Section B. Below is a newspaper clipping about Big-box retailers.

Answer BOTH questions in this section. Each carries 25 marks.

Big-box retailers like Walmart, Target try to beat Amazon on speed by focusing on curbside pickup

https://www.cnbc.com/2020/10/11/walmart-target-try-to-beat-amazon-with-curbside-pickup.html

by Melissa Repko@MELISSA_REPKO PUBLISHED SUN, OCT 11 20209:00 AM

KEY POINTS Walmart, Target and Best Buy will try to divert dollars from Amazon Prime Day by offering their own deals and fulfilling orders quickly through curbside and in-store pickup.

Buy online, pick up in store options have gained popularity during the coronavirus pandemic as a safe, convenient alternative to browsing store aisles.

Yet big-box retailers will have to prove they can keep up as deep discounts and holiday shopping drive demand.

The owners of a massive new shopping complex are convinced of success. But has America's once-great retail format simply had its day?

As big-box retailers throw their own sales events during Amazon Prime Day, expect to see them tout an asset that the e-commerce giant doesn't have: numerous stores across the country where customers can quickly retrieve their online purchases.

Amazon Prime Day starts at 3 a.m. ET Tuesday and lasts through Wednesday. Target will have "Deal Days" and Best Buy will jumpstart Black Friday sales on those days. Walmart holds its "Big Save Event" from 7 p.m. ET Sunday through Thursday.

Buy online, pick up in store options such as curbside and in-store pickup have gained popularity during the coronavirus pandemic as a safe, convenient alternative to browsing store aisles.

Best Buy rolled out curbside pickup at nearly all its stores during the early months of the pandemic. Walmart over the past five or six months has made tens of thousands of general merchandise items eligible for curbside pickup, along with its wide selection of groceries. Target will add fresh and frozen foods to curbside pickup at the vast majority of stores by the holidays, so shoppers can pick up milk along with gifts for their family

By offering an alternative to waiting for a package to arrive to the doorstep, retailers are trying to beat Amazon at its own game: shortening the time between when customers hit the "buy" button and receive their purchases. They are also giving shoppers more control over when they receive the item, which means the buyer doesn't have to worry about theft and can hide a holiday gift from prying eyes.

The services could be key differentiators this week and throughout the holidays as big-box retailers try to divert dollars from Amazon.

A surge in sales

Target has been vocal about the huge gains in its same-day services during the pandemic. Its curbside pickup service, called Drive Up, surged by more than 700% in the second quarter and its in-store pickup option, Order Pickup, grew more than 60%.

On an average day in April, CEO Brian Cornell said, the company fulfilled more items and orders than last year's Cyber Monday. It has used the services to attract new customers and win more of their business.

This holiday season will mark Target's second year with Drive Up at its stores nationwide. It sells about 250,000 items that customers can pick up in as little as an hour after they're purchased online.

On an earnings conference call, Target Chief Operating Officer John Mulligan noted the "stickiness" of the service. After a customer tries Drive Up for the first time, he said, the company sees a nearly 30% increase in the shopper's overall spending both online and in stores

For Best Buy, the service has also spurred growth. Online orders can be ready for curbside pickup in about an hour. The company's online revenue rose 242% in the second quarter from a year earlier. About 41% of those online sales were filled either through buy online and pickup in store or curbside pickup options.

Walmart responded to demand for these services by adding more curbside pickup slots and expanding its assortment to more than 160,000 items that can be ready within four hours, from barbecue sauce to headphones.

Curbside pickup has other business advantages. By eliminating the need to ship a package from a store or warehouse to customers, each online transaction becomes more profitable. For example, Target has said that when it fulfills an order by Drive Up or Order Pickup, it's 90% cheaper than shipping from a warehouse.

Yet big-box retailers will have to prove they can keep up as deep discounts and holiday shopping drive demand. In late March, shoppers began clearing shelves of household and pantry staples and later sought out items for long stays at home, from puzzles to exercise equipment, leading to out of stocks and delays

'Scramble of the season'

Some customers aren't sold on the convenience of the approach. About 77% of shoppers still want their purchases delivered directly to their homes, according to a recent holiday shopping survey of more than 1,500 U.S. consumers by Accenture. Only 11% said they are willing to use contactless options like locker or curbside pickup.

Shoppers' patience has worn thin, too, giving retailers less leeway for out-of-stock items or other hassles. More than half of respondents told Accenture they won't shop with a retailer again after an unsatisfactory delivery experience.

Kathy Gramling, consumer industry markets leader for EY in the Americas, said the appeal of curbside pickup will evaporate if customers endure long waits or cope with other customer service headaches.

"You think of the holiday parking lot of years gone by. There was never a pretty moment in any of that," she said. "I can't try to imagine a holiday parking lot now, where we're trying to limit the people who actually can go in the store, so there's a line again outside in the wintertime, and we're trying to jam people through a parking lot when it's snowing or raining or sleeting."

Those challenging logistics, she said, could benefit pure-play e-commerce retailers that have a near singular focus on delivering to customers' doorstep.

She said brick-and-mortar retailers will have to manage their inventory well in order to have the items customers want a short drive from their home.

"It works well if and only if as a retailer you're able to know that store number 115 or on Main Street, somewhere in the U.S., has that actual stock," she said. "Otherwise, I think we're in for a series of really disappointing shopper moments when consumers go online and then can't pick up in store."

"This is going to be the scramble of the season." '

Question

1. In view of the four basic retail values, discuss whether big-box retailers like Walmart, Target are able to beat Amazon by focusing on curbside and in-store pickup? (25 marks)

2. Critically analyse what and how retail activities of the big-box retailers must be enhanced for curbside and in-store pickup? (25 marks)