AUSTIN, TEXAS — Michael Conway, president of global channel development for the Starbucks Coffee Co., summed up his job succinctly when he said, “While most people think the majority of coffee purchasing and consumption occurs in cafes, actually the opposite is true. Of all the moments that Americans consume coffee, only 20% happen in retail stores. That’s a vast opportunity for us.”
Mr. Conway is charged with tapping into that opportunity. Starbucks consumer packaged goods (C.P.G.) products generate approximately $1.5 billion in sales and are available in grocery stores, airports, hotels, and convenience stores in nearly 40 countries around the world, according to the company.
“We are a fairly young C.P.G. company,” Mr. Conway said April 21 during the IRI Summit taking place in Austin. “It was only four years ago we decided we wanted to take charge of channel development. We had to figure how to take our culture rooted in coffee and bring that down the aisle. How do you break through? How do you get your brand to stand out in the aisle?”
Mr. Conway said research shows that in a grocery store the average shopper spends about 87 seconds in the wine aisle, 74 seconds in the tea section and 68 seconds in the coffee aisle. Customers are willing to explore and discover new products, rather than quickly grabbing a favorite cereal or the least expensive paper towels.
Part of bringing an “engaging, educational” Starbucks experience to a grocery setting involves helping shoppers make choices when they have a bit more time to spend in the coffee aisle, he said.
“Some of our grocery spaces pull through design elements from Starbucks stores,” Mr. Conway said. “It’s like a mini store with design features like a pendant light, tile backsplash, a counter that mimics the hand-off plane — signal a unique experience.”
In addition, Mr. Conway said his business unit is leveraging the company’s digital efforts through its loyalty program.
“There is nothing more important for companies than to develop a digital platform that is convenient and easy,” he said. “For us, it all starts with the card. Last holiday season 1 in 7 Americans received a Starbucks gift card. If you give someone $5 they may not think much of it, but give them a $5 gift card and there is a disproportionate value in that. Today, our digital program and app represent a third of business in our stores.”
Mr. Conway’s business is accessing the loyalty program by creating a cross-channel loyalty program. Consumers that buy Starbucks coffee at the grocery store may peel a sticker on the product and enter the code on the package into the Starbucks app to qualify for additional rewards.
“To date, there have been 10 million stars earned through the program and the growth has been incremental to Starbucks,” Mr. Conway said.
In addition to leveraging the in-store experience, Mr. Conway said Starbucks brings the C.P.G. experience to life through product innovation. He said the Frappuccino is an example of a Starbucks product that has been translated from cafes into the C.P.G. space.
“S’mores Frappuccino is being introduced in Starbucks stores later this month and a bottled version is now available,” Mr. Conway said. “Multi-channel synergy between handcrafted and C.P.G. products allows us to grow in a meaningful way for consumers.”
