A Gold-Plated, Well-Grounded Partnership


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Starbucks is cornering the market on coffee not simply because it has a location on almost every corner. The chain also has a deft touch when it comes to recognizing and rewarding its best customers.

The specialty coffee chain took it a tier higher this week, through its partnership with Gilt Groupe, the invitation-only shopping site where designer items are sold at fire-sale prices for short periods. Through this arrangement, Starbucks offered its Gold level My Starbucks Reward Members access to a limited supply of Galápagos San Cristóbal coffee, a rare brew grown in limited supply on just one farm in the Galápagos Islands. The coffee – at $12.50 for half a pound – sold out within a day.

Here is a partnership that goes together like, well, coffee and crème de la crème. Not all of Starbucks’ customers are luxury shoppers – nor are Gilt members – but they do have one trait in common with big spenders: the desire for exclusive experiences.

Such thinking is why Starbucks posted a fiscal 2009 profit of $391 billion, compared with $315.5 billion the year before. In the fiscal third quarter ended June 27, sales at Starbucks stores open at least a year rose 9 percent, driven by a 6 percent increase in traffic. Profits advanced to $208 million, from $151.5 million.

Starbucks – recognizing the value of its investors as well as its customers – rewarded shareholders by raising its dividend to 13 cents per share from 10 cents. These days, SBUX is trading at about $7 above where it was last year at this time, or in the mid $20s.

It doesn’t get any simpler: Knowing the customer translates to bottom line growth. And that is a corner every retailer should want to be in.

Lisa Biank Fasig
Lisa leads the creation of editorials and feature stories for COLLOQUY and oversees the work of contributing editors and writers. With 18 years of reporting experience, most in business and specifically consumer behavior, she is highly skilled at researching data and teasing out the trends. A background in graphic design enables her to see ideas in three dimensions and tell the story visually.


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