TGT Target Corp

By Sarah Nassauer and Khadeeja Safdar 

This holiday season one way traditional retailers hope to wrestle sales from Amazon.com Inc. is by making it easier for shoppers to buy items online and pick them up in stores.

Retailers including Wal-Mart Stores Inc. and Target Corp. are investing heavily to smooth pain points that have kept store pickup in the shadows of home delivery, Amazon's sweet spot.

Wal-Mart is making more products available for same-day store pickup, staffing the pickup counter with more workers and stocking inventory closer to those workers to shorten wait times, a key consumer gripe. Pickup orders surged last holiday season and the retailer expects an increase this year, company executives said Wednesday.

For the first time, Target is using a separate team in stores dedicated to fulfilling orders for in-store pickup. The chain has also invested in technology that helps track products in stores so workers take the most efficient route to collect those orders.

"We're in a different place today than we were 12 months ago" on order pickup, Target Chief Executive Brian Cornell said Tuesday.

Retailers with physical stores have scrambled to fend off Amazon, crafting ways to deliver goods to shoppers' homes and making stores an asset in the e-commerce race, including curbside pickup and delivery from stores.

"The large store-based retailers realized that if they want to compete with online retailers they need to leverage the strategic asset of the store," said Steve Barr, retail consultant at PwC.

In parallel, Amazon is exploring ways to take a bigger bite out of physical retailers' business by opening small grocery stores selling fresh food, The Wall Street Journal reported earlier this month.

About 21% of Americans say they use in-store pickup regularly and 48% say they use it "on occasion," according to a PwC survey of more than 2,100 people from earlier this year.

Getting more shoppers to pick up orders would be a welcome shift because retailers earn less when shipping directly to a customer's home. Many shoppers also keep buying once in the store to retrieve an online order.

Wal-Mart has invested billions over several years to improve its stores and boost e-commerce sales, including raising worker wages and purchasing discount online retailer Jet.com Inc. for $3.3 billion in September.

In past years pickup at some Wal-Mart stores felt like "organized chaos, " said Tony Gonino, a store manager for a Wal-Mart in Dearborn, Mich. In his store the pickup counter shared space and workers with the layaway service, a combination that slowed lines as layaway customers filled out lengthy forms to buy big ticket items. Now the store is placing the layaway cashiers in the garden center, giving pickup its own space.

Inventory at a cavernous Wal-Mart store always swells over the holidays, often requiring semitrailer rentals to keep up, but pickup orders have aggravated the issue. The back parking lot of the Dearborn store was filled last year with semitrailers to store layaway and pickup products. Store workers "in a blizzard, think, 'Awesome, I have a package to go pick up in back,'" for a shopper, said Jim Winkler, regional general manager for Wal-Mart in an August interview.

This year Wal-Mart has reduced inventory overall and is stocking products higher on shelves, clearing out the backrooms in some stores. About 1,000 of Wal-Mart's around 4,600 U.S. stores have also carved out space for pickup products near the front of the store, further speeding wait times, Judith McKenna, chief operating officer for Wal-Mart U.S. said this week. Store workers aim to bring shoppers their order in less than five minutes.

Target is testing separate locations and dedicated register lanes for order pickup in a number of stores. In September, the company began remodeling 82 of its top-volume order pickup stores to improve the service, adding more space, signage and dedicated registers.

Most shoppers still prefer home delivery, say retail consultants. There are signs that shoppers favor in-store pickup for certain occasions, said Trent Miller, an executive at Wal-Mart. For now, he said, the primary users are reserving in demand products like hot toys, buying "giant items" which shoppers need help bringing to their cars or as a theft-free alternative to home delivery.

Write to Sarah Nassauer at sarah.nassauer@wsj.com and Khadeeja Safdar at khadeeja.safdar@wsj.com

(END) Dow Jones Newswires

October 27, 2016 10:09 ET (14:09 GMT)

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