Starbucks is not preparing to launch its own digital currency, but with positive financial results the company is waiting for the dust to settle on the blockchain technology landscape.
Executive chairman Howard Schultz argued that Starbucks is in a unique position to cash in, as the company reported first quarter net revenues up 6% year-on-year to a record $6 billion.
The retailer has proved itself to be a mobile payments trailblazer. Its Mobile Order and Pay service, which lets customers order via the Starbucks app and avoid queues, has been a huge success, even causing congestion at some Stateside locations. Last year, it reported that payments made via mobile increased to 30% of transactions in US stores, with Mobile Order and Pay accounting for 9% of transactions.
“One of the real benefits of what we've been able to accomplish as a company has been the entrepreneurial DNA of Starbucks and constantly having the curiosity to see around corners and make big bets,” Schultz commented.
“There's probably no better example of that than over the last five, six years, what we've been able to do around digital, mobile payment, and our leadership position in what we've been able to accomplish as a bricks and mortar digital mobile payment business.”
Schultz tipped his hat to the rise of the internet in the late 1990s and the seismic change in consumer behaviour that followed. “Twenty years later or so, the world has been completely transformed and we're all connected in ways that no one could have possibly ever imagined. In terms of business and value creation, there have been some huge winners and some companies that have not done as well.”
The future of crypotocurrencies
For Schultz, a big question facing retailers today is where are cryptocurrencies headed and who will be the winners and losers this time around? But he warned companies should move beyond the soaring highs and sobering lows of Bitcoin as these will be irrelevant in the long run.
“I don't believe Bitcoin is going to be a currency today or in the future. I'm talking about the new technology of blockchain and the possibility of what could happen not in the near term, but in the few years from now, with a consumer application in which there's trust and legitimacy with regard to a digital currency.”
Schultz stressed that Starbucks is not prepping a digital currency or currently investing in this area. There are hundreds of millions of dollars being thrown at this technology and an arms race is well underway. The retailer is keen to hook up with those left standing when the dust settles and the feeling, Schultz believes, should be mutual.
“What company has the national or global footprint as well as the digital mobile payment trust and confidence integrated into its existing business?”
He added: “I personally believe there is going to be one or a few legitimate, trusted digital currencies off of the blockchain technology. That legitimacy and trust in terms of its consumer application will have to be legitimatised by a brand in a bricks and mortar environment, where the consumer has trust and confidence in the company that is providing the transaction.”
This is where Starbucks would be the optimum retail partner.
Schultz believes that in the near future Starbucks can take advantage of what tech companies have discovered about blockchain and provide a consumer use-case for the technology which would allow the coffee company to “benefit financially, benefit in terms of consumer behaviour and incrementality, and significantly create long-term shareholder value.”
This would be a case of building on growth not derived from monthly comps or quarterly comps, but rather, Schultz stated, from taking the long view: “the entrepreneurial DNA of the company and constantly rejecting the status quo and doing everything we can to push self-renewal, reinvention.”
The goal is to create “the kind of relevancy with our customers not only on what we sell and the experience we provide, but ensuring the fact that we are at the cutting edge of technology as we were in the last five years with our digital payment platform and rewards programme.”