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INNOVATION AUDIT: STARBUCKS
Strategic Management of Innovation
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Introduction
Starbucks has been on an innovation tear and is no longer just a coffee company. It is touted as a technology company with its path breaking innovations in tech and retail while expanding its offerings.
Starbucks has made huge spends on technology to gain a competitive advantage in an industry plagued by several players. As part of our project, we propose to analyse the various tech investments made by the coffee company to stay ahead of competition and provide recommendations on the future course of innovation for the company.
It's not coffee that defines Starbucks or sets it apart. Every restaurant, fast food chain and gas station sells coffee. Many players emerge each day competing on taste. The defining feature of Starbucks as a business is technology - that's what makes Starbucks successful.
As far back as 2010, Howard Schultz chairman and CEO gave an interview to Marketing Magazine outlining the company’s plans to become a leader in the digital space, stating that “social media is a natural extension of o ur brand because we want to do things that are unexpected and to speak to all sorts of people who are engaged in social media”.
Innovations at Starbucks
IoT
Starbucks has made investments in the IoT (Internet of Things) space. The company’s stores are equipped with Cloud-based Clover coffee machines that control brew time and temperature digitally, using cloud technology to update recipes, track consumer preferences and monitor coffee maker’s performance.
Starbucks is also heavily investing in new web technologies, such as networking coffee makers, refrigerators and appliances. Smart refrigerators would track the expiration dates of milk and other items inside. They are working on smart thermometers, smart door locks and other devices in stores where data on their current states can be uploaded.
Mobile Order & Pay
Starbucks has always been a customer-first company and embraces customer feedback. The company created a ‘Mobile Order and Pay’ app to avoid the hassle for a customer having to wait in queues for a long time. The service has resulted in efficient in-store operations, shorter lines and reduction in line attrition and improved overall throughput. The company's mobile transactions exceeded $2 billion in 2015. The mobile app has been used by over 12 million users in UK alone.
Starbucks is working to be a leader in Wi-Fi hotspot performance. Starbucks is bringing in Google to offer super high-speed access; it aims to provide faster Wi-Fi than the vast majority of its customers have access to anywhere. Google claims that its offering is 10 times faster than the old AT&T Wi-Fi that Starbucks used and 100 times faster in Google Fiber cities. Google Wi-Fi is expected to be installed in every U.S. Starbucks store.
It is also believed that Google is working on a Starbucks app feature that will automatically log users in to the Starbucks Wi-Fi the second they walk into the store. Unlike so many retail scenarios, where Wi-Fi is supplied grudgingly or not at all, Starbucks is trying to compete using much faster and easier Wi-Fi.
Retail Concepts
In a separate field, Starbucks which had started the phenomenon of Dine-in coffee house over the years had taken a new leap into providing a more enriching experience for dine-in customers. Starbucks in select outlets support wireless charging in the form of power mats fixed directly onto the coffee table. To provide this facility to the Apple iPhone users, Starbucks also sells powering which when plugged into the iPhone shall deliver an iPhone with wireless charging capabilities. This facility is unique to the Starbucks family of coffee houses.
Starbucks has launched a wide range of novel concepts over the last few years, from its store on a Swiss train, to a mobile shop serving university campuses in the US, to the Express format store opposite the New York Stock Exchange.
Most recent is the Reserve Roastery and Tasting room in Seattle, aimed at enriching the experience of coffee lovers by providing them a 15,000 square foot space as a site for small batch roasting of premium coffee lines. Specialist Starbucks Reserve only Stores have been popping up all over the world from Taiwan to London to Mexico City, and feature the more expensive Reserve coffees. Each of these stores has been designed to act as a theatre in order to showcase an experiential coffee experience.
Beverages
Starbucks Cold Brew launched in several regions, and later became available to Starbucks customers throughout the U.S. and Canada. Cold Brew is coffee steeped using cool water, while traditional iced coffee is made by brewing hot coffee at double-strength and pouring over ice.
Starbucks has ventured into tea and its related beverages through Teavana its latest venture to provide the complete array of beverages to its customers especially in places that have preference to drinking tea to coffee like the UK, India etc.