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BizReport : Mobile Marketing : January 31, 2017


Starbucks' mobile success slows in-store growth

There is something brewing at Starbucks', and it's not just the coffee. The coffee chain's first-quarter earnings showed disappointing growth which has been attributed to the success of the company's mobile order-and-pay app feature.

by Helen Leggatt

Starbucks' first-quarter earnings is lower than expexted. At 3% (for stores worldwide open for at least one year) it is a big decrease from 8% during the same quarter last year, and lower than the 3.8% growth predicted by some analysts.

Kevin Johnson, currently president and COO but soon to be CEO (April 2017) says the slowdown in store sales has been, in part, due to the success of the company's mobile app success - particularly the order-and-pay feature. The feature allows customers to order and pay direct from their smartphone and bypass the queue in-store.

However, so many customers are using the feature that those who just turn up at a store are faced with what, on the surface, look like long queues but are, in fact, just people picking up their pre-orders - and they leave. Or, Starbucks' baristas are so tied up with making the pre-orders that walk-in customers are having to wait for long periods.

As Johnson admits in an interview, "it's a good problem to have", adding that "We are now laser-focused on fixing this problem, but the nature of it - too much demand - is an operational challenge we have solved before and I can assure you we will solve".

Starbucks plans to add more baristas during peak hours who will only work on mobile orders, freeing up the rest to deal with customers using the pre-order feature.

Just yesterday (30 January, 2017), Starbucks' announced the launch of a voice ordering feature within its app (iOS).

"The messaging interface allows customers to speak or text just as if they were talking to a barista in-store, including modifying their beverage to meet their personal preference," said Starbucks' in the announcement. "This beta test of My StarbucksĀ® barista will be available to one thousand customers nationwide with plans for a continued phased rollout through summer 2017/ An Android version will follow later this year."

Tags: apps, mcommerce, mobile










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