Curbside Pickup Picks up Steam With Convenience, Speed and Digital Payments

Curbside Pickup Picks up Steam With Convenience, Speed and Digital Payments

Curbside Pickup Picks up Steam With Convenience, Speed and Digital Payments

John Carroll

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels.

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Jan Grogan drives her blue Volvo to Walmart to pick up groceries that she ordered online the night before. She pulls her car into one of the designated parking spaces on the side of the building, where an employee meets her and confirms her $50 order.

Grogan has already paid for the groceries. She used a credit card online when she made her order.

The baby boomer pops the trunk, and within a few minutes she is all loaded up with groceries and ready to go home. This is how Grogan rolls these days. She really likes the new grocery shopping pickup service, which is ideal for her and her busy schedule.

As more consumers like Grogan move to online and mobile ordering, it's no surprise that curbside pickup, facilitated by smartphone apps and digital payments, is experiencing growth with restaurants and retailers. With giants like McDonald's, Chick-fil-A, Target and Nordstrom installing parking spaces for curbside pickup, off-premise shopping and dining is becoming an even larger piece of the retail pie. Brands must keep up with the trend or risk falling behind, analysts say.

"Curbside pickup is the fastest-growing part of the retail and restaurant business," says Brian Yarbrough, senior research analyst at Edward Jones, where he follows the retail and restaurant industries. "It's usually a higher-ticket item, and retailers are doing it to compete with Amazon."

Consumers who value the convenience and immediacy that mobile options provide largely drive the curbside pickup trend, also known in the industry as 'click and collect.' Nearly 15 percent of consumers used a click-and-collect service in 2018, a roughly 67-percent increase over 2017, according to a recent study by customer experience firm Market Force Information.

The concept is simple: A customer places an order online and pays with a payment card or through a mobile app, then drives to the destination and parks outside in a reserved spot, where a runner brings the food or goods to the car.

"It's the cost of doing business today. If you're not doing it, you're falling behind," says Yarbrough.

Challenges and benefits

To keep pace, retailers must offer customers an omnichannel buying and payment experience, whether it's in-store purchasing, purchasing online with home delivery, buying online and picking up in-store, or buying online and picking up outside the store.

While Walmart offers its curbside pickup service for groceries only, other retailers such as Nordstrom and Target offer curbside services for most anything in stock. Yet, two challenges retailers face with curbside pickup are increased operational costs and the loss of impulse buys.

"Now you are paying an employee to pick and pack versus a customer doing it," says Yarbrough. "And you do lose the impulse buy with consumers who might buy extra items while they are in the store."

Despite these challenges, there are definite advantages and benefits to curbside pickup. First and foremost, retailers can build brand loyalty with customers by offering same-day order and pickup, fast digital payments and easy-to-use mobile apps. "So far what we're learning is consumer satisfaction is very high on these offerings," says Yarbrough.

Another benefit of curbside is attracting diverse demographics, such as parents with young children, seniors and people with mobility issues.

"It potentially allows you to attract a different consumer base and shift shoppers to your brand from Amazon or other online businesses," says Jeffrey Neville, senior vice president and practice lead at BRP Consulting. "If you can offer same-day order, same-day pickup, that appeals to some people."

Illustration showing omni-channel buying experience: in-store purchasing, purchasing online with home delivery, buying online and picking up in-store, buying online and picking up outside the store.

Reducing shopper stress

Convenience, speed and making payments easy are three keys to a successful curbside program, says Neville. Plus, new vehicle location technology used by some retailers and restaurants expedites the curbside experience for customers.

"A lot of retailers are offering mobile apps now for easy ordering and paying," says Neville. "You pay with Apple Pay or link your credit card to the apps."

He believes stores with curbside services will make up what they miss in impulse buys by increasing purchase frequency and attracting new customer segments.

From a consumer perspective, Neville says one of the obvious benefits of curbside pickup is reducing stress in people who have busy lives. "I'm stressed about going to Target, finding a parking spot, navigating all of the aisles and dealing with long lines and a lot of people," he says.

An alternative to the often-crowded drive-thru lane, the curbside pickup trend also drives the growth of cars as a place for commerce. And in the future, the service could align well with the emergence of self-driving vehicles and connected cars.

"When you combine this [curbside] feature with self-driving vehicles, I can send my car out to do my errands and essentially complete a curbside pickup with nobody in the car," says Neville.

Laura Kennedy, a retail consultant with Kantar Consulting, says curbside pickup is the next iteration of the industry-wide trend in retail toward e-commerce and convenience.

"It's the continuation of the general trend around convenience," says Kennedy. "Consumers are demanding this service. Consumers want options and flexibility, and some don't want to even have to get out of their car."

But curbside pickup doesn't work for all retailers. In December, CVS discontinued the service after launching it with much fanfare in 2016. On its website, the pharmacy chain doesn't give a reason for jettisoning its curbside pickup program other than to say, "That service is no longer available."

Yarbrough believes smaller retailers with less floor space, like CVS, will have a harder time making curbside pickup worthwhile, compared to big-box retailers and large department stores, like Walmart and Nordstrom. "For some retailers and restaurants, it's not going to be successful because it’s hard to make money off of it," he says.

In the short term, however, consumers like Grogan at Walmart will continue to use curbside grocery pickup as long as it's available. Grogan's husband is a disabled veteran, so curbside pickup makes sense to her, especially when they shop together. "It's easy and convenient and works for my family," she says.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by John

John Carroll

John Carroll is a writer and editor at TSYS who follows and writes about the payments industry. He has more than 20 years of experience writing and editing content for various news, marketing and technical channels. His articles have published in the Atlanta Journal-Constitution, the Columbus Ledger-Enquirer, the Daily Report and Georgia Trend.

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