Starbucks (SBUX : NASDAQ : US$77.85), Net Change: 0.64, % Change: 0.82%, Volume: 3,926,887
How much do you have on your Starbucks card? The Street published an interesting memo Howard Schultz, CEO of
Starbucks, sent to his store managers this week, where he highlighted two consumer trends: 1) showrooming and 2) the gift card
boom. Schultz writes, “First, 2013 was the first holiday that many traditional retailers saw in-store foot traffic give way to
online shopping in a very big way. Customers watched, waited, compared prices and then bought the brands and products they
wanted online – frequently using a mobile device to do so. As a result, national data will show that increases in online shopping
this holiday far outpaced increases in traditional in-store shopping. Starbucks was not immune but we will benefit from this shift
through our strategic investment in creating world-class digital and mobile payment expertise and assets ideally positioned us to
benefit from this transition, enabling us to efficiently handle over $1.3 billion in total Starbucks Card loads across the U.S. and
Canada for the quarter, up significantly over both last year and our current year plan. Second, this was also the holiday that
customers embraced the convenience and choice afforded by physical and digital gift cards. Instead of gifting a particular item
many consumers chose to gift “choice.” …To put this in perspective, in the U.S. and Canada on Thursday, December 19 we set a
single day record with approximately 2.4 million new Starbucks Card activations .. and then on Monday, Decemebr 23, and
Tuesday, December 24 we broke the single day record…again on successive days! Overall, we generated over $610 million in
new card activations in the holiday quarter, representing a significant increase over both last year and plan.” Some other
interesting gift card stats from over the holidays, according to the National Retail Federation, consumer spending on gift
cards during Christmas 2013 was expected to reach nearly $30 billion (an all-time record). The average card value was roughly
$45.00. If you can’t decide what to buy friends or family, what makes you think they can decide for themselves? CNBC recently
highlighted that American households have an average of $300 in unused gift cards in drawers somewhere and more than $41
billion in gift cards went unused between 2005 and 2012. Gift card exchanges like
CardPool.com and
GiftCardGranny.comhave popped up to offer the consumer an opportunity to unload unwanted gift cards. Sellers can typically get 70-80 cents back
on the dollar. Meantime, buyers can find gift cards discounted up to 30% off the face value of the card.
deanrodneylindal 