Costco under way with limited test of grocery curbside pickup
After previously not offering a click-and-collect option, Costco Wholesale has begun managing roadside pickup for groceries at several warehouse clubs in New Mexico.
Costco, of Issaquah, Washington, has not officially announced the test, but a page on the retailer’s website states that Instacart’s Costco Curbside Pickup will be available to members at three clubs in Albuquerque, NM on the same day. Users can choose from a selection of approximately 2,000 foods, including fresh foods and some non-food products.
To access Costco Roadside Pickup, members go to Costco.com and click on Grocery. Select “Same day delivery” and then “Collection”. Then they choose the pickup location of the club and start shopping. Costco noted on the website that the online pick-up shopping cart, which uses Instacart technology, is not part of the Costco.com virtual shopping cart and requires a separate checkout.
Pick-up times are offered in hour-long windows, and Costco has reserved parking spaces in each club that provide roadside service. Costco sends members an SMS with status updates on their orders. When the groceries are ready to be picked up, they will receive a message about where to park and how to check in. Costco staff prepare the orders and bring them to members’ vehicles.
Costco said on the website that there is a $ 10 fee per order to pick up and a minimum purchase price of $ 100. Product prices for roadside service are what the club says when the order is placed, the company said. Members receive 2% cashback when they use Citi’s Costco Anywhere Visa Card for their pick-up purchase. Roadside transactions are also eligible for the 2% annual premium in Costco’s Executive Membership Plan.
Costco first partnered with Instacart for same day delivery in 2016 and is now offering this service through all of its clubs. However, the retailer has so far held back on in-store pickup, save for a few items with large tickets that are less suitable for home delivery.
Regarding the implementation of pickup, the company has concerns such as the use of space in clubs for gathering and holding orders, reserving areas in its busy parking lots for roadside service, disrupting club traffic and potential impulse buying, as well as the Costs listed.
Richard Galanti, chief financial officer, mentioned the cost issue on a conference call last month specifically on Costco’s first quarter 2021 results when analysts asked if the company would reconsider its stance on offering online purchase and in-store pickup.
“We don’t think about it. We keep looking and scratching our heads a little. We don’t have a current plan right now, ”Galanti replied to a question from Wells Fargo Securities analyst Ed Kelly.
On the conference call, Galanti told BMO Capital Markets analyst Kelly Bania that Costco is still calculating the cost equation for the pickup.
“One of the challenges right now is that many of the traditional retail promotions where you buy online and in-store for pickup are the same price as you [to the club] and buy for. So somebody pays to pick it up and keep it and waits for you to pick it up, ”Galanti explained. “I think that will change over time – someone has to pay for it, either the company or the customer. We look at all of these things. But we didn’t make a decision to continue. “
The use of in-store, roadside pickup and home delivery has increased as more Americans seek contactless grocery shopping during the COVID-19 pandemic. Consumers tended to pick up on fulfillment, however, with Costco competitors like Sam’s Club, BJ’s Wholesale Club, Walmart and Target reporting strong results for the service.
According to the Retail Feedback Group’s latest U.S. online and in-store grocery shopping study published in December, 51% of online grocery shoppers used pickup, up from 47% in 2019. Forty-nine percent of those shoppers used the delivery service from 53% in 2019.
Overall, the U.S. online grocery market had sales of $ 8.1 billion in November, up 3.6% since August. This is the result of the latest survey by Brick Meets Click / Mercatus Grocery Shopping. The study found that US households, 60.1 million US households, placed an average of 2.8 online grocery orders per month, with delivery and collection accounting for 73% of sales. Active delivery and pick-up buyers reported a record repetition rate of 83%, indicating high levels of satisfaction with these services, said Brick Meets Click.