retail news in context, analysis with attitude

The Wall Street Journal has a story about how Starbucks had its best quarter in a year, posting same store sales that were up four percent in the US … though it appears that the growth came almost entirely from a five percent increase in transaction sizes, which came from price increases. Actual transactions, it seems, were down one percent.

Some excerpts from the story:

• “Pressure to improve customer traffic is mounting as the Seattle-based chain finds itself between lower-priced rivals like Dunkin’ Brands Group Inc. and higher-priced specialty coffee shops.” Meanwhile, the Journal points out, this was “the first full quarter that Chief Executive Kevin Johnson led the company without the presence of longtime leader Howard Schultz, who stepped down as chairman in June.”

• “Under Mr. Johnson, the company is focusing on knowing the preferences of more visitors so it can better target them with offers that appeal to their ordering behavior. Starbucks recently opened its mobile order app to everyone—not just to customers signed up for its rewards program - and brought in 4 million new digitally registered customers in the past quarter.”

• “The number of guests in its loyalty program is also growing, with 15.3 million active members in the U.S., up 15% from a year ago.”

The story notes that Starbucks also is introducing new products, like healthier Frappuccinos … installing more drive-through windows that seem to generate more traffic and transactions … and “is also testing delivery in Miami.”
KC's View:
One of the things that COO Rosalind Brewer says is that Starbucks needs to work on growing transactions and transaction sizes … which sort of works against my general feeling that progressive retailers need to be less transaction-driven and more focused on lifetime customer value. But this may actually be the exception that proves the rule, because Starbucks, through its digital app and loyalty program, has been doing an excellent job for years at connecting with its customers and establishing relationships.

I’m not really sure what the problem is … though I do think that maybe there is less surprise and delight than there used to be.