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[22 comments]

Starbucks: Steel This Gift Card

December 7, 2012

It seems like just last week that we were discussing Starbucks' use of limited supplies to build the perceived value of select estate coffees in the marketplace. Now the chain is back at it again, but this time it's with a limited edition gift card that is sold only through the Gilt luxury products website and costs $450.

The Starbucks Metal Card is made of stainless steel (that accounts for $50 of the cost) and the coffee giant is making only 5,000 of them. According to USA Today, the card would buy 106 Grande Frappuccinos, 119 Grande lattes, 205 regular brew coffee in a Grande cup, 402 K-cups and enough Pike Place Roast in six-ounce bags to brew 1517.5 cups of coffee. Each card comes with gold-level member benefits such as free refills and gifts.

"This is a card for the one percent," cultural anthropologist Robbie Blinkoff told USA Today. "It's all about status..."

The card is expected to become a collector's item. According to USA Today, other non-steel limited edition Starbucks cards go for thousands of dollars on eBay.

FINANCIALS:     [NASDAQ:SBUX] [ ]

Discussion Questions:

Do you think the Starbucks Metal Card aligns with the company's brand? What do you think Starbucks is looking to get out of the offer?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How many of the 5,000 Starbucks Metal Cards will be sold?

Comments:

I think the Starbucks Metal Card elevates the company's brand. If it's a status symbol to have one and you have to go into the store to use it, I can't see a more effective means for building an aura that is envied by other customers and enviable among retailers.

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Joan Treistman, President, The Treistman Group LLC

Well, another problem for airport security. I can hear the TSA announcer—"If you have a Starbucks Stainless Card please remove it from your pocket and place...."

Not too much of a surprise. CNBC's Jim Cramer was on the Starbucks push this week as they move deeper inside the home with their coffee maker and more. Starbucks is a brand that can easily become part of a person's "style." So fine, move to go after the top 1-2% income earners. There are plenty of people that drink 1 or 2 "bucks" almost every day. That is $6-$8 and burns through $450 in about 3 or 4 months.

In addition, this offer opens the door deeper into one of their markets and soon if you have one of these cards, you will get deals from their partners. This is a 1-2% shopper tracking device.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Bravo Starbucks! Create a gift card that generates a wave of free publicity, reinforces its image as a premium brand and becomes a collector's item.

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Max Goldberg, President, Max Goldberg & Associates

Starbucks is out to prove that its unique coffees are the Nectar of the Gods ... or, at least, one god, Howard Schultz. And they are winning with today's marketplace. Thus Starbucks Metal Card aligns with that goal.

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Gene Hoffman, President/CEO, Corporate Strategies International

Robbie Blinkoff summed it up nicely. This initiative will not make any direct mark on the company's balance sheet, but it will add to the cachet and perception that they sell something beyond diner or Dunkin' Donuts coffee. For the "99%" remaining customers, many will feel good and justified paying more to be part of the brand, even if they're only spending $4.50 (1% of the price of the card) at a time. That's where the card will have the most positive impact on Starbucks.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

Another great idea, and why not? Prestige is just like having the American Express Black card, and people with money love this. Good for them....

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Tony Orlando, Owner, Tony O's Supermarket & Catering

And we are wondering why our economy is nearing the "cliff"?

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

I don't know that anyone else has been able to turn commodities into premium products as successfully as Starbucks. And this gift card is just another step on that road.

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Nikki Baird, Managing Partner, RSR Research

I think its over the top and outside the experience of the brand. It feels exclusive, not inclusive.

I pulled this off their website: "It's not unusual to see people coming to Starbucks to chat, meet up or even work. We're a neighborhood gathering place, a part of the daily routine—and we couldn't be happier about it. Get to know us and you'll see: we are so much more than what we brew."

I just wonder whose neighborhood they are talking about when they want a stainless steel gift card.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

Starbucks understands its core audience—people who think that a soy nonfat latte with 2 pumps and room is a key part of their day. They'll not only sell all 5,000, but they'll wish they'd created another 250,000.

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Cathy Hotka, Principal, Cathy Hotka & Associates

All I can say is if anyone can do this, it's Starbucks. They have proved themselves over and over with smart moves. Chalk up another one!

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

Smart move. In the good old days, just carrying a Starbucks cup was a status symbol. Since that's become ubiquitous, the status stakes are higher. Flashing a steel Starbucks card will reinstate an accolade to a common commodity. Remember what a big deal it was to have a gold credit card?

Anne Marie Luthro, Most Insightful, AML Insights

This is a what to get gift for the snobby status conscious person who has everything. This is a card for the 0.01% not the 1%. Makes me only more determined not to patronize Starbucks.

'schindler'

Does Starbucks Metal Card align with the company brand? Yes, the brand is all about perception.

What do I think that Starbucks is looking to gain from this elite card? Mega publicity, such as this forum, and of course...snob appeal!

Charles P. Walsh, President, OmniQuest Resources, Inc

I see Starbucks' Metal Card as being perfectly in-brand. After all, infinite choice is one of its main brand promises.

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Carol Spieckerman, President, newmarketbuilders

Hard to believe that anyone taking this survey thought that Starbucks would not sell all 5,000 cards (23% thought so.) As of noon, 12/07 the cards are gone. Just checked at Gilt and I had to be "Wait Listed," less than 24 hours after the invitation to purchase was emailed. This is no surprise. It will be interesting to see how many people are on that wait list.

I like the idea that Starbucks is now testing the waters for super-premium priced coffees and items like this card. Their stores are saturated in most markets. (I have 4 within 1 block of my office.) I wouldn't be surprised to see a more upscale, pricier chain of shops spun out of all these "tests." Something that Basil Fawlty might operate to keep out the riff-raff.

Thomas Muscarello, Chief Strategist, Make It Happen Now

Pretty much what Max said...so props for now. But as I'm sitting here envisioning the people in the marketing department running around doing fist-bumps to celebrate just how clever they are, I'm wondering if this cuteness isn't starting to run out of fuel. How-are-they-going-to-top-that only works as long as you actually one-up the previous effort, and SB has a rather limited business model to work with...this isn't NM here!

'notcom'

Sure, this fits right in with the image that Starbucks effectively pursues—quality brand, loyal supporters, and aspirational drinkers of their favorite brew.

What they are seeking has to be $2.25 million in revenue, hyper-loyal customers, the cache of prestigious gifting, offering the status of a unique card that is limited in nature, a stronger positioning for their CRM platform, and enhanced cash flow/float from $2.25 million. Similar types of objectives for those who may choose to carry an American Express Black Card, drink Johnnie Walker Blue, or choose to tool around in a Maybach Mercedes Benz.

Sounds like another winning tactical move on the part of Starbucks.

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Roger Saunders, Managing Director, Prosper Business Development

Brilliant strategy. Perfect gift for the person who has the money to give to someone who needs nothing. Great for cash flow. Locks customers in to doing business with them and out of their competitors for a lot of lattes.

Sid Raisch, President, Advantage Development System

Only 5,000 cards of worth $450 value each!! The only differentiator seems to be the limited edition tag. At least the perception of limited edition should have been attached to a memorable occasion or business accomplishment. Now, if they repeat the same exercise every quarter, it will erode the brand value.

Chandan Agarwala, Manager - Strategy and Research, iGATE Corporation

This is not a card for the one percent. The one percent values money too much, and they don't want to be called-out. The target on the back of the affluent is getting bigger, and Starbucks is the very last place most would desire to tell those around them (in particular Starbucks employees) that they're wealthy. It is a card for those who wish they were part of the 1% or those who have a business budget for gifting.

Regarding the number of cards; it relates to less than 1 card for every store.

The card also illustrates that 'luxury' and conspicuous consumption may be slowly creeping back into the vernacular. Again, it seems targeted to those who wish they were affluent rather than those who are affluent.

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Christopher P. Ramey, President, Affluent Insights

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