#NRF2020: Successful retailers will have a physical presence, says Starbucks

As Starbucks quickly approaches its 50th anniversary in 2021, CEO, Kevin Johnson, says the company has to “boldly reinvent the future”.

The boss of the coffee giant, which serves 100 million customers every week, took to the keynote stage at NRF 2020 to say the industry needs to ensure the future of human connections in an increasingly digital world.

The coffee company has pioneered many digital innovations over the years across its 31,000 stores worldwide, including mobile order and pick-up. But Johnson said while mobile has created opportunities for bricks & mortar retailers to extend customer relationships through digital, Starbucks ensures it does not do this in expense of the in-store experience that created the brand in the first place.

Johnson describes Starbucks as the “third place”: “Not your home, not your world, but a warm welcoming environment to share coffee and connections with friends, colleagues and family.”

He described how a customer would enter a store and first smell the “aroma of coffee” and then be welcomed by a colleague, whether they are there to order a cup of coffee or to pick up a mobile order. “That small little human exchange keeps that customer coming back,” he says.

“We will not sacrifice creating that warm welcoming environment – that third place – that created Starbucks.”

Johnson said modern day retailing and the future of retail will include digital products as well as bricks and mortar stores that create a “destination for the customer”.

“Both ingredients are necessary for success in the future,” said Johnson pointing to traditional retailers who are racing to extend customer relationships to digital, as well as the Amazon and Alibabas of the world who are building their own bricks and mortar stores.

While Johnson warned that digital must go beyond simply convenience, rather than a store purely for collection which he believes is an extension of the supply chain, Starbucks is currently trialling a mobile order pick-up store in NYC. The Starbucks Pickup store is located in Manhattan's Penn Plaza and customers who come into this store must order ahead using their mobile app. On the other hand, NYC is also home to a Starbucks Roastery – a three-storey experiential “coffee playground” in Chelsea.

Deep Brew

Johnson also spent some time describing Starbucks’ investment into artificial intelligence (AI), which it has internally dubbed “Deep Brew”. He said AI isn’t about “robots replacing baristas”, but providing technology to conduct the manual tasks, such as inventory stock checks, to give baristas more time to spend with customers.

Starbucks is currently working on a number of advanced AI projects, including a microphone with natural language processing, which will allow baristas to take a customer’s order by simply having a conversation via voice ordering.  

“Neurosicence will tell you that eye contact… is a much better connection than typing [an order] into a POS.”

Johnson, who joined Starbucks in 2009 from Microsoft, said the company’s technology vision and scale has helped it attract world-class technology talent. He said the company wants to be as good at AI as the top tech companies in the next decade, but keeping to the Starbucks vision of enabling partners to connect with customers. “It’s a human-first digital strategy.”