Digital strategy is vital to attract Millenials
Digital strategy can be very important for several restaurants such as Starbucks Corporation (SBUX), Domino’s Pizza (DPZ), and a few more included in the Consumer Discretionary Select Sector SPDR ETF (XLY). Companies such as McDonald’s Corporation (MCD) and Dunkin’ Brands (DNKN) are playing catch-up in this game. In the chart below, you can see the impact of Starbucks’s digital strategy.
Starbucks’s digital strategy is important, especially in order to attract and engage Millennials. Starbucks (SBUX) claims its digital strategy enables convenience and drives a better consumer experience through its mobile app. This eventually helps drive ticket and traffic. As you can see in the chart above, 15% of revenues were generated by mobile, contributing revenues of $1.5 billion in fiscal year 2014.
“e-Commerce on steroid”
During Starbucks’s upcoming earnings call, we’ll most likely get an update on the company’s mobile order and pay, which it intended to launch in December 2014. The company believes that enabling customers to place and pay for their orders ahead of time can address incrementality at its location. Incrementality results in higher same-store sales growth, which the company is struggling with.
We also need to get an update on the company’s newly announced food and beverage delivery program, which it plans to launch in the second half of 2015. This will enable you to have your Starbucks coffee or food delivered to your desk. The company calls this strategy “e-commerce on steroids.”
The number of active members in the Starbucks Loyalty Program is increasing. The number was 8 million as of last quarter.
To learn more about Starbucks’s traffic and ticket, read An Investor’s Guide To Starbucks Corporation.
Let’s now take a look at Starbucks’s (SBUX) other initiatives.