Curbside pickup is here to stay, and retailers are going all out

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For Michael Whitley, pulling into the curbside pickup point at Walmart offers him a level of independence that wasn’t as widely available in his Huntsville, Alabama, neighborhood before the pandemic.

“More than anything, I hate asking for help,” said the 45-year-old, who has also had to rely on service from Publix, Kroger and Best Buy as cancer made walking long distances difficult and increased his risk to himself to be infected with the virus. He still does, even now that his health has improved.

“It’s one of the good things that has come out of Covid,” he added.

Curbside pickup, BOPIS (buy online, collect in store) and other “omnichannel” approaches designed to make shopping seamless, regardless of where the purchase is made—in store, by phone, app, or desktop—were already gaining ground before the coronavirus Significance At the beginning of 2020, the crisis began. But the pandemic forced retailers to adapt quickly to new safety concerns and social distancing norms, and now for many consumers there is no turning back: Thirty-three percent of adults under 50 who started curbside pickup during the pandemic say it’s a habit they’re expecting according to a study by the Associated Press-NORC Center for Public Affairs Research and the SCAN Foundation.

Retailers, ranging from large department stores to local hardware stores, are leaning into demand. But some might go a little further – by adding fees.

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“Retailers have started to see this as a competitive advantage,” said Katherine Cullen, senior director of industry and consumer insights at the National Retail Federation. “They know it’s something that shoppers like… and it addresses the reality that in consumers’ minds, there’s not really a difference between online and in-store anymore.”

A recent round of earnings reports from some of the country’s biggest retailers and government data show consumers are changing how and what to buy. Although they’re still spending, due to historically high inflation, more of their resources are going to essentials like gasoline and groceries. That leaves less room for more Discretionary purchases such as clothing, consumer electronics, or a DIY project for the home.

A slowdown in consumer spending has implications for the wider economy as it accounts for two-thirds of GDP. This could worry politicians and economists – especially when consumer sentiment is near historic lows. It’s a combination that can drag an economy into recession.

To convince shoppers, retailers focus on improving the shopping experience. A key draw is the multiple shopping options, according to Conor Flynn, CEO of Kimco Realty. The real estate investment firm caught the omnichannel trend early and worked with its retail tenants to install its designated neon green parking signs in its malls. The company even trademarked “curbside pickup” just before the pandemic hit.

“I think consumer habits and behavior are changing so rapidly that there isn’t one thing that’s consistent across the board,” he said. “It’s pretty much how you shop for groceries today – there’s no consistency. People go to three different grocery stores for three different things. And I think the same goes for the way people shop — whether it’s online, in-store, curbside, or online — they kind of want the variety of options that work, and whatever works for them that day .

The options are especially helpful for buyers with young children. Jelisa Osouna, a single mom in Newport News, Virginia, chooses curbside pickup when her 1-year-old daughter is with her.

“It’s very handy when I need to pack something quickly,” said Osouna, 30, adding that it saves her having to lug her daughter and the car seat out of her car. “Sometimes it can be a lot, so Curbside is perfect.”

Supply chain bottlenecks and labor shortages during the pandemic have also shifted consumer expectations around the wait time for online delivery orders. People realized that curbside and BOPIS are often faster, Cullen said. These changes allowed retailers to save costs by persuading their customers to drive their own cars and use their own gasoline in their own time to collect their items from the store. The BOPIS model also creates opportunities for shoppers to pick up a few more items when they go in to retrieve their online order, Flynn said.

“You get the halo effect,” he added. “And that’s really powerful.”

But Amanda Wise said she’s partially using curbside pickup to avoid impulse spending. “The problem with Target is that once you walk in, it’s difficult to walk out of the store without spending at least $100,” said the 34-year-old from Raleigh, NC. Wise added that some stores have cheaper prices online and she can use coupons and cash back apps or browser extensions if she buys in advance.

Another plus is that she can dodge the summer heat. Wise drives an Acura with dark leather seats, so returning to her sun-baked car is uncomfortable, she said.

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Most major retailers don’t charge curbside pickup fees as long as customers meet a minimum order value, which is generally at least $30 to $35. But that could change, said Chad Lusk, a retail consultant at Alvarez and Marsal, noting that Sam’s Club recently added a $4 fee for customers who don’t have a premium membership, Sam’s Club Plus.

“With in-store shopping making a meaningful return, retailers now need to start comparing the cost of curbside fulfillment with extra labor to in-store purchases,” he said, adding that the move of Sam’s Club “as a possibility could be used [incentivize] Consumers are fully back in the shops.”

Bob Hoyler, a retail consultant at Euromonitor International, said he wouldn’t be surprised if other warehouse clubs, such as Costco or BJ’s Wholesale Club, also introduced fees, since customers are primarily drawn to volume discounts. But he doesn’t think fees would go down well Grocery stores, particularly among consumers who are choosing curbside delivery services like Instacart and Shipt to avoid the extra costs, including tips.

When a curbside consumer is struggling financially and the grocer decides to charge a fee, “you better believe [those shoppers] will investigate the alternatives immediately,” said Hoyler.

Some retailers are changing their physical stores to better align with BOPIS and curbside pickup. Best Buy, for example, has reconfigured some of its stores to make room for backroom storage space, Lusk said.

“Further down the spectrum, we’re seeing the grocery space investing in microfulfillment centers, automated facilities that pick and stage orders for both in-store pickup and home delivery, separate from the store itself,” he added.

Microfulfillment centers are particularly effective in densely populated regions, and are often used for a one or two-hour delivery. But they’re not widespread in rural areas, Cullen noted. Instead, omnichannel shopping options are particularly beneficial for these communities.

Those expanded shopping opportunities are still “in the first inning,” Flynn said.

“I think it will evolve, but it’s very clear that it’s working and a lot of customers are loving it,” he added.

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