Business model

Is curbside pickup a viable business model? – RetailWire

April 04, 2022

The startup Fresh Street has open Chicago’s first curbside pickup grocery store with the promise of saving shoppers time and money.

“My family and I have experienced the frustrations and inconveniences that plague today’s online grocery options,” Fresh Street CEO Mike Sayles said in a statement.

The first location, measuring 10,000 square feet on the border of North Park, West Ridge and Lincolnwood, offers more than 4,000 SKUs, including national and local brands. Orders are available for pickup within 30 minutes.

Focusing solely on pickup eliminates delivery scheduling issues and avoids the often higher prices of online grocery shopping. For grocers using Instacart or Shipt, the cost may include higher markups, as well as delivery and service charges.

Sidewalk-only also offers at least some of the convenience of online shopping.

“Our core demographic is made up of very busy families,” Sayles said. Block Chicago Club. “You get to a point where grocery shopping is less of an experience and more of a chore.”

The platform has a ‘no substitution’ rule to improve efficiency, although management says it’s ‘very rare’ for an ordered item to go out of stock due to real-time visibility of the model. The location has six designated parking spaces — about double that of a typical grocery store in the area — with an initial capacity to serve about 2,000 customers per week.

“We’re focused on faster turnaround times, better uptime, getting people in and out of their parking spot faster – we should be able to do it in less than a minute,” Sayles told the Chicago Grandstand.

Many households have discovered a recovery during the pandemic with eMarketer estimating 35 percent of Last year, digital grocery sales in the United States were clicks and collects. A Mercatus investigation compared to last year, 31% of U.S. grocery shoppers preferred curbside pickup, before delivery at 24%, but behind in-store at 44%.

e-marketer recently released “US Click-and-Collect Forecast 2022” reporthowever, determined that the overall growth in curbside pickups was “well below” expectations. E-marketer wrote, “The era in which click-and-collect options dramatically changed the dynamics of e-commerce and in-store shopping appears to be over.”

DISCUSSION QUESTIONS: Will a grocery store with curbside pickup be attractive to a large number of consumers? What is likely to be the key to Fresh Street’s success from an execution perspective?

Braintrust

“If Fresh Street can deliver on their promises, keep prices low, and successfully fill orders correctly, they have a successful model.”

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