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Costco to test curbside grocery pick-up in small market

1 month 1 week 1 day ago Thursday, January 21 2021 Jan 21, 2021 January 21, 2021 11:53 AM January 21, 2021 in News
Source: CNN

Costco may soon be joining the ranks of Walmart, Target, and Sam's Club in offering customers the option of curbside pickup instead of in-person shopping. 

According to CNN, the membership-only warehouse club is allowing three of its locations in Albuquerque, New Mexico to see how well customers and staff respond to the new service. 

Costco announced last week that it would start offering Albuquerque-area members the option of same-day pickup on 2,000 grocery and general merchandise items.

But the service is on the costly side. Customers must spend at least $100 to be eligible for curbside pickup, and a $10 fee is added to each order as the model "adds an additional expense to our low-cost business model and limited markup structure," the company says on its website.

The company previously offered pickup on an extremely limited basis, that only included costly items like jewelry and electronics. The reason? Costco officials said it was simiply too expensive to expand the service.

They also pointed to the fact that Costco locations don't have much room in their jam-packed stores and parking lots to pull off the logistics of pickup. Curbside service often requires a staging area inside the store for workers to assemble orders, extra cooler space to keep items fresh and dedicated parking spots for customers driving in to come grab their groceries. Officials couldn't envision how this would be possible in each store's current set up.

Despite these reason, some Wall Street analysts who noticed how popular curbside pickup became during the novel coronavirus pandemic questioned Costco's hesitation to expand in this regard.

Apparently, officials within the company began to raise the same concerns, as the company is now testing an expanded curbside pickup service in a small market.

Richard Galanti, chief financial officer at Costco, said,"We're always trying different things. We still scratch our head a little bit on it. We figured we'd try it in a discrete market where there's just a limited number of locations. And it's really nothing more than a test at this point."

Costco has dedicated parking spaces for customers driving in to grab their orders at each of the stores in Albuquerque, CNN explains. Employees prepare the online orders and bring them out to customers' cars. Customers will shop for orders and pay through Costco's website.

Costco's test comes as rivals, such as Walmart, Kroger and Amazon-owned Whole Foods, have also expanded their own curbside pickup offerings during the pandemic.

Costco's new pickup option has a higher minimum order threshold and fee than other chains. Walmart, Kroger and Whole Foods offer free grocery pickup for orders above $35.

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