Why Starbucks wins at retail and CVS loses

Why does Starbucks win at retail? It all comes down to a simple quote in response to a question from an editor at Geekwire posed to the CTO of Starbucks, Adam Brotman

Q:How do you feel about Apple Pay? Today, iOS users can use it to reload their loyalty cards, but what about using it to pay in the store?

A: Brotman: “We are strongly considering it. We are strongly considering the whole world of NFC. We are fans of it, and whatever our customers want, we’ll incorporate into our system.”

Simple Premise — Lead in what you’re best at; follow everywhere else

The basic concept here is that consumer experiences companies should lead in their experiences and follow in technology.

Starbucks follows the customer in technology

“Whatever our customers want, we’ll incorporate into our system.”  Customer driven features and service. Starbucks is a coffee company and leads the customer to new coffee and tea experiences. But they know they are not a technology company. In tech, they smartly follow the customer.

CVS fails to follow the customer

By contrast, CVS and 50 other retailers are set on implementing a payment protocol called CurrentC that satisfies no customer. CurrentC is an attempt by retailer to cut out the credit card companies by promoting debit card payments as opposed to credit card payments, thereby saving the credit card fees.

But no where does CurrentC stipulate or suggest that the savings will flow to the customer. Instead, this is an implementation of technology for the benefit of the store, not the customer. This is doomed to fail. Since when can or will a retailer lead a consumer to better technology experiences?

Example: Apple Pay vs CurrentC — Apple is a technology company; CVS is not

By contrast, Apple has demonstrated its ability to lead the customer into ever (usually) better technology experiences. Their revenues and stock value signal their success. When Apple releases new technology, it is quickly adopted by their massive consumer base. Apple Pay has been lauded on many fronts – obvious and non-obvious. While many look at the seamlessness of the payment process with Apple Pay, other journalists cite its ability to eliminate the need for a wallet filled with credit cards — a benefit we can all relate to.

By contrast, CVS and the other retailers have not demonstrated any real technological prowess. They have launched an alternate payment service called CurrentC and have blocked the use of Apple Pay in their stores. This block did not include the feedback from customers, but rather a top-down attitude that they know best.

Why CurrentC will Fail?

Its pretty easy to highlight while CurrentC will fail:

  1. Its not secure. CurrentC has already been hacked. Why would a consumer trust a retailer to deliver state of the art technology?
  2. It leverages debit cards instead of credit cards. The former are not typically insured against theft. Why would a consumer prefer a solution that provides them no real benefit and that is not secure and without insurance protection. The only ones who benefit are the retailers.

Starbucks is consumer driven — CVS and CurrentC are not

The Starbucks experiences leads in coffee and tea experiences and follows in technology. CurrentC retailers would be wise to give up this fools errand to try and lead in technology. They already stink at it and are exposing customers to far more losses due to theft with no benefit in return.