Costco does not blow in the wind with every change that sweeps into retail. Its financial success is evidence that its unique, slow pace of change is working. This cautious approach will not work for most retailers and eventually it will cause customer abandonment and revenue losses as the CNN story suggests. However, before this becomes critical, Costco will roll out curbside pickup like everyone else. This has been the approach Costco employed with its slow-moving roll out of e-commerce. While Costco was late to the online game it never lost revenue momentum thanks to its unique membership model and the strong loyalty of its customers.
Good question. I have always thought BOPIS was a good option for the retailer because it drives (literally) shoppers to the store, which creates foot traffic and additional/impulse sales (potentially) and is less costly than home delivery. For shoppers, I guess they want to eliminate fees and tips associated with home delivery. I know I have done BOPIS in the past for purchases from Best Buy (when there was no home delivery from the store available several years ago) to ensure the product was there when I drove to the store. Maybe there are other reasons. I would love to hear them.
Dark stores and ghost kitchens will definitely outlast the pandemic. The concept was experimented with prior to the pandemic in urban locations and the explosion of at-home ordering, thanks to the pandemic, has confirmed there can be ROI in the model. The keys to success will be execution with a lot of automation and customer analytics to predict buying patterns, specifically at the hyper-local level.
Good point about tailwinds for essential retailers, however electronics are sold everywhere, especially online. I believe the electronics category is the number one category in e-commerce and for Amazon, too (although not its most profitable category). Normally this would not bode well for an electronics retailer. However Best Buy has been investing in omnichannel for years and is very good at it. It has also invested in core systems that enable fast, scalable marketplace adjustments, such as curbside service. These investments have been decisive.
After all the good comments let me add one: families with kids need something fun to do that does not involve a blue screen. So many previous kid-friendly options are closed right now -- play dates, organized sports, camps, lessons and even school -- so parents are turning to the outdoor categories. The current boom will not be sustainable at this high level, but retailers have a clear opportunity to convert a new cohort of parents and children into lifelong fans. Personally, I am glad to see it.
We call them shopping malls but they are really real estate operations with a current focus on retail. In the future, the focus by many B, C and D class malls will not be exclusively retail. It is in their self interest to make deals with Amazon or any business that will fill empty spaces left by retrenching brick-and-mortar retailers, so I believe these kinds of deals will expand.
One interesting retail story that is relevant to this thread is about Vornado Realty Trust, which currently has assets of $18.7 billion and just signed an agreement with Facebook leasing 730,000 sq. ft. of office space in NYC. Vornado started out as a mass-merchant-type retailer and boomed through the 1950s and '60s however, in the '70s it began to make more money by selling the property under its 200 stores. By 1980, it began the process of moving out of retail entirely and becoming a real estate trust and has since operated on an arc of steady and reliable success. Some less successful malls will no doubt try to emulate this arc.
Why speculate when you can look at Kroger, which increased profits by 57% YoY in the last quarter when grocery delivery was sky high? Walmart's profits increased by just 3.9% and Target's decreased by 64% in the same period. Kroger nailed it by investing heavily in analytics, robotics and omnichannel. I wrote about how Kroger did this in a recent blog. One thing I didn't focus on was pricing. Kroger's pricing model is brilliant. It keeps prices competitive in-store by enabling shoppers to get sale prices by using their loyalty card. However, home delivery shoppers pay full price and Kroger keeps the difference.
I believe the word "essential" has been permanently added to our vocabulary and the implications are profound. When I see "mask refuseniks" in videos screaming in Costco after being denied service, I hear them saying they have a right as citizens to shop there anyway they want as if Costco (and other stores) are an essential part of their lives. Retailers should adopt "essential" as a business model, especially brick and mortar retailers. Others, such as clothing, fashion and luxury, should focus on convenience, service and online.
Vitriol by members of the public (shoppers or anyone) was not born this year due to a shift in our political discourse or the pandemic. It has occurred regularly, consistently and often without public witness. What is different this time is that videos are being taken and posted. I am all for it.
Everyone agrees retailers need more agility and visibility in their supply chains, which to me sounds like words out of a dictionary. The question is how? I agree with Paula that the supply chain has become efficient in terms of cargo ships, freight trains, big-rig trucks, containers and crates. So shift the hard work of supply chain transformation to optimizing inventory at the commerce level. Focus on inventory in stores, fulfillment centers, e-commerce channels, digital platforms, last-mile delivery, and direct-to-consumer. This is where the rubber meets the road, where sales and profits are maximized. Do this by using dashboards with real-time visibility, folding customer metrics into forecasting, shift away from massive to local, and invest in advanced technologies ( IoT, AI, machine learning, blockchain, and robotics) to improve operational speed.
Stitch Fix seems to care more for lowering labor costs than focusing on driving customer satisfaction and increasing purchases-per-customer. By treating employees as interchangeable units of human capital, Stitch Fix, like Facebook (which is in a category by itself due to recent actions by Mark Zuckerberg), is in danger of damaging its reputation and weakening engagement with its customers.
If you don't want your stores becoming the next coronavirus hot spot like the meatpacking plants, you should do everything in your power to prevent sick people -- staffers or shoppers -- from spreading the disease in your stores. Taking temperatures during a pandemic seems like a reasonable step to take for a national retail chain.
Mark, retailers have to make this call -- difficult or not, with national guidelines or not. We may never feel as safe at work as we once did, or at least not for some time to come. So to paraphrase Mohamed Amer, "you deserve hazard pay when you work in hazardous conditions."