The retail industry, especially grocery stores, are huge businesses - they made $674 billion in the US in 2017. However, this comes at a cost, very close to this revenue; the profit margins of these stores tend to be very thin. Therefore, retailers are doing whatever they can to receive more business from customers.
One approach is the offering of curbside pickup, where customers order groceries online or on the phone and then pick them up outside the store, similar to how one would order Starbucks or meals to-go. Grocery store chains like Publix and Kroger have started to offer this service recently, but one notable chain is Walmart. Not only do they offer curbside pickup for free, but they've also advertised it during the Golden Globes award ceremony to promote it.
It's pretty obvious why consumers would want to use curbside pickup - it saves time, it gets what they want, and it saves a lot of hassle of having to find the food. But it's also appealing to retailers - it's much cheaper and more profitable than the other convenient alternative, delivery. It's expensive to hire someone to find groceries, take them outside, and then load them on a truck to drive to customers's doors.
Consumers also enjoy curbside pickup more than delivery - delivery trucks can get stuck in traffic, causing the delivered products to melt or limp or wilt, and if the consumer notice there's something missing or incorrect in the order, it's easy to correct it with curbside pickup than with delivery.
Although consumers tend to be demanding when it comes to the promptness of the curbside pickup, it sees clear results: according to Jaron Waldman, CEO of Rakuten Ready (a key developer of technology for curbside pickup apps), customers who receive their order in two minutes or less are four times more likely to order again with the retailer than if the order took ten minutes or more.
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It's interesting to see that many grocery chains are taking shifts to try and greater assist the consumer in shopping. Another example of this is Amazon's free grocery delivery service. The fact that many grocery chains are taking these actions, as you mentioned, suggests that the additional revenue gained by making shopping easier for consumers outweighs the costs of providing these services.
ReplyDeleteI think this post highlights peoples willingness to pay for quicker delivery of any goods because they get utility faster. Just as Luke talked about Amazon delivery services, it is the same thing with all their other deliveries. Consumers are willing to pay extra money for same day delivery because they are more impatient and want to receive goods faster.
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