Three reasons Starbucks Pickup will succeed

Mobile-only stores aren’t right for every retailer, but a good format for Starbucks.

Starbucks is quietly introducing Starbucks Pickup, a streamlined store experience specifically designed for members of the Starbucks Rewards loyalty program who order and pay with its app. Said to be “coming soon,” the store will be located in New York City’s Penn Station and serve up orders placed ahead of time via mobile app. A status board will inform customers of how many orders are ahead of them when they arrive.

Baristas will be on hand to make coffee and assist mobile customers, but not to take in-store orders. Here are three positive results Starbucks Pickup will likely produce.

Higher loyalty/app participation
The opportunity to tap and pay for a Starbucks order ahead of time and then have it ready upon or soon after arrival at the store is a strong motivator to both join the Starbucks Rewards loyalty program and download the Starbucks app (which has Rewards loyalty functionality built-in). 

Every retailer wants as many customers as possible to join its loyalty program and use its app. The benefits of loyalty perks and the ease of mobile shopping can help drive higher purchase totals and more frequent visits (more on that in a moment). In addition, loyalty programs and apps also serve as effective opt-in tools for tracking customer data that provide invaluable insight into their shopper base.  

Best customers get better
As mentioned above, participants in retailers’ loyalty and mobile efforts tend to be their best customers. It creates something of a virtuous cycle, as more frequent customers will be more likely to initially join these type of promotions, and then have their positive shopping behavior reinforced by reward and convenience.

Starbucks Rewards takes the concept of providing a premium to your top customers to a whole new level. The elimination of taking orders or accepting payment in-person should result in faster fulfillment, while also removing the need to stand in the traditional, aggravating checkout queue. The entire store exists to serve as a hassle-free experience for Starbucks’ most enthusiastic fans. 

Reduced costs
The Starbucks Rewards format should be able to reduce the operational costs associated with brick-and-mortar retailing in several key ways. While Starbucks has not released any specifics on the size of the store, the elimination of cash wraps and the need to allot space for in-person purchases should allow for a smaller footprint than a traditional Starbucks location.

In addition, Starbucks does not have to invest in traditional POS terminals, or pay a store associate to serve as a cashier. Instead, associates can devote their full attention to filling orders and assisting customers. This improves operational efficiency and customer satisfaction, and possibly allows Starbucks to staff the store with fewer employees.