Target, the retail giant, has launched a new service allowing customers to make returns without leaving their car. The curbside-returns service has been introduced to approximately a quarter of Target’s 2,000 stores nationwide and will be available across the chain by the end of summer. This move comes as Target seeks to attract and retain customers by enhancing its curbside-pickup service, Drive Up, and capitalising on its pandemic-fueled gains.
Click-and-Collect Sales Surge Amid Pandemic
As the Covid-19 pandemic drove a shift in consumer behaviour towards e-commerce, click-and-collect sales surged. In 2019, click-and-collect sales accounted for only 6% of overall e-commerce sales in the US; however, this figure increased to 11% in 2022. Retailers, including Target and Walmart, have moved to capitalise on this trend by increasing their click-and-collect services. Euromonitor, a market research firm, reports that click-and-collect sales are expected to grow by 8% this year, compared with 2% for delivery. The growth will be fuelled by consumers opting for curbside pickup to avoid delivery fees and shipping minimums, particularly given the current climate of heightened price sensitivity.
Curbside Pickup Service Enhances Customer Loyalty
Target hopes that the introduction of convenient perks such as curbside returns will boost customer loyalty and drive sales. The company believes that by removing friction from the customer experience, it benefits both the customer and Target, deepening their relationship. Target’s Drive Up service grew by more than 70% in the last fiscal year, on top of a more than 600% boom during the prior fiscal year. Sales fulfilled through Drive Up now account for more than half of digital sales as consumers embrace convenience. The company’s average fulfilment cost per unit has fallen by 40% over the past four years as same-day services grow.
Other retailers, however, have opted to eliminate curbside pickup. Kohl’s, for example, decided to end the service last summer and replace it with a self-pickup service inside stores. The decision was driven by the time and labour costs of curbside pickup, which can be hard to justify, particularly as it encourages shoppers to stay in their cars rather than step into stores where they may make more purchases.
Despite initial scepticism of curbside returns within Target, the company believes that lifetime customer value is more important than the economics of a single transaction. The introduction of curbside returns is expected to help the retailer get unwanted items back on the sales floor faster and lower the cost of mail-in returns. It also believes that curbside pickup still inspires browsing and other purchases. On average, approximately 20% of customers who pick up Drive Up orders also make an in-store purchase on the same day.
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