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Starbucks teases upcoming mobile strategy for grocery stores during Q1 call

With mobile payments continuing to account for a growing portion of Starbucks transactions, the coffee giant is looking at ways to expand the strategy, possibly into grocery stores.

Speaking during a conference call with analysts to discuss the merchants fiscal first quarter results, CEO Howard Schultz said the continued growth and success of Starbucks’ digital business and mobile initiatives were a significant highlight in the quarter with mobile payments now accounting for 20 percent of overall card transactions. Answering an analyst’s question, Mr. Schultz also teased plans to expand the card within the areas of consumer packaged goods and grocery.

“Over the next few months or so, we’ll be coming back to you and sharing with you the plans that we have to take advantage of Starbucks products within CPG, and specifically grocery, and leveraging the technology and the advancement of providing value to our customers that are buying Starbucks products in grocery, and leveraging the card,” Mr. Schultz said during the conference call.

“I don’t want to get into too much specificity today, only to tell you that we strongly believe that this will provide an incentive for our customers to not only buy Starbucks coffee, but integrate them even further in the Starbucks ecosystem with the card loyalty and mobile,” he said.

Mobile expansion
Starbucks is not resting on its laurels and continues to look for ways to expand its mobile strategy. Starting in November of 2012, Starbucks customers had the opportunity for the time to pay for purchases using the Square mobile wallet app.

During the call with analysts, Mr. Schultz said Starbucks is looking to leverage its knowledge of social and mobile expertise to attract more customers to Teavana stores, which was acquired by Starbucks during Q1.

Additionally, the company has plans to include tipping as a mobile payments feature this year and is also looking to add mobile ordering and personalization.

Robust opportunity
More than seven million customers now use one of its mobile payment apps and that there are hundreds of thousands of additional Starbucks mobile app downloads each week, Starbucks reported last week.

Additionally, Starbucks sees 2.1 million mobile payment transactions each week.

Overall, the Starbucks card accounts for 25 percent of U.S. tender. During the first quarter, the My Starbucks Rewards program added 1.4 million members, an 86 percent increase over the number of new members added during the first quarter in the previous year.

During the recent holiday period, the card continued to gain success, with more than $1 billion loaded during the merchant’s fiscal first quarter, which ended Dec. 30, 2012, up 25 percent from the prior first quarter.

Mobile e-gifting delivered record holiday results with Christmas Eve and Christmas Day the most popular days for e-gifting.

Performance in mobile was enhanced by the integration of Starbucks’ mobile strategies and its ability to send messages directly to customers’ mobile inboxes, per Mr. Schultz.

“We are in the nascent stage of being able to leverage and integrate social, digital, mobile, our investment with Square, and the loyalty program into a very significant and robust opportunity going forward,” Mr. Schultz said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York