Mobile Continues to Grow at Starbucks, but Rewards Program Change Triggers Questions

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:, November 3, 2016 - by Jim Daly

651 554 8533

TAGS:   Loyalty, Rewards and Membership, trends

2016’s Marketplace Concept Spreads to Other Retailers

Crate & Barrel, taking a page from Inc., is partnering with outside sellers to boost the number of items available to shoppers on its website.

The home-goods chain this week is adding items to its online assortment, such as kitchen tools and other small appliances, that it won’t handle or ship.  Wal-Mart Stores Inc. and  Macy’s Inc. are among the other retailers that have opened their e-commerce sites to third parties as a way to expand their reach with consumers.

On Amazon, an early adopter of the concept, half of the items are sold by third-party sellers. “The benefit to the consumer is huge, because now we have a much wider assortment and more options,” said Michael Relich, Crate & Barrel’s chief operating officer.

With the marketplace model, retailers can increase the number of items they offer, giving them a bigger presence in a field crowded with e-commerce offerings, without forking over cash for inventory. But it also runs the risk of damaging the retailer’s brand if there are any problems with an order from an outside seller.

The marketplace model underscores the challenge for traditional retailers competing with Amazon,  eBay Inc. and other online-only sites that now offer millions of items for sale—much of which they don’t actually hold themselves. Amazon has become a one-stop shop in part by using third-party sellers to increase its offer to hundreds of millions of items for sale.

More than 250 retailers have added this type of capability in the past couple of years, including Belk Inc., Saks Fifth Avenue and Lord & Taylor, says RevCascade, which developed a platform that connects hundreds of retailers and vendors. Department stores may use it to offer extra sizes, colors and brands of clothes and accessories, while a sporting-goods store may offer specialized equipment that appeals to a limited audience.

“We are in the early stages of every retailer rolling out essentially a marketplace that compliments the products they buy and stock in their stores,” said Josh Wexler, RevCascade’s chief executive.

It is relatively easy for retailers to add outside inventory to their websites using a technology platform. The product is listed on the website, and the vendor holds it and ships it directly to the consumer when an order is placed, a practice known as “drop shipping.”

Still, it comes with some risk. Offering outside items on websites can open retailers to problems if the vendor isn’t able to adhere to their standards. Amazon and others have increasingly struggled with issues involving counterfeit goods and unauthorized sellers.

[Continue reading at The Wall Street Journal online.]


Source:, November 17, 2016 - by Laura Stevens

651 554 8533

TAGS:   trends


Target Testing New “Cartwheel Perks” Rewards Program

Since its launch in 2013, Target's Cartwheel app has provided customers with several avenues of savings: from clipping manufacturer's coupon to sending notices of what's on sale near them. Now, the company is testing another feature that rewards customers for using the app.

The St. Louis Post-Dispatch reports that Target will test "Cartwheel Perks" starting this week in St. Louis, Denver, Houston, and San Diego, allowing customers to earn points redeemable for merchandise based on how much they spend at the register.

Under the program, custoemrs will earn 10 rewards points for every dollar spent at the store, excluding pharmacy and gift card purchases. Once a shopper accumulates 5,000 points, they can select from 25 pre-determined rewards, including free sunglasses, laundry detergent, and athletic apparel.

Continue reading at


Source:, September 12, 2016 - by Ashlee Kieler

651 554 8533

TAGS:   Awards / Recognition, trends