Shopper insights signal that grocery pickup’s potential and performance may be suffering from an unsustainable strategy. David Bishop from Brick Meets Click shares his views on what retailers need to understand and consider to address this issue.
Online order trends show that curbside pickup continues to capture a larger share of egrocery compared to delivery nationally. The trend applies even more so outside the top-ten metro markets in the US. This is because more households who shop online for groceries use pickup even though home delivery has been available for a longer time in the US. And, it’s because more households prefer to use grocery pickup, partially because it costs less than delivery and, in theory, they have more control over when they receive their online order.
However, insights flowing out of the Brick Meets Click / Mercatus Grocery Shopping Survey, covering the November 2020 period, illustrate that customer satisfaction for pickup lagged that of delivery in two critical stages of the shopping experience. So, what are the two stages? And what should retailers consider in order to address the likely root cause of each?
Selecting a time slot
Our November research found that pickup satisfaction scores trailed delivery by ten-percentage points when analyzing the share of very/extremely satisfied customers based on their ability to select a preferred time slot for one of these two respective service types.
While this point comes not from the insights, but rather from observations that we also capture, we believe the most likely cause reflects a capacity constraint that most grocers still haven’t addressed. And, the reason it’s affecting pickup and not delivery relates to the fact that delivery fulfillment is largely handled by a third-party provider while grocery pickup is the responsibility of the retailer.
Regardless, picture your customer trying to select a pickup slot at 11 am to discover the first available isn’t until the next day; however, if they toggled to delivery they could get something within two hours or maybe a little further out but at least the same day.
Now, if you think that a customer would do what I just described, please know that very few ever will. As a retailer, you risk losing this entire order if receiving the order the same day is important to the customer. If this claim shocks you, then have someone on your team analyze how many of your active households use both your delivery and pickup services over a one-month period.
The Brick Meets Click / Mercatus Survey in November found that only 15% of the active online grocery households across all online retail formats used both service types during the same month. To be clear, this includes only households that placed a delivery and pickup order whether used at one retailer or multiple ones.
And, if we only analyzed dual usage for a retailer, the dual usage rate would almost be cut in half. Even though this insight is from benchmarking that Brick Meets Click did in late 2019 with nearly 30 grocery banners who offered both delivery and pickup, it still does illustrate that households have a clear preference when it comes to how they receive online grocery orders.
Retailers can solve the capacity problem one of two ways. While they can simply add labor to increase throughput, the better solution is to improve your assembling productivity. In fact, Brick Meets Click quantified that implementing and utilizing an enhanced fulfillment approach to assembling online orders in the store could result conservatively in a 30% improvement in labor productivity.
So, from this perspective, it seems like a fairly straightforward decision; however, some retailers still view this an added and avoidable cost when ironically the avoidable cost is encountering higher labor dollars as a result of an inefficient pick-and-pack process.
Receiving a grocery pickup order
The other red flag, according to our November research, was that grocery pickup again lagged delivery, this time by over eight percentage points, relative to customers’ satisfaction with receiving their order in a timely manner.
A year or more ago delivery would have trailed grocery pickup, but the times have changed and fewer retailers have invested in the necessary tools, while third-party providers have introduced new features that have improved this stage of the delivery experience. For instance, push notifications, alerting customers that the order is on its way or the rise of unattended delivery, thanks in large part to COVID-19, means customers don’t have to guess when their order will arrive at their door.
Although customers are hopefully considerate to the challenges that retailers are currently facing, few people will really enjoy sitting idle in their vehicles for 5, 6, 7, or more minutes for a grocery pickup order – especially if there are any young kids in the backseat. However, the ugly truth is that this is still occurring and that’s not good for the customer and you.
Grocery retailers need to understand that customer's expectations relative to pickup wait times are being influenced by experiences elsewhere. For instance, the Brick Meets Click / Mercatus Survey shows the share of customers who shop online for groceries from a regional supermarket and a mass merchant during the same month continues to grow – in November 2020 the number had climbed over 20 percent.
If you haven’t experienced first-hand what it feels like to sit there waiting and wondering when your pickup order will be brought to your car, then give it a try. And, when you do, listen to Pink Floyd’s Comfortably Numb because it has a run time around seven minutes and that’s how you feel if you’re so unfortunate to wait that long. Then, do a Target drive-up order and you’ll wonder why a Target associate can bring your order out in under two minutes. Ask yourself, why does your store take what seems like forever?
Well, like with the assembling problem, there is a solution that’s been available since well before the pandemic. Geo-location tools are becoming increasingly commonplace given the importance and usage of mobile apps. And, these solutions dramatically reduce those annoying wait times for the customer almost the moment the retailer and customer begins using them.
And, while this won’t come as a surprise, many retailers still are hesitant because it adds cost. Which, while that’s true, it reduces customer churn by minimizing the likelihood that your customers will say, “hasta la vista”. It may even give you a leg up on those mass merchant retailers when your customers share their positive pickup experience at your store with a friend or neighbor.
Is it strategy or execution that’s causing CuSat issues?
It’s both; however, not taking advantage of solutions that address these problems now illustrates that it may be more a strategic issue. This doesn’t surprise me if this is the case as I’ve come to realize that many retailers actually don’t have a sound omnichannel strategy and that’s a whole other conversation for another time.
If you’re nodding your head, then I’d suggest your next team retreat or meeting start by placing a pickup order together to see how soon it could be ready, then finish by having you all pile into a vehicle to experience what your customers are experiencing.
To learn more about Brick Meets Click, contact David at [email protected]
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