Costco still holding out on offering online grocery sales, store pick-up option
While most retailers have jumped on the trend of offering customers the ability to buy groceries online and picking them up curbside or in-store, big box retailer Costco Wholesale is still not considering adding that option just yet.
During a conference call to discuss its quarterly results, Richard Galanti, executive vice president and CFO for Costco, said although the subject has been on the table “we haven’t made any decisions to go forth with it.”
“One of the challenges right now is there is a lot of the buy online and pick-up in store traditional retail promotions are at the same prices, which you can come in and buy it for,” he said.
“So, somebody is paying for the picking it up and the store is waiting for you to pick it up. I think that will shake you out to over time as people – as somebody has to pay for either the company or the customer,” Galanti said. “I’m not trying to be – we’re looking at all those things, but we haven’t made any decisions to go forth with it.”
“We continue to look at it [buy online, pick-up in store] and scratch our heads a little bit. But at this juncture we don’t have any current plan to do so,” said Galanti, adding that online sales represented about 6% of the company’s revenues in Fiscal 2020.
On the US mainland, Costco has partnered with third-party services like the InstaCart “Same Day Fresh” home delivery service, which Galanti said could push that percentage higher, especially with the advent of the COVID-19 pandemic.
However, that grocery delivery service is not available in Puerto Rico and neither is Costco’s two-day deliveries of non-perishable food and household supplies, according to its website.
Total online grocery sales grew nearly 300% during the first quarter of Costco’s fiscal year, Galanti said.
Earlier this year, a few months into the COVID-19 pandemic, Sam’s Club — Costco’s main rival — launched its pick-up service in Puerto Rico, allowing members to buy online and schedule a day and time to procure their purchases, as this media outlet reported. It also announced a partnership with local company Pick My Stuff to provide delivery service.
Despite not offering online grocery sales in Puerto Rico, early this year, Costco completed the $1 billion acquisition of Innovel Solutions — a former subsidiary of Transform Holdco, LLC, which operates Sears and Kmart stores — to offer “final mile” delivery, complete installation and white glove capabilities for “big and bulky” products.
Innovel, now rebranded as Costco Logistics, delivers items such as major appliances, furniture, mattresses, televisions, grills, patio, fitness equipment and wine cellars.
In Puerto Rico, Costco Logistics operates out of the former Sears warehouse complex in Cupey, this media outlet learned. Costco members are able to “select specific delivery dates for most big and bulky items and made improvements to our call center with specifically trained agents, as well. That continues to grow nicely,” Galanti said.
“The investment in Innovel…that we’re calling Costco Logistics, that was a — as we expected — a hit year-over-year to the margin simply because it’s being ramped up and [we’re] upgrading it,” Galanti said.
Costco Wholesale has four warehouses in Puerto Rico, in Carolina, Bayamón — where it has two — and Caguas.