As vice president in Gartner Supply Chain Research for the retail industry, Tom Enright keeps a close eye on supply chain strategies. So, when the COVID-19 pandemic upended retail — and made curbside a viable option — Enright took a deeper look.
In late June, he published new research, “Keep Your Distance: How Retail Curbside Fulfillment Allays Consumer COVID-19 Concerns.” NRF spoke with Enright about the report and his thoughts on the long-lasting impacts of curbside pickup.
You’ve just recently completed research into the issue of curbside pickup and its role in the pandemic. What are some of the most surprising findings?
The approach retailers took to accelerating their developments took them well outside their normal comfort zone. Having to cut corners and put some manual things in place that actually work, the consumer experience was still good enough for consumers to use.
Before COVID-19, if you had asked a lot of these retailers, “Do you want to develop a curbside service?” they would have said yes, but offered a long lead time, piloting, testing, caution, risk avoidance. It may have taken 18 months. In some cases, some retailers stood up a service overnight and certainly in days.
That could give them greater confidence that they don’t need to be as cautious as they normally might be in the future. I wouldn’t say what has been put in place is a foundational piece that every company can build on. The methods are rudimentary and won’t be part of a long-term plan. Some will have to go back and reconfigure to go forward.
What are some examples of retailers who successfully deployed or improved curbside during the pandemic?
There are a number that stand out. Kohl’s expanded its curbside service. Michaels stood up a service virtually from scratch. We saw Best Buy, which in December had curbside in about 100 stores, add the service temporarily to virtually 1,200 stores before they had to subsequently close. Rather than do what some companies did, get curbside because the stores were closed, Best Buy tried to get it up and running as a preemptive strike in many ways. They were utilizing their parking lots as best they could. Their message was, “If the product’s inside the store, one of our associates will be happy to go get it for you while you remain in the car.”
One other example that we found, Willowbrook Mall in Houston, launched a curbside service at the mall rather than allowing individual retailers to do it. They’ve partnered with 12 or 15 retailers, many of whom have stores inside the malls. Product is landlocked behind shutters, but they’re able to get it out and get it to the curb. We might see more of that in the future.
I wouldn’t be surprised at all to see malls develop a multi-retailer curbside area. Rather than pick up at each store all the way around, there is a designated area for each retailer that wants to participate. That’s going to be an interesting development.
Curbside today is largely a collection process, but returns could expand its appeal. You might be able to return something without getting out of the car. Now you have even more reasons to use curbside.
Retailers need to be able to present products with potential upsell appeal to consumers during the curbside collection process.
What do retailers need to do to launch or improve curbside offerings in the future?
The age-old issue of store inventory accuracy has to come into play. Curbside could be the catalyst that gets companies thinking about how to improve that.
With curbside, you don’t have the safety net of a distribution center to bail you out. Generally speaking, the store is self-sufficient. If a retailer has an existing buy online, pick up in store service, that’s a very good starting point.
But only about one-third of retailers in the United States have BOPIS. That acts as a foundation for them to go on and extend to curbside. It doesn’t mean curbside couldn’t be delivered without BOPIS, but it’s likely to be a newer experience that isn’t as slick.
Other, more longer-term criteria would be the development of a distributed order management system so they’re more systematically able to route the order to the store for curbside. From an accountability or visibility view, the inventory will be consumed by an order management system. Retailers with large stores might need to invest in store logistics capabilities to really be able to scale up the volume of picking they’ll need to do to make it efficient.
A couple of things to be aware of: BOPIS tends to attract an upsell rate. The consumer can spend an extra 10-15 percent of the value of the order being picked up. That’s a fundamental part of a BOPIS business case. But that upsell is harder to realize when the consumer is in the car.
Retailers need to be able to present products with potential upsell appeal to consumers during the curbside collection process. Some are developing a pop-up kiosk approach to have those products close to hand. It’s a difficult thing to get right, as the assortment will be narrow and won’t appeal to everyone’s needs.
The other area is really around understanding the changes in consumer behavior that might come about as a result of the availability of curbside. Some of them are obvious: Everybody who buys something via curbside may buy one less thing using another method.
There also are products that have a great sense of curbside appeal that a store might not necessarily stock. There’s an opportunity to put those into stores because curbside will generate demand for it.
If they know consumers don’t like to carry in their carts any more than 10 to 15 pounds of pet food, but will buy 100 pounds if it is just placed in their car at curbside, stores may need to stock that larger bag. Equally, you then need to reduce the amount of the smaller bags on the store shelves because that customer is buying the larger bag at curbside.
The logic is obvious, but the analytics aren’t as prevalent as you’d imagine. One of the things that we talk to retailers about is, “You’ve got look at these services as part of a portfolio. Look at them individually to see how they work and how much they generate, but usually it’s the same shopper using both services.” That’s an important part of understanding how it can be improved.