Holiday Central

More holiday shoppers are rushing to the store to pick up online orders. That's a good thing

Key Points
  • Shoppers are opting to buy items online and pick them up in store.
  • Half of all shoppers have selected this option, up 44 percent from last year, according to a JDA survey.
  • Speed is a top reason why shoppers select this option.
  • Retailers save shipping costs, and have the potential to sell more items when shoppers come to the store. But they must efficiently staff pick-up counters and track in-store inventories.
Buy online and pick-up-in-store programs reviewed
Buy online and pick-up-in-store programs reviewed

Holiday retail has always been a game of one-upmanship: which retailer has the lowest price, the earliest opening time, the best inventory and the fastest delivery option.

For traditionally store-based retailers competing with Amazon this holiday season and beyond, it's about using stores as assets rather than hindrances.

Retailers like Target and Macy's are touting store pick up as a free, faster and a potentially more convenient option than ordering online and waiting for delivery — faster and more convenient maybe even than Amazon.

Wal-Mart offers a discount for many online items when you choose to pick up your order at a store instead of opting for delivery.

Kohl's has dedicated parking spots for shoppers coming in to pick up online orders. Lowe's is adding them next year.

Buy online pick up in store, or BOPUS as some retailers call it, used to be an additional offer to enhance the shopping experience. Today, it's all but expected by consumers, along with free in-store returns for online orders.

According to a JDA survey, half of consumers say they have used the option of buying online and picking up in the store in the last year, 44 percent more than when the company asked the question in 2015.

Speed is the top reason consumers cite when choosing to use stores for online order pick up, according to JDA's survey. Retailers like the option because when shoppers come to their stores, it saves the costs associated with running an online fulfillment center and the delivery costs to ship to shoppers.

The service is a widely used option at the big home improvement retailers. Lowe's has offered it since 1999, and 60 percent of its online orders are picked up in store. The home improvement retailer gets a benefit from that too. About 40 percent of those shoppers pick up something additional in store when coming to pick up their online orders, making both the online in store order pick ups and radiated sales among the highest of the big retailers.

At competitor Home Depot, 45 percent of online orders are picked up in a physical store, and 20 to 25 percent of those shoppers make an additional purchase.

Department stores like Kohl's and Macy's and mass merchants like Target see more shoppers opting to buy online and pick up in store during the holiday season.

Target spokeswoman Erin Conroy said on average 15 percent of Target's online volume is picked up in stores, and that increases during the holiday season. At peak times – like the days before Christmas – it rises to more than 50 percent of its online volume. One third of shoppers make an additional purchase once they arrive at the store.

Macy's and Kohl's say the additional items shoppers pick up in the store when grabbing their online orders add an average of 25 percent to the receipt.

"Since launching the [buy online pick up in store] service in all Kohl's 1,100+ stores nationwide in May 2015, we've evolved the process and made significant technology investments to make it ever faster and easier — not only for our customers — but also for our winning team of Kohl's associates who are fulfilling orders," said Sona Chawla, Kohl's chief operating officer.

But buy online pick up in store isn't without obstacles, for both retailers and shoppers.

For consumers that want to buy online and pick up in store the same day, a careful search has to be executed to make sure a specific store has that item in stock, in real-time. That's difficult, since a store's inventory changes constantly during business hours, as shoppers grab items off the shelves.

Further, in the online world, retailers can offer shoppers an "endless aisle." But in a store, there are space constraints. For example, Home Depot has over a million items on its website, while an average store stocks about 35,000. Thanks to a surge marketplace sellers, Wal-Mart has more than 60 million items available on its website, compared to 150,000 in a typical store.

When looking for same-day pick up, shoppers are typically looking through just an individual store's actual, and current, inventory position.

"Our customers love Pickup Today, including the ability to pick up select online items the same day from our stores," said Erin Hulliberger, Wal-Mart's spokeswoman. "It's so popular that we've tripled the number of items available for same-day pick up since last year.

Both Wal-Mart and Kohl's also offer shoppers the ability to notify the store when they are heading in to pick up.

The service does create a staffing challenge for retailers. The stores need to have sufficient employees to pull online orders for in-store pick up, while also serving customers in the stores with other needs. Pick-up counters also need to have the orders ready quickly, and be staffed to serve consumers as efficiently as possible, ideally avoiding long lines.

WATCH:  We put retailers' buy online, pick-up options to the test. Here's how they fared:

Retailers take on the delivery challenge. Here's how they fared
Retailers take on the delivery challenge. Here's how they fared

Macy's vs. Kohl's

Buy online, pickup in store challenge: Macy's vs. Kohl's
Buy online, pickup in store challenge: Macy's vs. Kohl's