Business In News
Starbucks is preparing for the future with Starbucks Odyssey, a new experience that will be powered by Web3 technology, and the release of its Reinvention plan, a three-year financial roadmap that aims to deliver 7% to 9% comparable store sales growth and 10% to 12% revenue growth annually. The retailer also expects to grow its global store portfolio by roughly 7% annually to reach 45,000 locations by the end of 2025 and keep the chain on track to reach approximately 55,000 locations by 2030.
“Starbucks is a growth company, and our accelerated expansion is a direct reflection of the expected returns from our Reinvention plan,” said Laxman Narasimhan, who will become CEO of Starbucks effective October 2022 in a statement. “By making strategic and highly targeted investments to drive value for partners, Starbucks will also drive value for customers and shareholders, while managing costs, improving margins, and elevating the Starbucks Experience for all stakeholders.”
Starbucks Plans Additional Workforce Investments
Starbucks’ Reinvention plan also includes a three-pronged model of support for associates that aims to empower them to thrive at work, thrive as individuals and thrive together. The retailer plans to invest in recruiting, training and onboarding as well as other tools and benefits for workers, with several near-term solutions to be implemented in 2023:
- Wage and recognition innovation, including helping give partners the hours they need, expanding digital tipping and incorporating other opportunities to increase overall pay;
- New wellbeing benefits including offering enhanced sick pay, new savings and student loan management benefits and additional mental health support; and
- Personalized career mobility through a newly introduced partner app and the development of personalized career paths.
Starbucks also will invest in its store managers through new leadership training, the reinvention of scheduling and decisioning tools and career journey mapping to improve retention and satisfaction. The retailer has found that stores led by managers who have more than three years of tenure have 13% greater weekly sales and higher customer satisfaction.
The collective workforce-focused changes will be implemented at Starbucks’ 9,000 U.S. company-operated stores. The most effective and scalable best practices from these initial efforts will then be applied globally.
Customer Benefits Include New Store Concepts and Technology
Starbucks also will introduce enhancements to the customer experience across retail and digital to help meet customers wherever they are by expanding the experience beyond the physical store. The retailer will invest in three specific areas:
- Purpose-built store concepts: Starbucks is reimagining the store environment, investing an incremental $450 million in the existing U.S. store base in fiscal 2023 with continued investment in fiscal 2024 and 2025. Starbucks expects these investments will create efficiencies, unlock capacity for partners and enable increased throughput to support increasing customer demand;
- Delivering beverage innovation: Starbucks has developed the Siren System, a proprietary new equipment innovation designed to meet the growing demand for customization of hot and cold beverages and warm foods. The retailer also has redesigned a cold beverage station to reduce the time and number of steps needed to make cold beverages, freeing up time for associates to connect with customers; and
- Expanding effortless digital convenience: Starbucks will emphasize the convenience and personalization enabled by Starbucks Rewards, Mobile Order & Pay and grow its Starbucks Delivers program in the U.S. with a new partnership with DoorDash, which will expand to a national scale alongside Uber Eats in fiscal 2023.
These efforts will be supported by the launch of Clover Vertica, a hot brewed coffee made with proprietary technology that lets shoppers access a freshly ground, freshly brewed cup in just 30 seconds. Starbucks already has started to roll out the technology, which will be fully deployed at all U.S. stores in the next three years. In addition, Starbucks is developing a Cold Pressed Cold Brew system to deliver cold press coffee and espresso in a matter of seconds.
The new store economics are expected to deliver a 50% ROI and 25% cash margin that will help Starbucks accelerate U.S store growth to 3% to 4% annually. The retailer will diversify and expand formats across cafés, pickup, delivery-only and drive-thru only locations.
Starbucks Odyssey Adds NFTs to its Loyalty Program
The shopper experience will be further enhanced by Starbucks Odyssey, which will offer associates and Starbucks Rewards members in the U.S. the opportunity to earn and purchase digital collectible assets that will unlock access to new benefits and immersive coffee experiences. Starbucks plans to integrate NFTs with its loyalty program at scale while creating a digital community with the program, which will launch later this year.
Members can log in to Starbucks Odyssey using their Starbucks Rewards login credentials. From there, they can engage in activities called “journeys” such as playing interactive games or taking on challenges to deepen their knowledge of coffee and Starbucks. They will be rewarded for completing journeys with a digital collectable ‘journey stamp’ NFT.
Members also can purchase ‘limited-edition stamp’ NFTs through a built-in marketplace within the Starbucks Odyssey web app experience. Limited-edition stamps will be available for all members to purchase directly with a credit card, with no crypto wallet or cryptocurrency required.
All stamps will feature artwork co-created with Starbucks partners as well as outside artists. Additionally, a portion of the proceeds from the sale of limited-edition stamps will be donated to support causes that matter to Starbucks employees and Starbucks Rewards members.
Each digital collectable stamp will include a point value based on its rarity, and the stamps can be bought or sold among members within the marketplace, with ownership secured on a blockchain. As stamps are collected, members’ points will increase to unlock access to unique benefits and experiences such as a virtual espresso martini-making class; unique merchandise and artist collaborations; and invitations to exclusive events at Starbucks Reserve Roasteries or trips to the Starbucks Hacienda Alsacia coffee farm in Costa Rica.
“Starbucks has always served as the Third Place, a place between home and work where you feel the warmth of connection over coffee, community and belonging,” said Brady Brewer, EVP and Chief Marketing Officer at Starbucks in a statement. “The Starbucks Odyssey experience will extend the Third Place connection to the digital world. For the first time we are connecting our Starbucks Rewards loyalty program members not just to Starbucks, but to each other.”
Additionally, Starbucks Odyssey is being made with technology that aligns with Starbucks’ sustainability aspirations and commitments. The program will utilize a “proof-of-stake” blockchain technology built by Polygon, which uses less energy than first generation “proof-of-work” blockchains.