Starbucks CIO Brewing Up Much More than Free Wi-Fi

CIO Stephen Gillett is no plain old IT order-taker. He's leading a new group developing even more in-store tech offerings--and delivering what CEOs want most from CIOs: strategic innovation.

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Daryl Schoolar, a senior analyst at market researcher In-Stat, told CIO.com in 2008 that "it is hard for [businesses] to just walk away from that revenue stream even if it will decline." Schoolar predicted that a decline in access revenues will begin in 2010 in United States and in 2012 in the rest of the world.

In August 2008, CIO.com examined the Wi-Fi strategies of four retailers: Borders, McDonald's, Panera Bread and Starbucks. At the time, Panera was the only business of the four that offered free Wi-Fi in its 1,200 restaurants. One analyst in the article noted that for many businesses, free Wi-Fi is already, or will soon become, seen "as just another cost of doing business and an operational expense, rather than as a profit center."

Today, the other three retailers have joined Panera in its customer wireless strategy: Borders begun offering free Wi-Fi (via Verizon) in October 2009; McDonald's (via AT&T) in December 2009; and now Starbucks in July 2010 (also via AT&T).

[ See how Starbucks 'immersed' new CIO Stephen Gillett in its culture: Strong Brew, Free Samples and the Drive-Thru: A Week in the Life of Starbucks' New CIO ]

Starbucks has been under pressure from McDonald's (on several fronts) and other lower-cost competitors, though the company's financial improvements (since Schultz took back the reins in early 2008) have impressed Wall Street and investors.

Now the biggest worry for Gillett and his team might be what effect "Wi-Fi squatters" will have on the customer flow at Starbucks.

When asked about it, Gillett had this to say on his blog: "We thought about this and worked closely with our store operations team before making this offer. Starbucks has always been about the third place and constantly looking at always improving this experience. This is the right thing for our customers and our store employees."

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Copyright © 2010 IDG Communications, Inc.

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