Inside Starbucks' innovation efforts: 'We need to meet the increasing need for speed and convenience'

Starbucks has also started stocking other food items with a local touch such as the Hainanese Chicken Rice Quinoa salad.

Starbucks believes 2019 has been a year of innovation for the company as the growing demand for retailers to provide an omnichannel retail experience increases.

The Seattle-based coffee giant opened its Singapore flagship store at Jewel Changi Airport earlier this year where it introduced Mobile Order & Pay (MO&P) to allow customers to order their favorite drink, beat the queue and pick up their order at the store with ease.

“Innovation has always been a key ingredient of Starbucks’ culture. We are consistently on the lookout for new ways to enhance our retail offerings and experience for our local customers, meeting their needs and wants,” Patrick Kwok, general manager for Singapore at Starbucks tells The Drum.

“At Starbucks, we monitor consumer trends and constantly evolve to excite our customers by introducing new offerings and technologies, going the extra mile to offer our customers a multi-sensorial experience to coffee.”

MO&P, which functions similarly to Starbucks Now, gives customers the opportunity to customise their order as they usually would, with the option to choose the number of espresso shots and make dairy selections. Starbucks claims every order is freshly prepared and ready for pick-up within minutes.

In addition, customers can collect Stars as well as earn and redeem rewards such as free drinks or food with the Starbucks Rewards loyalty program, just as they would if they placed their order in the store.

“We know that our customers here lead extremely busy lifestyles and prioritize convenience and efficiency, so this feature was developed with them in mind. Like the rest of our innovations in 2019, it aims to make our customers’ experience at Starbucks even more enjoyable,” explains Kwok.

The coffee brand has in the past couple of years concentrated its tech and innovation efforts in China, which is its fastest-growing market. Starbucks has more than 3,100 stores across 136 cities in China, with a new store opening every 15 hours.

It predicts its China business will contribute a quarter of its entire sales growth by 2019 and the market is credited with helping Starbucks move beyond its longstanding dependence on the US business.

In order to cope with that, in 2018, Starbucks opened a 30,000 square feet interactive Starbucks Reserve in Shanghai, powered with Alibaba’s tech, in anticipation that it will serve more than a million customers a year. This is in addition to the more than 600 stores it already has in the city.

While Starbucks has matched Singapore’s growing love for artisanal coffee over the years by introducing new innovations that target the growing segment of “coffee connoisseurs”, the brand is now keen to ramp up its innovation efforts in Singapore - a market it has been in since 1996, which is longer than its existence in China - to meet the increasing need for speed and convenience in Singapore-based customers’ busy lifestyles.

For example, it has brought the innovations it introduced in China, like the 4-tap Nitro Brew, to Jewel Changi, making Singapore only the second market in Asia to carry the cold brew. It has also introduced a Cold Foam Iced Espresso and coconut milk as an alternative milk option.

Starbucks has also started stocking other food items with a local touch such as the Hainanese Chicken Rice Quinoa salad, as well as new desserts like the Milo Chocolate Tiramisu and Satay Chicken Ciabatta, which are exclusive to its Jewel Flagship Store.

After a study by Deliveroo found that 69% of consumers in Singapore order from food delivery apps at least once a month, Starbucks met the demand by partnering with delivery platforms in Singapore, including Deliveroo, Grab Food and Foodpanda.

“Beyond that, we have been progressively adding new and innovative partnerships and activities to meet our customers’ needs while doing good for society. Strategic and community partnerships are integral to Starbucks; collaboration is part of our DNA,” explains Kwok.

“One area of growth has been in our lifestyle offerings, which you can see through our constantly evolving merchandise collections throughout the years. We have worked with well-loved lifestyle and fashion brands to add zest to our collection. For example, we partnered popular fashion brands such as Alice & Olivia, Paul & Joe, Bando, Rachel Zoe, Vera Bradley, and more to launch various products such as pouches, cold cups and mugs. In Singapore, we’ve also collaborated with local designer brands such as The Paper Bunny, Kai, and others for exclusive limited-time lifestyle items.”

He continues: “We also constantly work with non-profit organizations and social enterprises to reinforce our connection with the local community and empower our partners to contribute to society positively. One example is the Singapore Kindness Movement – we have partnered them for two consecutive years in their “Be Greater” campaign, encouraging customers at Starbucks to practice gracious behavior. Beyond that, we have a longstanding collaboration with the Autism Resource Centre (ARC) – in 2019, we worked with social enterprise The Art Faculty to support the ARC and Pathlight School, by donating proceeds of the sales of an exclusively designed collection to the ARC.”

A joint research by Chief Marketing Officer (CMO) Council and Pitney Bowes earlier this year found that while the world may seem to be transforming into a wholly digital landscape, the most effective approach for customer engagement is an omnichannel one that builds relationships.

It is an approach Starbucks fully subscribe to as it seeks to create an omnichannel retail experience. It calls all its baristas and staff as partners, not just employees because it believes they are family of contributors with a voice and a part to play in doing well together with the brand.

According to Kwok, the millennial audience is “very dear” to Starbucks, noting that the very culture of Starbucks is millennial-centric as 70% of its full-time partners are millennials ranging from the ages of 22 to 37. These make up 57.3% of Starbuck’s total workforce, while the average age of its workforce is 24.

For Starbucks, this unique segment is known as the “always connected” generation due to their close relationship with tech and their strong appetite to participate in a brand’s marketing.

This means Starbucks has streamlined its marketing strategy to cater to millennials by learning to speak their language and launching new offerings that are closely matched to their interests, as well as constantly elevating its coffee experiences to suit their lifestyles.

“Millennial customers crave convenience and ease. The Starbucks Singapore app is already popular with our existing millennial customers, since they can claim rewards with it and use it to easily reload their Starbucks Card in seconds, alongside other benefits. With MO&P, they now enjoy even greater convenience and a more seamless retail experience,” explains Kwok.

“We have always tailored our strategy and communications to meeting millennials’ needs and wants. For example, we speak to them directly on platforms such as Facebook and Instagram by experimenting with new formats such as engaging visuals, GIFs, digital games and more. We also keep our social channels up to date with cute and light-hearted animated videos, flatlays and other fun content like a “PersonaliTEA” quiz.”

Kwok explains Starbucks ‘ innovate its products with millennials in mind and to make it as “Instagrammable” as possible to provide them with fully immersive and premium coffee experiences.

Starbucks also has an always-on influencer marketing strategy that helps it tap onto the most prominent personalities in the market who impact the decisions of its millennial consumers. Kwok says Starbucks identify influencers who are already existing Starbucks fans and welcome them to its family by getting to know their interests and which campaigns would appeal to them the most.

He adds Starbucks does not just connect with them once in a blue moon for ad-hoc campaigns, but also consistently share with them the brand’s latest news and offerings and inviting them to visit its new stores and launches, such as its flagship store at Jewel Changi Airport

“We want to strengthen the “third place” association of Starbucks and make it somewhere that consumers can always return to between the office and their home,” says Kwok.

“Beyond a coffee hub, it’s also a sanctuary where millennial consumers can relax, interact and collaborate. To bring across this messaging, we focus on connecting with lifestyle influencers who are authentic and relatable to our day-to-day consumers.”

He adds: “We will continue to explore new technologies and tools that can help make their experience at Starbucks even better.”

The omnichannel consumer continues to be a highly valuable audience, increasing their mobile and online purchases even as they stay true to their penchant for shopping in-store. Criteo’s Q3 Global Commerce Review found that mobile transactions account for anywhere from 40% (North America) to 52% (Asia Pacific) of all transactions globally.

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