NRN editor and restaurant marketing expert Jennings breaks down what you should be watching in the industry this week. Connect with her on the latest marketing trends and news at @livetodineout and [email protected].
Laying out the marketing roadmap for the holiday season ahead, Starbucks Corp. is finally launching the long-awaited mobile ordering feature that will allow guests to order and pay ahead, and skip the line.
This year it will only be available in the roughly 150 Starbucks locations in Portland, Ore., but the market debut will give a preview for the national rollout planned for 2015.
Seattle-based Starbucks has been a leader in allowing guests to use their smartphones to pay, which now accounts for about 15 percent of transactions at the chain.
Earlier this year, the company added innovations to its mobile platform, including a new iPhone app with a speedier shake-to-pay function, and the ability to tip digitally for the first time.
At the time, however, Howard Schultz, Starbucks’ chair, president and chief executive, described mobile ordering as the “holy grail” of throughput.
More restaurant chains now offer the capability, including Panda Express, Subway, BJ’s and Dickey’s, and Taco Bell and Dunkin’ Donuts are testing such functions, just to name a few.
Analysts have projected that a mobile ordering feature will dramatically increase customer enrollment in the Starbucks Rewards loyalty program, which already represents more than 25 percent of transactions. Loyalty program members can automatically redeem rewards points as they use the mobile app to pay.
To encourage that trend, an unknown number of lucky souls could win Starbucks for Life by using their Starbucks card or paying with a mobile device this holiday season. That translates to one free drink or food item for 30 years, which USA Today estimates would save someone roughly $22,995.
“What could be bigger this holiday than winning Starbucks for Life?” said Sharon Rothstein, Starbucks’ executive vice president and global chief marketing officer, in a statement last week. “This is the first time we have ever offered customers something of this magnitude and what better way than to anchor it with our renowned Starbucks Card program. This giveaway is poised to bring great excitement and fun to our customers during this special time of the year.”
The holidays are a big deal for Seattle-based Starbucks.
The Pumpkin Spice Latte may have been out since mid August, but heart of the season begins on Nov. 1, when its red holiday cups roll out and its green mermaid logo becomes a beacon for weary shoppers to lay down their bags and sip something warm and winter-flavored. This year, the chain will introduce a Chestnut Praline Latte, its first new holiday drink in five years, the company said.
And don’t forget gift cards.
Last year, the company estimated that one in 10 Americans received a gift card to its chain for Christmas. This year’s lineup will include 100 “uniquely designed” Starbucks cards in a full collection.
Schultz, however, last year began warning of a seismic change threatening brick-and-mortar retailers. For the first time, he said, in-store foot traffic was giving way to online shopping in a major way.
According to research firm ShopperTrak, retail sales increased 2.7 percent during the 2013 holiday season, but foot traffic fell 14.6 percent, a shift blamed in part on an increase in online shopping.
This year, the National Retail Federation projects that holiday shoppers will spend more on average, though consumers are still looking for discounts.
The average person is expected to spend about $804, a nearly 5-percent increase from $767 last year, according to an NRF survey released last week.
But more than half of those surveyed, or 56 percent, say they plan to buy gifts online. Another 56 percent said they also plan to use their smartphones in some way to help with holiday shopping.
Starbucks is positioning itself to capture those increasingly smart-phone-tethered shoppers, who Schultz said will visit a mall to find what they want, compare prices, then order it online.
Through the loyalty program, guests this year will also have access to special events, like an upcoming Holiday Share Event, sneak previews of new products and promotions, and have the opportunity to earn rewards as they shop for Starbucks products in grocery stores and other retail outlets across the company’s various brands.
All of these marketing efforts are focused on “radically redefining the Starbucks retail experience,” said Schultz.
“As a result of the work we’ve done, Starbucks is poised for a great holiday,” said Schultz. “Our innovation pipeline is strong and we have a number of initiatives ready to launch during the holiday and into calendar year 2015 and beyond.”