Starbucks · Strategy · Mid · 45 to 60 minutes

Should Starbucks make stored value core?

Starbucks is a global coffee chain that sells drinks and food through company operated stores, licensed stores, and a mobile app. Answer this product management case and get it graded line by line against a weighted rubric.

Product strategy
Behavior design
Payments economics
Metric design
Stakeholder judgment

The situation

You are a PM on Starbucks' digital team in the late 2000s. The VP of Digital and the head of U.S. retail want a recommendation for the next phase of the mobile app. Starbucks is a strong brand, but store economics are under pressure from labor, rent, spoilage, and easy substitutes. At the same time, gift cards are growing across retail, and Starbucks is seeing customers use them not just as presents but as a routine way to pay. The current app can support basic account features, but gift cards are still treated mostly as a separate utility, not a central product loop. Leadership wants to know whether Starbucks should invest in turning stored value into a bigger part of the everyday experience, or keep payments and loyalty more open and lightweight. Why now: the app roadmap is being set, and any strategy chosen will shape rewards design, checkout flow, and customer habits for years. Assume annual U.S. gift card loads are large, balances often sit unused for days or weeks, and any change must protect trust while improving repeat purchase behavior and unit economics.

What to produce

Write a 1 to 2 page strategy memo.

Your answer must

State the product decision you recommend and the main business and user goals it serves.
Identify the user behaviors Starbucks should encourage, and name the primary customer segments most affected.
Compare at least three strategic options, including keeping the current model, and explain the tradeoffs of each.
Explain the economic logic behind your recommendation, including transaction friction, repeat purchase behavior, timing of cash collection versus redemption, and the effect of unused balances.
Define 4 to 6 success metrics and guardrails, and include a phased rollout or experiment plan.

Constraints

Do not assume new in store hardware or a separate banking product.
Your strategy must still work for customers who pay with cash or credit cards.
You must address customer trust, legal and accounting treatment of stored value, and brand risk from appearing too manipulative.

Format

Use clear headings, include a simple options table, and keep any math illustrative rather than detailed.

How Starbucks actually played it

Explains how Starbucks gift cards and stored value turned the app into a strategic asset with large unclaimed balances. Offers a framework for designing a similar loop and metrics to track.

Stored value changes the economics of a loyalty app
Payments, rewards and habit reinforce each other
Track float and redemption alongside engagement

Built from The Starbucks Scam You Actually Like by Sid Arora (JAPM).