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11/01/2021

Starbucks Exploring Blockchain for Cross-Retailer Rewards

Jamie Grill-Goodman
Senior Editor
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Within the next year, consumers will see a Starbucks loyalty points exchange with another consumer brand.

The next evolution of Starbucks Rewards is coming: connecting to other retailers’ loyaty programs.

Starbucks Rewards members active for 90 days grew 28% year-over-year to 24.8 million members. That number sat at 24.2 million in Q3 2021.

[See more: Starbucks’ Active U.S. Loyalty Members Grow 48%]

CEO Kevin Johnson noted that 51% of U.S. tender for company-operated stores was generated by this base in the coffee retailer’s Q4 2021. Now it seems the retailer is looking at a new way to capitalize on the loyal consumer base. 

“We continue to nurture and deepen our direct personalized digital relationship with our members with enhancements to the program like Stars for Everyone to expand reach and through payment partnerships with PayPal and Bakkt, where a customer can now reload their Starbucks card with a range of cryptocurrencies including Bitcoin, Ethereum and others by converting digital currencies to physical currency and reloading their Starbucks card,” Johnson said on the recent earnings call.

Through blockchain or other innovative technologies, we are exploring how to tokenize Stars, create the ability for other merchants to connect their rewards program to Starbucks Rewards. This will enable customers to exchange value across brands, engage in more personalized experiences, enhance digital services and exchange other loyalty points for Stars at Starbucks.”

Johnson gave the example of Starbucks’ recent partnership with Air Canada which allows customers to link the airline’s Aeroplan and Starbucks Rewards accounts. The rewards joining lets members of the two programs get Aeroplan points when they load money to their digital Starbucks Card or make purchases at Starbucks.

He noted that within the next year, consumers will see this loyalty points exchange with another consumer brand and that the approach is serving as a foundation for “new, modern payment rails that align payment expenses with the value received by customers and merchants.”

Starbucks' Raising Pay

Starbucks’ U.S. comparable store sales increased 22%, driven by a 19% increase in comparable transactions and a 3% increase in average ticket in its Q4, while U.S. comparable store sales increased 21%, driven by a 13% increase in average ticket and an 8% increase in comparable transactions for full year fiscal 2021.

Along with its earnings announcement, the coffee retailer also announced it would raise wages. All employees will earn at least $15 per hour in Summer 2022.  Effective in late January 2022, workers with two or more years of service could receive up to a 5% raise and those with five or more years could receive up to a 10% raise.

By Summer 2022, Starbucks said average pay for all U.S. hourly partners will be nearly $17/hr. Up against the same pressure to find workers as much of the retail industry, it also announced its added recruiting specialists across all U.S. markets and is extending its $200 referral bonuses to help attract new talent. 

[See more: Workforce Management for Retail Victory]

“Today we announce we will be doubling-down on our investments in our partners, the heartbeat of our company,” Johnson said in a press release. “We know that when we exceed the expectations of our people, they in turn exceed the expectations of our customers – which creates value for all of our stakeholders – our partners, our customers, our communities and our shareholders. We anticipate that our strong business momentum, increased operating efficiency and continued global store expansion will fund these unprecedented investments while delivering yet another year of significant growth.”