Starbucks Isn’t a Coffee Business — It’s a Data Tech Company
They are a textbook example of how to strategically use data to stay competitive
Starbucks doesn’t simply sell huge numbers of hot and cold drinks around the world — it also gathers huge amounts of data from over 100 million transactions a week. How does it use this data? And what role do A.I. and the internet of things (IoT) play in this?
The way Starbucks uses data and modern technology for competitive advantage is instructive for all businesses, regardless of size. For example, it’s a pioneer in combining loyalty systems, payment cards, and mobile apps. But that just scratches the surface.
This article highlights five of the most interesting examples of how Starbucks uses data, A.I., and IoT for competitive advantage. They suggest there might be a compelling argument that Starbucks is no longer a coffee business, but is now a data technology company in the food and beverage space.
Starbucks demonstrates the relationship between data, technology, and business better than most
Starbucks is not short on data. It has over 30,000 stores worldwide and completes close to 100 million transactions per week. This gives it a comprehensive view of what its customers consume and enjoy. But perhaps surprisingly, it’s only really focused on the value of this data for little over a decade.
It’s not that it didn’t use data before then. But, as with many big shifts in a company, a crisis caused the change. In this case, it was the 2008 financial blip and associated store closures. Then-CEO Howard Schultz’s lesson from this was that Starbucks use of data needed to be more analytical, specifically in deciding store locations.
Prior to that, Starbucks’ decisions were — like many other organizations — human-driven, based on experience and judgment. Data was obviously important, but wasn’t as systematic as it could be. There’s little written about it, but it appears to have been the conventional approach of using data to validate and inform human ideas and decisions.
What it does exceptionally well is trial all sorts of new…