Starbucks moves to secure local loyalty
STARBUCKS announced on Friday that it will introduce its new rewards system to South Africa — its latest market — in August.
Carlo Gonzaga, CEO of Taste Holdings, the South African franchise holder, confirmed the introduction of the system saying, “we’ve done a launch with My Starbuck Rewards and the associated functions and benefits”.
The new rewards system — through which customers earn reward stars based on the amount of money they spend at Starbucks — was introduced in North America last month.
And loyalty is something that the coffee brewer will need to build among South African consumers.
Speaking at the new store in Rosebank, Johannesburg, Starbucks CEO
You see long lines of people queuing but it’s going to fade away
Howard Schultz said he believed the “proof of the brand is in the cup”.
“This market is going to be larger than we probably thought initially . . . South African consumers are well aware of the company’s reputation and what we call the third place and the experience that we create.”
Schultz added that the company was not looking to be a “fad” but rather was in the business of creating an experience “and building on what we think is the third place — between home and work”.
With plans for 150 outlets countrywide, Taste intends to invest R130million in expanding the brand in South Africa.
However Makwe Masilela, a portfolio manager at BP Bernstein, warned that the current Starbucks model was better suited to venues with a lot of foot traffic.
“We [South African consumers] drink coffee at the garage, filling up petrol, or going to the bus station. I don’t drink coffee because I am in a FLYING START: People sit down for a cup of coffee during the opening of South Africa’s first Starbucks store in Rosebank, Johannesburg on Thursday last week mall. I drink coffee because I am in a rush and I stop at a filling station and put in petrol and rush to the office — or rush to the train and get off.”
Makwe added that the Starbucks novelty was likely to wear off soon.
“You see long lines of people queuing but it’s going to fade away — which is the same thing that happened with Burger King. There were long queues until people were like, ‘This is just another burger.’ It’s not just about Starbucks or Burger King — people will rush for anything new.”
But more than a week after the opening of the first outlet in Rosebank there remains a constant queue outside its doors
“The business has done substantially better than we thought it would and I think that’s testament to the growing coffee culture — and the queues are testament to that,” Gonzaga said.
But as Schultz looked over his shoulder and saw the queue of customers, he added: “The line is very long — almost too long in a way.”