The classic fulfillment image of online grocery shopping remains home delivery. But recently, big name brands such as Walmart and Kroger have stepped up investments in curbside pickup — a unique development given the vertical’s plethora of on-demand grocery delivery services such as Instacart, FreshDirect and Ahold’s Peapod.
The handling of the last mile has become a paramount concern for retailers as they compete with Amazon in this growing $13 billion market. While pickup programs might serve as a partial shortcut around the last mile, they raise the stakes for retailers in terms of ensuring that the final point of interaction is successful.
I’ll admit the personal touch of grocery pickup does intrigue me. While none of these services have ever been offered near me — preventing me from ever testing out this kind of shopping experience — past experiences within the store make me feel that this would add a measure of comfort not always provided with delivery.
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As I’m sure other shoppers tend to feel, waiting in line with a bunch of groceries in my cart can be a nuisance. A lack of staffing within each aisle is the most notable culprit for these long lines, in my experience. With that said, the implementation of any pickup system will still depend heavily on the retailer’s ability to make the associate valuable at that closing interaction point.
If anything, the advantage here for the consumer is that while they don’t have every item delivered directly to their doorstep, they do have the opportunity to interact with these associates to ensure the right items have been picked for them on the spot.
Pickup also provides one more perk, particularly when relating to the on-the-go, mobile consumer: the shopper doesn’t have to be home when the order is delivered.
Kroger CEO Sets Sights On ClickList Expansion
In Kroger’s Q1 financial report, Chairman and CEO Rodney McMullen highlighted the expansion of the ClickList offering to more markets as a major reason the company was pleased with its Q1 results. Kroger has taken ClickList to 25 markets thus far, with McMullen revealing in interviews that the retailer is going “all in” on the technology as part of the service’s expansion.
As part of the process, Kroger is hiring and training as many as 20 people per store, adding parking signs, knocking down exterior walls to make dedicated ClickList doors and installing new refrigeration and freezer units within stores.
McMullen remains confident that ClickList’s profitability will depend entirely on the service’s ability to scale:
“One of the things that our team has done a lot of work on is trying to make sure we design a ClickList model that can scale to whatever the volume it scales to. So if it’s 5% of the business, we’ll do fine at 5%. If it becomes 20%, we’ll do fine at 20%. Our team has really done a lot of work to try to make sure we’ve designed a model that can scale, and scale from a profitability standpoint. And the customer will lead us to what percentage they want it to be.”
McMullen’s statement indicates that retailers as a whole can’t bite off more than they can chew when implementing the system. We’ve seen in the case of Target that not all major retailers have had success rolling out a curbside pickup system. With Target particularly, because curbside pickup discouraged customers from going into the store, the retailer may have been worried about the loss of impulse sales.
With The 2016 Grocery eCommerce Forecast revealing that the number of U.S. shoppers buying groceries online was set to double from 8% to 17% this year, online grocery as a whole is breaking out of its infancy period. Jumping on this opportunity in the way Kroger or Walmart has, at least in the U.S., can potentially be a huge factor in building the reputation of retailers’ online grocery programs going forward. The report revealed that 64% of online grocery shoppers say they would be likely to switch retailers in search of an exceptional e-Grocery experience, making it even more pivotal for these early adopters to get the service aspect down pat.
