Dive Brief:
- Target will offer Starbucks items for free carside delivery on Target Drive Up orders placed at 1,700 stores, the retailer announced Wednesday.
- Customers who place Drive Up orders through Target’s mobile app will be prompted to add their favorite Starbucks menu item to their order. Target says it is the first retailer to offer this service “at this scale.”
- Target is rolling out the service over the summer and aims to offer it from all stores that have Starbucks cafes and accept Drive Up orders by October, according to the press release.
Dive Insight:
Carside delivery of Starbucks items was “Target guests’ most-requested feature,” Target said in the press release. The companies partnered to develop the service beginning in 2022, and worked to ensure fulfillment was “efficient and easy for team members.”
Mark Ring, SVP of U.S. Licensed Stores, Starbucks Canada and Siren Retail, said the new Target offering helps Starbucks meet customers where they are. Those efforts have included the extension of Starbucks’ loyalty program to many of its licensed stores over the last two years, as well as expanded delivery partnerships.
Starbucks and Target did not immediately respond to requests for comment on estimated sales lift provided by the partnership, or the specific structure of their licensing deal.
Starbucks’ licensed stores are an important part of the chain’s U.S. strategy, and the chain’s footprint includes more than 7,000 licensed locations in North American markets, according to the company’s latest 10-Q. North American licensed stores contributed more than $655 million in revenue in Q3, representing a roughly 21% increase in year-over-year revenue.
On Starbucks’ Q3 earnings call, CFO Rachel Ruggeri attributed much of that revenue growth to the expansion of Starbucks Connect, the tie-up for the brand’s loyalty program at licensed stores, and continued travel recovery from COVID-19.
