Some analysts aren’t sure the retailer can implement in-store pickup for holidays.
A Target employee pushes shopping carts inside the Target Corp. Store in Torrance, California, U.S., on Tuesday, August 20, 2013. Target is expected to announce quarterly earnings results on Aug. 21, 2013. Photographer: Patrick T. Fallon/Bloomberg
With less than three months left until the official start of the holiday shopping season, Target Corp. is furiously playing digital catch-up.
The Minneapolis-based retailer is introducing a service that allows consumers to pick up online orders in stores, something already available at Wal-Mart and Best Buy Co. Target wants to roll out the service, known as Buy Online, Pick Up in Store (BOPS), to all of its 1,800 stores in the United States by the time Black Friday shoppers hit stores in late November.
“We continue to invest to further integrate the shopping experience across channels,” CEO Gregg Steinhafel recently told analysts. “We will begin in the Minneapolis market before expanding the role to other markets. We expect to complete the role to all stores by the holiday season.”
Later this year, Target also plans to have its employees test whether they can retrieve digital purchases in stores the same day they bought them. The company also is exploring whether shoppers can buy something at one store and pick it up at other locations.
But some analysts doubt whether Target can effectively offer even the basic BOPS service by the holidays.
Under the plan, shoppers place orders on Target.com, which then identifies the closest stores that carry the merchandise. A store employee then plucks the product off the shelf and leaves it for the customer to pick up at the guest services desk.
The company declined to disclose additional details but said some products, such as special sale items, will be excluded.
Rewiring inventory systems at all 1,800 stores in time for the holidays is a tall order, especially for a retailer that recently has struggled with supplying the right amount and assortment of goods to stores in Canada, said Amy Koo, an analyst with Kantar Retail consulting firm in Boston.
“It’s a huge operational challenge,” Koo said. “I’m curious to see how Target plans to pull it off.”
Consumers will not be happy if an item they ordered is not available or ready to be picked up as promised, said Danny Silverman, vice president at the consulting firm Etailing Solutions, which advises companies on e-commerce.
“It’s about meeting customer expectations,” Silverman said. Harried holiday shoppers “just want to get in and get out of the store as quickly as they can.”
Analysts, though, say most consumers are not familiar with in-store pickup and the ones who do use it view the service as a perk vs. a necessity.
Nonetheless, the option is gaining popularity rapidly as Internet sales continue to soar: In 2012, e-commerce sales jumped 15 percent to $186 billion.
An effective in-store pickup option can drive real customer loyalty, according to a recent study by UPS and comScore.
About 44 percent of surveyed consumers said the service was a key factor that determined the likelihood they would shop at a particular retailer.
“Every retailer needs to be doing it if they want to [win over] consumers who like different options when they order merchandise,” Koo said.
But offering the service is one thing; doing it well is quite another. The UPS/comScore report said only 55 percent of consumers were satisfied with the ability to pick up goods at retail locations they found convenient.
Interestingly enough, some experts suggest that BOPS could actually decrease a retailer’s overall sales.
For example, Silverman of Etailing Solutions said the service might hurt “impulse sales” at stores if a customer visits a store just to pick up an order, whereas regular customers waiting at checkout might see something else they want to buy.
That might pose a problem especially for Target, whose entire strategy depends on convincing shoppers to load up their carts as much as they can with every visit.
In any case, retailers such as Target feel they need to offer every service that customers expect.
“I think the key for us is just the convenience for guests,” Kathy Tesija, Target’s executive vice president for merchandise and supply chain, recently told analysts. “Sometimes they don’t want it delivered and sitting on their door step, but oftentimes they want to be able to get other things in the store, either that go along with that core item or just the rest of their list. So we think it will be very interesting to our guests.”
Thomas Lee • 612-673-4113