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Is Curbside Pickup a Long-Term Strategy or Short-Term Fix?

More retail landlords are rolling out the option for mom-and-pop tenants. The trend is expected to stick.

As the COVID-19 pandemic continues to wreak havoc on the U.S. retail sector and alter the way people shop, big retail landlords are implementing curbside pickup programs to help their tenants ramp up sales as the economy begins to reopen.

Kimco Realty Corp. and Federal Realty Investment Trust are two large shopping center owners designating curbside pickup areas at their centers for essential retailers that are currently open and non-essential retailers that will reopen as government restrictions are eased.

These landlords say they want to help retailers and their customers adapt to the changing shopping habits caused by the pandemic.

Jericho, N.Y.-based- Kimco, which owns 409 U.S. shopping centers and mixed-use properties totaling 72.4 million sq. ft., rolled out its Curbside Pickup program at 23 centers in Texas. Many of its properties are open-air, grocery-anchored centers.

Kimco plans to add these designated curbside pick-up spaces to its retail centers nationwide to be used by all tenants and their customers. Kimco executives say it’s a way for customers to ease back into a daily shopping routine while feeling safe and comfortable.

To use the service, a customer places an order with the store through their website, app or by phone, and chooses curbside pickup. The retailer provides the customer with the appropriate “Pickup Zone” (for example, Zone A, B or C). The customer is instructed to call the store once they’ve arrived, indicating which spot number they’ve parked in. The retailer brings the item to the customer’s vehicle and places it in the trunk.

The program was launched at Grand Parkway Marketplace in Spring, Texas, with 60 parking spots dedicated for curbside pickup.

“We started with our whole portfolio across Texas, because that was really the first state to reopen their doors,” says Conor Flynn, Kimco CEO.

Starting April 24, Texas began allowing non-essential retailers to start offering curbside pickup of online and phoned-in orders.

“That will quickly be followed by Georgia and then it will be taken nationally,” Flynn says. He notes that curbside pickup was a trend that was accelerating before the pandemic, but has picked up momentum.

It’s a natural extension of what the consumer is looking for today, which is convenience, value and just having a suite of amenities that are available to them.”

Proof is in the pudding

During the pandemic, more consumers have turned to online shopping.

Buy online/pick-up in store orders surged 208 percent between April 1  and April 20 compared with a year ago, as consumers continued applying social distancing to shopping to limit their exposure to COVID-19, reported Adobe Analytics, which measures the buying power of digital consumers.

Additionally, Adobe reported that U.S. online sales shot up 49 percent from March 11 to April 21 compared with a baseline from March 1 to March 10.

“Since the pandemic has occurred… some of our public retailers have said they’ve seen growth in their curbside pickup orders of over 200 percent,” Flynn notes.

Essential retailers like grocers, Target, Walmart and Lowes have been offering curbside pickup successfully during the pandemic as they’ve been allowed to remain open.

Kimco’s program now formalizes the process and expands it beyond the national retailers to local mom-and-pop businesses.

“The concept originally was one where we saw a lot of our national retailers really doing a nice job,” Flynn says.

Essential retailers operating through the pandemic have been offering curbside as a way to keep shopping centers busy and get consumers comfortable with coming back to the center. “So, we thought long and hard about it,” Flynn notes. “Okay, if our national retailers are doing this and are successful, we should quickly move so that we can make sure that this becomes a best practice across all of the retailers in the shopping center.”

Non-essential retailers haven’t had the luxury of operating during the pandemic, so “we figured as a landlord, we could have this program in place and ready to go when they’re allowed to reopen.”

The small shops are going to need a lot of help out of the gate, Flynn says. This is a way for them to engage curbside pickup in a way where there previously was no formalized program, and they can start to utilize it to help their sales rebound quickly.

Kimco also established the Tenant Assistance Program (TAP) to help tenants apply for government-sponsored COVID-19 aid programs  

“We’ve been trying to act quickly and be nimble recognizing that certain retailers are well-positioned and can use their balance sheets to weather the storm, but there are a whole bunch of small shops that need help—from curbside pick up to legal advice and services to help them get to the PPP program,” Flynn adds.

Curbside is ‘here to stay’

Because of how simple it is, you see how quickly it can become adopted as a new normal, Flynn notes.

“That’s why we think it’s here to stay,” he says. “A lot of people were buying online, but electing to pick it up in-store. With this pandemic, I think there are going to be a lot of people who just elect for curbside pickup from here on out.”

Similarly, Rockville, Md.-based Federal Realty, which owns 104 shopping centers totaling roughly 24 million sq. ft., is rolling out its curbside program dubbed The Pick-Up on May 15. It will provide a contactless exchange for its centers in anticipation of a phased reopening for retail tenants in the coming weeks. The service is for retailers and restaurants of all sizes.

“The Pick-Up takes what is already a growing trend and builds a scalable platform, making it easier for merchants and customers to coordinate the quick, contactless exchange of products to help our tenants drive demand,” said Don Wood, president and CEO of Federal Realty, in a statement.

Meanwhile, ICSC reported that Cincinnati, Ohio-based Phillips Edison & Co., a large owner and operator of grocery-anchored shopping centers, launched its Front Row to Go Program. It’s an expansion of work the landlord previously did with grocers to accommodate pickup programs.

Growing trend

Real estate services firm JLL is receiving more requests from tenants wanting to offer curbside pickup, says Greg Maloney, president and CEO of the firm’s Americas retail division.

“We’re working with them and converting spaces for curbside pickup. We’re putting up cones and signage,” he says. “We’re putting tents out there. We’re trying to do anything for the customer so that when they come in, they go, ‘Ahh. Here’s where we go [to pick up orders].’”

Maloney believes curbside pickup will become a long-term strategy for many retailers and restaurants, but not all might be able to keep up with orders when in-store businesses fully reopen, particularly restaurants.

“These restaurants that are doing it just to keep their doors open, when they get busy again, they’re saying we can’t do it,” he notes.

Curbside pickup is an effective strategy

“It has been a game changer and it will stay at higher levels,” notes Deb Carlson, a director in the Twin Cities office of real estate services firm Cushman & Wakefield. “Not as high as it is now, but certainly higher than it has ever been, because it just works so well. It’s just another way—even when the world is reopened again—to shop.”

For example, curbside pickup has “kept the grocery stores rockin’ and rollin’ these last two months,” Carlson says.

She speaks to grocers around the Twin Cities, for example, who have shared that their curbside pickup has increased from single digits to 40 to 50 percent during the pandemic. “I think it has become so easy and so nice to have, that consumers are going to keep up with it,” she says, adding it won’t just be grocers but other retailers as well.

Carlson believes that that world might not “right itself” until there’s a vaccine.

“Nothing happens until people aren’t scared anymore,” she notes. “People are going to be scared for a long time. As long as there’s some fear out there, curbside pickup is just going to make a whole lot of people feel better.”

Eventually, however, people will return to in-store shopping.

People will say, “I need to see what’s new. I need to look and see the product. I need to get back into my routine,” Carlson points out. “So those who’ve done [curbside pickup] 100 percent of the time might start to do it 50 percent of the time.”

Carlson also notes that curbside pickup assumes consumers have previously shopped online.

“Your online brand has to be really good and work really well,” she says. “And you have to have consumers that are really comfortable with that.”

 The disadvantage for retailers of curbside pickup, is there’s less impulse buying and not everything in the store is online.

“And it’s less of an experience,” Carlson adds.

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