Coffee giant Starbucks is developing new digital initiatives to interact with customers. The company will create a series of branded NFT collections, that double as an access pass to exclusive experiences and a new global community. But the world of NFTs is unpredictable and worldwide sales are declining. Will NFTs as part of a marketing strategy work in the long term?
The company aims to create a new, global digital community that is 'defined by collaboration, experiences and shared ownership', and is centered around coffee. It is a further step towards Web3, that refers to innovations in the blockchain space, but Starbucks want to focus on the technology of NFTs or non-fungible tokens. "We are fascinated by how NFTs allow people to own a programmable, brandable digital asset, that also doubles as an access pass," CMO Brady Brewer explains on the website.
The idea is to develop a shared-ownership model for loyalty, community building, storytelling and offering unique experiences. "We plan to create a series of branded NFT collections, the ownership of which initiates community membership, and allows for access to exclusive experiences." The collection will be based on coffee art and storytelling. The first collection will form the core digital community and will be announced later this year. Starbucks is not the first company experimenting with NFTs. Gucci, Nike, Adidas and Coca-Cola were among the frontrunners. Digital marketing is nothing new for Starbucks and the app plays a central role in it. But the new NFT approach will take it a step further. NFTs especially attract a young audience, gamers and others who are tech savvy, and the company hopes to create increased customer engagement. It sounds like a great idea, but the NFT world is volatile and not very predictable. The same day Starbucks announced its NFT plans, the Wall Street Journal published an article 'NFT sales are flatlining'. After a sweeping start, there are more sellers than buyers of NFTs.
Treasure trove of assets
Starbucks CEO Howard Schultz mentioned the idea of NFTs first during a meeting with employees. Schultz has returned to the company as its chief executive. When he shares his vision on the future of Starbucks he says: "It is time to celebrate what Starbucks has been, who we are, and reimagine who we are going to be. (…) Digital innovation through NFTs as well as a plan for evaluation of partner benefits. (…) All I ask of you is to embrace every step on the way, a standard of excellence."
During his speech Schultz is curious to know how many of his employees consider themselves digital natives. Only a few raise their hands. So, work remains to be done, but Schulz sees an opportunity not to be missed. "If you look at the companies, the brands, the influencers, that are trying to create a digital NFT platform and business, I can't find one of them that has the treasure trove of assets that Starbucks has, from collectibles to the entire heritage of the company."
Changing the store experience
Schultz moreover suggests to change the store experience. "People are not using our stores the same way. We have to reimagine the customer experience, the third place environment, which has been a foundational aspect of Starbucks. All those stores that we have that have big lobbies, they may not be as relevant tomorrow as they have been in the past. We have to redefine, redesign our store experience."
It is here that a new digital approach fits in, as CMO Brewer notices. "While the 'Third Place' has often been described in physical terms – a place between home and work – the essence of the third place has always been the feeling of connection and belonging. In the hyper digital era we live in, the community connection is equally powerful as we extend the third place connection to wherever customers experience Starbucks." The plan is in line with the development of Web3. The coffee company will add "new concepts such as community-based membership models that we see developing in the Web3 space," Brewer is quoted in The Verge.
Where does the NFT bubble go?
NFTs have been hot for a while and several companies have successfully experimented with NFTs. But interest in NFTs is declining. The Wall Street Journal notices that there is a 'disproportionate number' of buyers and sellers. For the first time in the history of NFTs, trading-related activities are no longer profitable, writes NFT data analytics site NonFungible in its quarterly NFT Market Report. For companies like Starbucks it comes down to one question: will NFTs succeed in adding value for consumers? The company plans to announce more details in September. NonFungible is still optimistic about the future. 'Despite a complicated economic context, NFTs continue to surprise and we observe some strong trends, which tend to revitalize the markets.'