards account for another 5% of tender. Mobile Order & Pay, a pay-ahead service through the mobile app, now accounts for 6% of transactions.
Starbucks reported net income of $801 million in the fourth quarter, a 23% increase from $652.5 million a year earlier, on $5.71 billion in revenues, up 16% from $4.91 billion.
[Continue reading at Digital Transactions online.]
Source: digitaltransactions.net, November 3, 2016 - by Jim Daly
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Gift cards are supposed to make gift-giving simpler, reducing the need to worry about the recipient’s tastes and what specific items he or she might already have. But not all gift cards are created equal, which might help explain why nearly $1 billion in value went unused in 2015, despite gift cards being the most popular type of present for the ninth consecutive year.
So in the interest of helping you find the best gift cards for any occasion – whether a birthday, holiday, graduation, etc. – we [WalletHub] compared the 50 most popular options across five major categories: 1) card popularity; 2) average discount; 3) average resale value; 4) retailer appeal; and 5) shipping fees.
1. Amazon Gift Card
2. Visa Gift Card
3. iTunes Gift Card
4. American Express Gift Card
5. Walmart Gift Card
6. Target Gift Card
7. Starbucks Gift Card
8. Google Play Gift Card
9. Netflix Gift Card
10. eBay Gift Card
[Check out the rest of the TOP 50 list at WalletHub.com and the Methodology behind this year's findings]
Source: wallethub.com, November 10, 2016 - by John S. Kiernan
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KATIE SINSKY | MARKETING DEPT.
651 554 8533
KRSinsky@traveltags.com
Virtual reality will be a bustling industry by the middle of the next decade, but getting to that point will take some time, according to a study released today.
The new 10-year industry forecast from Greenlight Insights and Road to VR suggests the VR business will be "very modest" through 2018, and in an "inflexion zone" for the next five years before blossoming to $38 billion in annual revenues by 2026.
An oft-cited study from Digi-Capital had concluded that the VR industry would be worth $30 billion by 2020.
But despite the rosy industry forecasts, more than half of the report’s industry respondents said they expect to bring in less than $1 million in VR revenue in the next 12 months, and just 45.2% think they’ll be profitable in that time frame.
As the number of VR hardware platforms has grown to include the Oculus Rift, HTC Vive, Playstation VR, Google Daydream (and Cardboard), and Samsung Gear VR, among others, one of the biggest concerns about the health of the consumer VR industry has been a dearth of quality content.
That is changing as more and more content is developed, but the report suggested that the lion’s share of industry revenue will still come from hardware sales. Overall, the authors wrote, about 62% of revenue will come from sale of headsets, VR cameras, and other gear.
Within hardware, meanwhile, VR cameras are expected to bloom from less than 1% today (for devices like Ricoh’s Theta S or Samsung’s Gear 360) to about 12%, or $4.6 billion, by 2026, Greenlight and Road to VR predicted.
At the same time, there will likely be a "broad transition" away from VR headsets with cables—like the Rift, Vive, and PSVR—to cordless systems starting in three to five years. Some of those systems will still depend on being linked to a separate computing device, like a phone. But the report suggested that standalone headsets with built-in computing could become a major category within the sector by 2021.
Already, however, Facebook-owned Oculus and Microsoft have talked about standalones, though neither have shared timeframes on when they expect to release their devices.
Another significant shift in the industry is expected to come in 2020, the report concluded, when revenue from consumer-related VR experiences like games will be surpassed by enterprise experiences like workforce training.
"The enterprise market will become the largest part of the VR industry," the authors wrote, "accounting for nearly a third of total industry revenues from all sources by 2026."
[Continue reading at Fast Company online.]
Source: fastcompany.com, November 2, 2016 - by Daniel Terdiman
MEDIA CONTACT:
KATIE SINSKY | MARKETING DEPT.
651 554 8533
KRSinsky@traveltags.com
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