Consumers are shopping online, but are still willing to pick up in stores

Julia La Roche

Even with the continued rise of e-commerce, shoppers still appear willing to go to physical store locations to pick up their orders.

According to recent management commentary from earnings calls compiled by The Transcript, a weekly newsletter, retail executives still report brisk foot traffic despite the broad shift toward online shopping.

"Being able to have the broad selection that customers are coming or accustomed to online, but being able to pick it up in stores resonates with lots and lots of customers,” Nordstrom (JWN) co-president Erik Nordstrom told investors and analysts on the department store's earnings call this month.

“Just looking at a lot of retailers’ results these last couple weeks, seems to me there's a pretty common thread there of some successes in various categories of companies doing this," he added.

In recent years, Nordstrom has experimented with new physical retail formats — specifically its Nordstrom Local neighborhood hub, which first opened in 2017 in Los Angeles, the retailer's largest market.

What the retailer found is that customers at those local hubs typically spend 2.5 times more, and they account for 30% of order pickup volume, based on the most recent quarterly results.

Another retailer focused on investing in its physical and digital infrastructure is Target (TGT), whose stock hit an all time high after it delivered strong second quarter results.

The big-box retailer has seen some of its most rapid growth from the in-store pickup, and that's increasingly becoming a preferred fulfillment choice for customers.

Drive-through and in-store pick up options “have more than doubled over the last year, accounting for nearly three quarters of Target's 34% digital comp in the second quarter," COO John Mulligan said on the earnings call.

The retailer’s CEO, Brian Cornell, noted that customers are still shopping in the stores on a regular basis. However, they like the convenience of ordering online and picking up in store.

"So we are seeing traffic and interaction and engagement with our brand continue to grow and I think it's that wonderful combination of great store experience and the suite of fulfillment capabilities that we are now offering that's driving great engagement and greater traffic visits to our stores and to our site," Cornell said.

Separately, Home Depot (HD) noted a 50% surge in all of its online orders picked up in store during the quarter.

The Nordstrom store is pictured in Broomfield, Colorado, February 23, 2017.REUTERS/Rick Wilking

"While our stores remain the hub of our business, we know that many of our in-store sales are influenced by online visits and approximately 50% of all online U.S. orders were picked up in our stores during the quarter,” CEO Craig Menear said on the call.

“Our customers continue to blend the channels of engagement, and we are investing to remove the friction as they do so," he added.

Part of Home Depot's physical and digital strategy includes the rollout of automated pickup lockers for online orders. Over 1,100 stores with these lockers have seen their checkout scores increase 250 basis-points, versus the locations without the offering.

With all that in mind, a number of retail giants are ramping up delivery options to satisfy rising demand.

This summer, Nordstrom upped its available inventory for next day pickup, by offering seven times more selection in its Los Angeles area stores. This move resulted in sales from order pickup nearly tripling in the month of July.

What’s more, during the retailer's anniversary sale, transactions from pickup more than doubled, and nearly half of those customers used pickup for the first time. The customers who used order pickup doubled their overall spend, Nordstrom noted.

Going forward, the company intends to leverage its physical and digital assets in New York City, its largest market for online sales, with the opening of a flagship store and two local formats this fall.

Julia La Roche is a reporter at Yahoo Finance. Follow her on Twitter.

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