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Schultz to Step Down as CEO at Starbucks, Impressive Customer Loyalty Bodes Well for Future

Starbucks CEO Howard Schultz may be stepping down next year from his current role for the iconic global company, but it seems apparent that the incredible amount of customer loyalty, fueled by growing with digital technology and mobile engagement, will provide for a continued bright future.

The former owner of the NBA’s Seattle SuperSonics, Schultz will step down as CEO on April 3, 2017, and become executive chairman, shifting his focus to innovation, design, and development of Starbucks Reserve® Roasteries around the world, expansion of the Starbucks Reserve® retail store format, and the company’s social impact initiatives. In this new role, Schultz will continue to serve as chairman of the Board.

Starbucks’ current president and COO Kevin Johnson will expand his role and assume the responsibilities of president and CEO on April 3, 2017.

“Starbucks consistently outperforms the retail industry because our stores, our offerings, and the experiences our partners create make us a destination,” said Schultz. “The best evidence of the success of the core strategy driving our business is that we continue to deliver quarter after quarter of record, industry leading revenue, comp sales and profit growth, and that the newest classes of Starbucks stores continue to deliver record-breaking revenues, AUV’s and ROI both in the U.S. and around the world. As I focus on Starbucks’ next wave of retail innovation, I am delighted that Kevin Johnson has agreed to assume the duties of Starbucks chief executive officer. This move ideally positions Starbucks to continue profitably growing our core business around the world into the future.”

As president and chief operating officer since March 2015, Johnson has led the company’s global operating businesses across all geographies as well as the core support functions of Starbucks supply chain, marketing, human resources, technology, and mobile and digital platforms. Johnson has been a Starbucks board member since 2009, and will continue to serve as a member of the Board.

“Over the past two decades, I have grown to know Starbucks first as a customer, then as a director on the board, and for the past two years as a member of the management team,” said Johnson. “Through that journey, I fell in love with Starbucks and I share Howard’s commitment to our mission and values and his optimism for the future. It is an honor for me to serve the more than 300,000 partners who proudly wear the green apron and I consider it a privilege to work side-by-side with Howard, our world-class board of directors, and a very talented leadership team. Together, we will reaffirm our leadership in all things coffee, enhance the partner experience and exceed the expectations of our customers and shareholders. We believe in using our scale for good and having positive social impact in the communities we serve around the world.”

Johnson's career spans 33 years in the technology industry, which included a 16-year career at Microsoft and a five-year tour as CEO of Juniper Networks. At Microsoft, he led worldwide sales and marketing and became the president of the Platforms Division. In 2008, he was appointed to the National Security Telecommunication Advisory Committee where he served Presidents George W. Bush and Barack Obama. He joined the Starbucks board in 2009 and the management team in 2015.

Launched in 1971, Starbucks has 25,000 retail stores in 75 countries. For fiscal 2016, Starbucks’ global comparable store sales increased 5 percent, and its consolidated net revenue rose 11 percent, to $21.3 billion.

“You may recall that it was three years ago that I shared with you what I sensed were the early signs of a seismic shift in consumer behavior – away from bricks-and-mortar and toward mobile and online retailing,” Schultz added. “Today, that shift has taken firm hold around the world, both disrupting and redefining retailing and significantly reducing the consumer foot-traffic that traditional retailers have relied on for decades.”

Johnson added: “I do want to acknowledge the obvious: Howard Schultz is among the world’s most iconic leaders and entrepreneurs. I know Howard doesn’t personally think of himself that way, but as his business partner and friend, I know this to be true. It is a privilege to work side-by-side with Howard. I have great confidence in our strategy, the partnership that we have developed, and the world-class talent we have assembled.”

When Starbucks announced changes to its Starbucks Rewards loyalty program back in February, the initial response from its customer base was negative. Program members questioned how the changes−where customers earn reward stars based on the amount of money they spend at Starbucks, rather than how often they visit−would create a positive experience.

By April, those sentiments faded as nearly 1 million customers joined the loyalty program during the company’s fiscal second quarter. At the time, Schultz noted: “We’re building something so enduring and so unique I think it’s going to be one of the most significant changes to the equity of the brand.”

Stellar Loyalty CEO Kevin Nix is confident that Starbucks will continue its dominance after Schultz steps down, especially due to what has transpired during the latter’s stint as CEO.

“Mr. Schultz has been a remarkable visionary and innovator in creating a consistent, enjoyable consumer experience,”" Nix told Loyalty360. “His leadership in advancing the application of mobile pay and mobile order, all tied to a relevant loyalty program, helped fuel a mobile breakthrough, creating a wave of fast followers in the industry and beyond. Schultz and the Starbucks team have proven to the business world that a well-designed mobile experience can be a significant business driver by increasing revenue and decreasing cost, while enhancing the customer experience exponentially.”

Lonnie Mayne, president of CX optimization leader InMoment, offered his thoughts about Schultz.

“Starbucks is the quintessential disruptor of the customer experience, and Schultz the architect,” Mayne told Loyalty360. “In imagining a ‘third place’ community gathering spot, Starbucks transcended the cups of coffee being sold, proving the new role of experience in setting a brand apart. This third place has become home to an entire generation of creatives, remote workers, entrepreneurs, and everyday individuals who can become part of something bigger by simply walking through the door.”

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