“The Future of Starbucks” by Maeng Myeong-gwan

January 10, 2024 254 Views

Starbucks is not only a personally inspiring space but also a place that garners significant attention. Originating from a small coffee shop in Seattle, the brand transformed its narrative by conceptualizing cafes as a “third space.”

In South Korea, the Starbucks phenomenon began on July 27, 1999, with the opening of its first store in front of Ewha Womans University in Seoul. While initially facing criticism for its relatively expensive coffee prices, which led to the creation of terms like “dwenjang girl” (a colloquial term referring to someone who spends more money on coffee than meals), Starbucks has since become an integral part of the coffee culture in the country.

Particularly in the central area of Gwanghwamun Square in Seoul, within a 1km radius, Starbucks boasts the highest concentration of stores globally, even surpassing New York. Despite its global success, Starbucks faced challenges in countries like Italy, Australia, and Vietnam, where their unique coffee cultures posed obstacles.

Domestically, Starbucks stands as one of the most successful cafe franchises, with numerous locations in urban and suburban areas, including large flagship stores with distinctive concepts. The brand has played a significant role in introducing “Western coffee” flavors and culture to South Korea, reshaping the cafe landscape.

In “The Future of Starbucks,” author Maeng Myeong-gwan delves into Starbucks’ success story, exploring its strategies and potential future directions. The book, published in 2021 amid the lingering effects of COVID-19, provides insights into Starbucks’ transition from a coffee business to a data-driven enterprise.

Starbucks has expanded beyond its coffee origins, venturing into the realm of data business. With approximately 30,000 stores processing over a billion transactions worldwide, Starbucks is recognized not merely as a coffee business but as an entity engaged in “data business.”

Utilizing Microsoft’s Azure IoT (Internet of Things) technology, Starbucks ensures optimal conditions for its coffee machines globally, maintaining consistent quality. The “Deep Blue” intelligent menu recommendation system, powered by Azure and AI, analyzes user preferences to suggest personalized menus and popular items based on weather and location.

Moreover, Starbucks leverages Azure Blockchain to trace the entire journey of coffee beans from origin to final packaging, ensuring transparency in the supply chain. The company also employs IT for location analysis, utilizing demographic information, daily traffic, proximity to commercial zones, and public transportation data to inform store placement decisions through the “Atlas” app, driven by big data analytics.

“The Siren Order,” a mobile application representing Starbucks’ digital transformation, is highlighted in the book. The app allows customers to place orders online, reducing wait times and optimizing staff efficiency. Starbucks’ dedication to digital transformation extends to mobile payments, where the integration of Starbucks Pay enables swift and convenient transactions, fostering customer loyalty through reward programs.

Maeng Myeong-gwan contemplates whether Starbucks could evolve into a financial institution. The book discusses Starbucks’ financial aspects, including the Starbucks Card and prepayment features, which contribute to the company’s substantial cash holdings.

As Starbucks continues to innovate with blockchain technology and digital services, the question arises whether it could potentially take on characteristics of a financial entity. While Starbucks fundamentally revolves around coffee and customer-centric experiences, the evolving landscape of industries and increased online activity prompts consideration of diverse future paths.

“The Future of Starbucks” is a recommended read for those interested in Starbucks’ digital advancements and technological aspects. For a more in-depth exploration of Starbucks’ emphasis on the “third space” concept, Kim Young-han’s book “Benchmarking Starbucks” is suggested.

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