Published on: January 25, 2016by Kevin Coupe
Business Insider has a piece about Starbucks CEO Howard Schultz, who in an investor call last week "laid out his thoughts on the current and future prospects for retail business." He said on the call, "I think today in the headlines you've seen just in the last three weeks store closures of almost 50 Macy's stores, 150 Walmart stores ... You've got to ask yourself what's going to happen to the future of many of those malls that are anchored by those big-box retailers."
And, he said, "I think we said three years ago publicly that we began to envision that there would be a seismic change in consumer behavior, and that seismic change was due in large part to e-commerce and smartphone shopping."
That's a fair observation, I think. After all, Schultz was smart enough to change his own job description not that long ago, devoting most of his time to figuring out Starbucks' positioning in a digital world. The company's vaunted mobile payments program, which integrates smart phone technology with both the ability to pay and earn rewards, and. most recently, order before even getting to the store, almost certainly is seen as the beginning of the so-called seismic shift, not the end.
These shifts take all sorts of forms. Fast company posted a story about how Starbucks - which used to sell CDs and even owned a small CD chain called Hear Music before streaming made CDs less relevant and profitable - has launched a partnership withSpotify that creates multiple in-store playlists with hundreds of tracks, allowing customers to download those playlists to their own devices.
According to Fast Company, "Although customers cannot yet influence the music being played in stores, you can see how that might change in the future: In addition to saving playlists, customers can share tracks on Facebook and Twitter or tap a 'like' button on each song within the app. Over time, presuming the feature is used widely enough, this creates a new pipeline of data about customers' music preferences."
In some ways, this is yet another progressive, ambitious company defining and expanding its own ecosystem ... generating actionable data and then acting on it, and in doing so hopes to create a stronger relationship with its customers.
In a different story, the Washington Post put it this way:
"Starbucks is outgunning its peers, at least for the moment, in tackling some of the problems that have befuddled the industry. One place where this is evident is in its digital strategy, which has centered heavily on incorporating mobile devices into the in-store experience. The company’s app accounted for over 21 percent of transactions in the quarter. At a time where shoppers have not widely embraced mobile payments, Starbucks appears to have built a digital ecosystem that customers have found especially useful ... Starbucks is getting reams of data about customers who use the app and the related loyalty program, allowing the chain to personalize offers to individual users and to generally better understand what menu items and price points are clicking with their most devoted followers."
It's this simple, this Eye-Opener. You can't just sell stuff anymore. Retailing is much more demanding and complex. And if marketers don't adjust to this reality ... well, they can be disrupted right out of business.
Which brings me to another story.
The Wall Street Journal has a piece this morning that starts out this way:
"Yellow Cab Cooperative Inc., San Francisco’s largest taxi company, filed for bankruptcy protection Friday, the latest in string of traditional taxi companies to turn to chapter 11 amid the rapid rise of ride-hailing rivals like Uber Technologies Inc. and Lyft Inc.
"Pamela Martinez, the co-op’s president, said in court papers that her company faced a host of challenges, including a high number of accidents-related claims and liabilities, a steep decline in ridership and competition from newer app-based ride-sharing services, namely Uber and Lyft, which have also increasingly poached Yellow Cab drivers."
That's what happens when you don't adjust and improve your game in a more demanding and complex marketplace.
You can't just cope with seismic change. You have to create it ... and, short of that, embrace it and figure it out how to make it work for you.
- KC's View: