At Macy’s department store in Flushing, New York, the office that allows online shoppers to pick up their orders rather than waiting for them to be delivered is usually busy. That’s even truer now, as consumers burned by late deliveries in the last holiday season fear chaos in the country’s supply chains could cause even more serious delays this year.
Providing consumers with the ability to order online and pick up at a store is nothing new: Groups like Circuit City and Sears were hailing the integration of “clicks and bricks” 20 years ago. But the surge in online orders and distribution network bottlenecks triggered by Covid-19 make it more important to U.S. retailers this year.
Almost one in five online orders were collected from stores in the first half of this year, up from 16.8% a year earlier, said Neil Saunders, chief executive of GlobalData. Retailers plan to “buy online, pick up in store” – BOPIS in industry parlance – to play an even bigger role in the next peak shopping season.
Office Depot this month announced a service that promises in-store pickup within 20 minutes of a customer placing an order online. Best Buy’s holiday promotions hail in-store withdrawals as a “safe and secure” way for consumers to get their e-gifts, while every Lowe’s store now offers contactless lockers for collection of products purchased on their site Web.
Consumers shifted much of their spending online last year due to security concerns about entering stores before vaccinations lowered the risk of coronavirus. This year, however, their online purchases are driven more by convenience than health concerns, according to Morning Consult. vote.
After 18 months in which traffic to stores has been well below normal levels, getting consumers to pick up their merchandise “offers retailers a chance to convince consumers again to enjoy experiential shopping,” said Melissa Minkow, Head of Retail Sector at CI&T, a digital consulting firm.
Online shopping and in-store pickup is also proving more popular among shoppers who fear shortages of trucks, drivers and other critical links in the supply chain are delaying the delivery of their gifts.
Retailers expect strong demand on the holiday, with Deloitte forecasting sales to rise 7-9% from 2020 levels, to $ 1.3 billion. But supply chains are so strained that retailers and consumers fear a repeat of the disruptions that led to the arrival of large numbers of orders at the end of last year.
Delays are likely again in 2021, said Mr Serkan Akturk, an assistant professor at Clemson University who has studied the in-store pickup phenomenon. The option also gives customers “insurance,” he said, as it allows them to inspect the goods and return them immediately if they are not satisfied.
For the retailer, he added, this also offers the advantage that customers can purchase additional items while they are in the store.
Chains, including Walgreens, have also attributed the dynamism of their online sales to these “omnichannel” offers. Rob Garf, general manager of retail at Salesforce, said retailers that offered in-store pickup last holiday season reported 63% higher digital sales for the five days to Christmas 2020 than those that didn’t. have not.
“Physical locations will be a critical part of digital strategies during this vacation,” he said, noting that the in-store pickup model saves retailers on shipping costs because it “essentially outsources the last mile. to consumers. . . This is essential because home delivery will be more expensive and slower this year, even more than in 2020. ”
Retailers were offering free shipping for online orders up to a week or 10 days before Christmas, but started limiting it last year on Cyber Monday in late November, said Taylor Schreiner, director of Adobe Digital. Insights. He predicted that rising “last mile” distribution costs would cause retailers to stop their free shipping offers even earlier this year, making in-store withdrawals more popular.
For those retailers who still do not have an in-store pickup service, however, launching a service can be “a little expensive” and “surprisingly difficult to execute” due to labor shortages and delays. technology systems needed, said Marc Rousset, Oliver Wyman’s retail partner. practice.
Thomas O’Hern, chief executive of Macerich, a real estate investment trust, echoed the message last month, telling analysts that small retailers who had tried to introduce pickup deals during the pandemic “were in sort of overwhelmed ”.
For large chains used to being overtaken by online-only competitors such as Amazon, however, the growth of in-store pickup has offered a rare advantage. With warehouse capacity at an all time high, physical retailers are increasingly using their stores as distribution centers.
“Retailers can just pick products off the shelves with this concept, as opposed to exclusive online shopping, where they distribute them from a warehouse,” said David Naumann, who leads Verizon’s marketing strategy for retail.
There are also products that consumers don’t want to wait a day or two, Adobe’s Schreiner added: “These are segments that you just can’t reach as a pure online store.”
However, Amazon is opening more stores, and consultants like Bob Amster, director of retail at Retail Technology Group, said it was difficult to quantify the market share stores with pickup services were taking from retailers by line only.
In-store fulfillment and pickup connect online and physical stores more closely than ever, Saunders said.
At Macy’s, this can have implications far beyond the pickup office in Flushing. Jana Partners, the activist investor, reportedly lobbied last week for Macy’s to follow Saks Fifth Avenue’s lead in separating its e-commerce business from physical stores in search of higher valuation.
The popularity of in-store pickup and other “omnichannel” strategies can complicate the case for activists, Saunders said, “It just doesn’t make sense. ”