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Starbucks expanding mobile, loyalty program after successful 2012

March 21, 2013

Starbucks executives touted the company's major growth in 2012 during today's annual meeting of shareholders. They also announced the expansion of the chain's loyalty and rewards programs and the creation of a new supply-chain initiative to help create jobs. During the meeting webcast to the 200,000 Starbucks partners around the world, CEO Howard Schultz thanked his team and recognized the company's robust operating performance, noting that the company posted record revenues of $13.3 billion and record earnings per share of $1.79 in fiscal 2012.

Other growth highlights included:

• 38 percent total shareholder return in 2012, following a 46-percent return in 2011, and a 32-percent return in 2010.
• 14-percent revenue growth in 2012, capping off the 11th consecutive quarter of 5+ percent global comp store sales growth.
• 18-percent earnings per share growth in 2012, despite significant commodity headwinds.
• And continued outperformance of key industry financial performance metrics, record cash flow of $1.8 billion, record returns on invested capital of 22.4 percent and more than $1.1 billion returned to shareholders through dividends and share repurchases in 2012.

Digital and loyalty momentum around the world
My Starbucks Rewards loyalty program continues to resonate with customers, driving increased revenue, traffic and purchases and further differentiating Starbucks from competitors, Adam Brotman, chief digital officer, said during the meeting. He announced the evolution of the My Starbucks Rewards loyalty program into a cross-channel, multibrand loyalty program.

Beginning in May, customers will earn My Starbucks Rewards Stars for purchases of Starbucks packaged coffee in grocery channels. These Stars can then be redeemed for free food or beverages in Starbucks retail stores. The program is expected to be expanded to include other Starbucks products sold through grocery channels this fall, Brotman said.

The chain will also integrate the Starbucks Card and My Starbucks Rewards loyalty program across several of its emerging brands, including Teavana. Beginning next month, registered customers who make purchases with a Starbucks Card or through the Starbucks mobile app at any of the more than 300 Teavana retail stores will be able to earn Stars for their purchases.

Together, Brotman reported, these new program innovations are expected to contribute toward a rapid and substantial increase in My Starbucks Rewards membership, from 4.5 million active members at the end of October 2012 to approximately 9 million members by the end of fiscal 2013.

Leveraging global scale for local good
With more than 200,000 partners in more than 18,000 stores in 62 countries around the world, Starbucks' growth has also enabled the company to leverage its global operational scale for good in a variety of different ways across the enterprise, said Blair Taylor, chief community officer. He affirmed Starbucks' commitment to U.S. manufacturing and announced a first-of-its-kind supply chain initiative that will leverage Starbucks multi-billion-dollar network to create leadership and job skills training for disengaged youth. Highlights of Taylor's discussion include:

Made in the U.S.A.: Starting in the fall, American Pioneer Manufacturing will begin producing a Starbucks siren mug that represents a core product in the company's overall drinkware lineup. To help build capacity for the new facility, Starbucks has placed an initial order for 100,000 units for delivery in the fall and is making the mug available for purchase in U.S. stores starting in the winter. As a result, American Pioneer Manufacturing expects to hire as many as 20 U.S. workers by the end of the year.

Supply Chain Coalition: Building on the learnings and success of the Starbucks Youth Grants initiative, Starbucks also announced an initial $1-million grant for the development of a nonprofit corporation – LeadersUp – that will tap into Starbucks' supply chain to bring new job and leadership skills training to young people with the eventual linking of trainees to job experiences within its collective companies and beyond. In the first year, this organization has the goal to raise $10 million to support this work over the next year, with a long-term strategy of establishing up to a $100 million annual fund.

Earlier this week, Starbucks also announced the purchase of a 240-acre coffee farm as part of its ongoing commitment to ethically source 100 percent of its coffee by 2015.

Starbucks names Sharon Rothstein as global CMO
The chain also announced earlier this week that it appointed Sharon Rothstein as global chief marketing officer. Rothstein was previously senior vice president of marketing at specialty beauty retailer Sephora.

"Throughout our 42-year history, Starbucks has strived to innovate and exceed the expectations of our customers around the world," Schultz said. "Sharon's forward-thinking brand sensibility and global cross-channel marketing expertise will continue to push us toward our aspiration of building one of the world's most relevant, trusted and enduring brands."

Rothstein will report to Schultz and serve on Starbucks' senior leadership team. She will steward the Starbucks brand as well as the company's portfolio of emerging brands, including Seattle's Best Coffee, Evolution Fresh, La Boulange, Tazo and Teavana.

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