Food Business News - February 12, 2013 - 9

Editorial
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Morton I. Sosland
Executive editor, markets
Neil N. Sosland
Editor
L. Joshua Sosland
Executive editor
Keith Nunes
Senior editor, markets
Jay S. Sjerven

KEITH NUNES

knunes@sosland.com

Starbucks is redeﬁning
brand loyalty

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Eric J. Schroeder
Associate editor
Jeﬀ Gelski
Associate editor
Ron Sterk
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Laura Lloyd
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Christina Sullivan
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February 12, 2013

ttention must be paid to the Starbucks
The market research firm SymphonyIRI reCoffee Co. and how it is in the process cently issued a report that says consumers have
of altering food and beverage merchan- “drastically” changed their approach to grocery
dising. The company that has reinvigorated the shopping during the past decade. They comcoffee segment by turning coffee drinking into bine on-line and offline planning with in-store
a value-added proposition is now on the cusp visits and make more informed and cost-effecof redefining how consumers shop for its prod- tive purchasing decisions.
ucts in grocery formats and how they perceive
“Emerging and evolving technologies have
brand loyalty.
enabled innovative marketers to begin reachOver the next few months Starbucks will ing shoppers in their homes while they are reunveil a strategy to extend its loyalty program searching products and making their lists, and
to the products it sells within the
consumer packaged goods sector
While the Starbucks name is synonymous with coﬀee,
and specifically the grocery segment. The company will leverage
its plans have the potential to involve several parts of
technologies such as Smartphone
apps that executives believe will
the grocery channel and put pressure on competitors
allow consumers to buy Starbucks
products outside of the company’s
that are already working to diﬀerentiate their products
stores and still earn rewards.
This is significant given Starfrom a variety of private label oﬀerings.
bucks’ recent substantive expansion into the bakery, juice, tea and
ready-to-drink iced coffee segments. While the Starbucks name is synony- then reinforcing their messages on the way to
mous with coffee, its plans have the potential the store, and in the store when consumers are
to involve several parts of the grocery chan- making their final selections,” said Susan Vianel and put pressure on competitors that al- mari, a researcher with SymphonyIRI. “Marketready are working to differentiate their prod- ers that keep pace with and embrace this opportunity will achieve success, while those who
ucts from a variety of private label offerings.
The popularity of Starbucks’ rewards pro- fail will find it difficult — even impossible — to
gram, which allows customers who register remain relevant and competitive.”
The purpose of merchandising is to spur
with the company to earn rewards such as free
beverages and other benefits, is undeniable. consumers into action and make a purchase.
During the first quarter of fiscal 2013, Starbucks Merchandising that accomplishes this goal is
accelerated the growth of the rewards program said to have achieved “sales lift,” according to
by adding 1.4 million members, an 86% increase SymphonyIRI, but in recent years, the research
over the 778,000 members it added during the group says average sales lift has declined 70%
same period of the previous year. In addition, in the grocery category.
Starbucks is in the process of changing how
more than 7 million customers now use one
of the company’s mobile payment apps, which some grocery shoppers perceive merchandistranslate into 2.1 million mobile payment trans- ing and its products. While the company’s business model of presenting a strong brand in both
actions each week.
In a recent conference call with financial an- food service and consumer packaged goods
alysts, Howard Schultz, chairman and chief ex- gives it an advantage over traditional consumer
ecutive officer of the company, said this holiday packaged goods manufacturers, food compaseason was extraordinary for the company’s nies would be wise not to ignore this effort.
There are many facets to brand loyalty, and
loyalty program.
“I must say it was stunning and almost it is clear Starbucks is in the process of tapping
unbelievable,” he said. “Our Starbucks card into an element that was once the sole purview
had its best holiday season in history, as mea- of retailers. While Starbucks may be on the
sured by any metric, with more than $1 bil- cutting-edge of consumer packaged goods merlion loaded during Q1, the most ever loaded chandising, it would be wise for competitors to
not fall far behind. FBN
onto any kind of Starbucks card.”

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Food Business News - February 12, 2013

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