Can Starbucks replicate the ‘third place’ in the metaverse?

Photo: @triziaquilala via Twenty20
May 10, 2022

Starbucks is looking to create a “digital third place” with the help of emerging Web 3 technologies that will support the sale of NFTs (non-fungible tokens) and drive loyalty.

As with many recent announcements involving the metaverse, the details are fuzzy and the concepts appear to be in development.

Starbucks’ plans call for the launch of its first NFT collection later this year with the first focus on “coffee art and storytelling,” Brady Brewer, EVP and chief marketing officer, said in a blog post. Other assets that could be used in the creation of future NFTs include its nearly 27 million active Rewards members in the U.S., store designs, Starbucks card art, music and books.

The sale of digital art is expected to make the venture accretive, but NFT ownership also supports membership and access to exclusive experiences and perks.

“We are fascinated by how NFTs allow people to own a programmable, brandable digital asset, that also doubles as an access pass,” wrote Mr. Brewer. “We believe NFTs have broad potential to create an expanded, shared-ownership model for loyalty, the offering of unique experiences, community building, storytelling, and customer engagement. And, while doing so, also being a source of accretive business that can benefit a number of stakeholders in the process, while creating a new type of digital ecosystem to complement Starbucks current digital platform offering.”

Starbucks’ enhanced digital push comes as its locations, according to the Wall Street Journal, are becoming “less and less the ‘third place’ between the office and home for customers to socialize, relax or mooch off free Wi-Fi” as only 30 percent of customers now consume their purchases on premises with the greater adoption of mobile pickup and delivery.

Speaking on last week’s second-quarter analyst call, Howard Schultz, founder and interim CEO, said the Starbucks experience extends well beyond the cafes. He said, “The equity of the Starbucks brand has real legitimacy and relevance outside of our stores. And the world we’re living in today, our customer base is getting younger, they’re digital natives, and they expect Starbucks to be as relevant outside of our stores as we are inside.”

DISCUSSION QUESTIONS: What do you think of Starbucks’ vision of extending the “third place” concept online through NFTs and metaverse content?  How well do you see such a digital realm working in helping Starbucks build true relevancy online?

Please practice The RetailWire Golden Rule when submitting your comments.
"Starbucks’ concept of creating a 'digital third place' that is powered with NFTs and metaverse content is spot-on."
"The entire metaverse is the third place. So I’m not sure why Starbucks thinks they can own it."
"I’m sticking to the reality-verse."

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23 Comments on "Can Starbucks replicate the ‘third place’ in the metaverse?"

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Joel Rubinson

This is a tough one. Starbucks has always been the leader in social spaces — Facebook followers, quantity of conversations in social media — but I felt it was rooted in a physical experience. In my neighborhood, there is a bit of a traffic jam at 7AM from people who MUST get their Starbucks on their way to work or school. Realizing that there is a metaverse and NFTs is admirable, but I think their efforts must be tethered somehow to the physical experience of Starbucks or at least to drinking their coffee you brewed at home. Can they find that narrow pathway? It’s unclear, but I agree they must try.

Gary Sankary

I agree with you Joel. It wasn’t too long ago that Starbucks was in the media business, selling CDs and music online. The reasoning seemed sound — coffee shops were a place where people listen to music. The caveat, while drinking coffee. That experiment didn’t really work out for them.

I also agree that they should try this and see where it develops. I just don’t know how this extends to their value prop of providing coffee and snacks.

Chuck Ehredt

Brands need to start experimenting with the metaverse concept because it is likely to expand quickly. “The third place” is a great concept offline, but could also be quite relevant online, so I see this as a smart way to put a toe in the water and see how people respond. I can imagine people wanting to enter a relaxing place online, getting pushed relevant content, possibly have the opportunity to meet like-minded people, etc. — while enjoying a coffee. Of course, curating this experience will require some significant investment but, for the portion of people who engage, the opportunity to learn more about them should pay significant dividends. In general, brands need to be present where their customers are – and in this decade that means being present in marketplaces that brands typically don´t control. This is a new learning curve, but an important one for those that want to be relevant as the decade proceeds.

Melissa Minkow

It sounds like there isn’t that clear of a vision yet for what this third place can be, and I think that’s because it’s going to be very difficult to draw consumers there. If there isn’t significant value in this digital destination, it’s not going to replace a physical one that’s no longer relevant either.

Bob Phibbs

The breathlessness with which people speak about all things deemed metaverse is astonishing. So people will go into a computer program where you can’t eat or drink and buy things they can exchange for the real thing? Right.

Georganne Bender

Nailed it.

David Slavick

Anything Starbucks puts its collective mind to will succeed. Their core hot and cold brew lovers that go way beyond the 27 million reward members are the perfect target for an art and entertainment NFT marketplace. Getting at the heart and soul of their brand lovers through music and more is what the brand is all about.

Karen S. Herman

Starbucks’ concept of creating a “digital third place” that is powered with NFTs and metaverse content is spot-on. I am already talking with partners and clients about the new brand journey. It is a fluid movement between offline, online, and the metaverse. Brands and businesses need to start planning now and Starbucks, as usual, is ahead of the game.

Bob Amster

You can’t put it better than Howard Schultz’s own comment on the topic. Starbucks has the right customer base and it’s getting younger and more susceptible to involvement in the metaverse. Starbucks has been an innovator since it launched the “third place” concept nationally Consumption on-premises is significantly down therefore “digital consumption and engagement” can go up.

Carol Spieckerman

The phrase “we are fascinated…” caught my attention. Starbucks may be fascinated with NFTs, but are consumers? I’m not a metaverse curmudgeon by any means but Starbucks would seem down on the list of promising early adopters. The march to the metaverse is inevitable, but I’m not sure Starbucks’ customers are craving a “fourth place.”

David Naumann

Starbucks’ powerful brand, loyal fans and technology leadership make it a likely winner in the metaverse. Starbucks has been one of the most successful retailers in achieving mass adoption and use of its mobile app and loyalty program. Its customers are generally tech savvy, including a large segment of digital natives. If anyone can successfully monetize the metaverse, I put my money on Starbucks.

Ken Lonyai

This is yet another company out of ideas grasping for what is supposedly “the future.” They sell coffee, not pixels. This is all window dressing to try and sound new, in-tune, and relevant. It’s a distraction from what should be their focus: relentless improvement of the IN-STORE experience.

Brandon Rael

The digital-first and mobile-first Starbucks operating model has made the coffee experience in their cafes less about the customer journey and more about their business’s transactional and efficiency aspects. The Starbucks cafes have morphed to where only a smaller percentage of loyal customers stay in the cafes for an extended time.

However it will all come down to cafe-level execution of the fundamentals and recapturing the magic that made the Starbucks model unique and authentic when it matured 20-plus years ago. There is an opportunity to shift the narrative, invest in the design and architecture of the cafes to make them more welcoming, and find a strategic way to move the mobile orders to a different area of the cafe.

The metaverse is another opportunity for Starbucks to extend its brand reach and drive loyalty. Ultimately, Starbucks would benefit by attracting customers to their cafes. An engaging and authentic metaverse experience may attract the right amount of interest through gamification and other loyalty strategy integrations.

Michael La Kier

The entire metaverse is the third place. So I’m not sure why Starbucks thinks they can own it.

Brian Delp
4 months 25 days ago

The success will likely come down to the benefits they create for members. The gold star program keeps me active, but perhaps they could do something like tying NFTs into some limited edition drinks like the color-changing unicorn drink that was a big craze and sold out so quickly. Unlocking access to something like this could create buzz and drive social content.

Lee Peterson

Meanwhile one of our many local coffee shops, Stauf’s, a Berkeley-esque place (pretty big) is packed every day with people talking, doing business, enjoying coffee, you know, like a third place. I’m sticking to the reality-verse.

Gene Detroyer

“The details are fuzzy, and the concepts appear to be in development.” It sounds as if some CMO said this meta thing is great. We ought to try it.

Maybe the reason only 30 percent of Starbucks customers are hanging out is that the hangout was basically closed during the pandemic. I would wage that those 30 percent are generating much more than 30 percent of the revenue.

As I have said before, I understand how the metaverse works in gaming, but for real brands I don’t have a clue.

Raj B. Shroff

I don’t think this is a zero-sum game. Physical and digital can and will co-exist. Pursing the “digital third place” for the purposes of learning and connecting is smart. But if this effort takes away energy from other, more pressing issues, that’s a red flag. With 30 percent on-premises and my Starbucks drive-thru packed daily, what are the implications? My pre-teen kids and their friends are enamored with the product with the equity of the brand. In places outside of the U.S., Starbucks are often full of people talking, relaxing, and drinking coffee. But are things slipping? Perhaps. Keep a pulse on the physical and don’t let that slip away — also stay on top of what’s happening in this emerging space.

Lisa Goller

Starbucks is smart to evolve to align with consumers’ experiential expectations.

We’re past the glorious ‘90s lattes and Gypsy Kings café scene. Now younger consumers and art lovers are migrating to the metaverse to connect, create and relax. Starbucks needs a brand presence as digital real estate to build loyalty among this mobile, global community.

Taking up space in the digital realm will keep Starbucks top-of-mind among younger consumers. Starbucks will also entice coffee lovers who to like socialize online, and support artists and content creators.

Cathy Hotka

Stephen Colbert skewered NFTs recently as “a picture of a picture of a picture, but it’s the real picture. Bidding starts at TEN MILLION DOLLARS.” Color me skeptical.

Kenneth Leung

I think it is worth the experimentation since the cost of entry for NFTs and the metaverse right now isn’t that high. The key is to not over-rotate the investment because at the end of the day Starbucks is in the business of selling coffee and a space to either work remote or relax. Metaverse and NFTs can help the customer with loyalty to the brand, but that’s all it is from my point of view.

Anyone here remember the hype around Second Life?

Brian Kelly
4 months 25 days ago

For starters, read the blog post. It is a place used for wondering aloud.

What if Starbucks could create a new, global digital community — a community defined by collaboration, experiences, and shared ownership — all centered around coffee to start, and then perhaps expanded into the many of the areas Starbucks has played in over the years as a coffeehouse; art, music, books and beyond?

“Third Place” reminded me of Taco Bell’s “fourth meal.” Both ways of reframing their role in a customer’s life.

Anil Patel

New technologies require a curious approach. The metaverse is still not widely known, and experimentations could help retailers better understand the core of the technology.

Starbucks’ initiative of introducing a digital third-place is appreciable and could work as an elevated extension of its real-world experience. The digital ecosystem could help people socialize virtually in the metaverse, allowing them to have casual as well as formal meetings in the digital space. I also feel the metaverse can help in offering personalized customer experiences that are otherwise not possible in the real world.

"Starbucks’ concept of creating a 'digital third place' that is powered with NFTs and metaverse content is spot-on."
"The entire metaverse is the third place. So I’m not sure why Starbucks thinks they can own it."
"I’m sticking to the reality-verse."

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