Curbside pickup of groceries and other big-box retailer goods had been growing for years, then boomed during the pandemic, reaching mainstream adoption. Now, Target is taking the opportunity to offer more services through its Drive Up curbside option, with this week's announcement that it plans to allow customers to return new, unopened items from the convenience of their car.
The launch could prompt rival retailers to offer support for returns through their curbside pickup services as well, as the addition could give Target a competitive advantage in the market. The convenience of the service could prompt consumers to shop at Target over others if they knew they wouldn't have the hassle of going inside the store and standing in line to return items that didn't work out.
The retailer shared the news earlier this week through a newsroom post but was light on details. We spoke to Target to get more information about the coming service and how curbside returns would work.
As the company explained, Drive Up Returns would be useful for a range of customers, and particularly those with kids or pets in tow, those with disabilities or anyone else who wanted to be able to more easily return items from the comfort of their car. Typically, these customers would have to park and go inside the store to the customer service counter, where there's often a line. Or, as in the case with many online orders, they'd have to re-package the item and drop it off with a mail carrier to be shipped back.
By using the no-charge Drive Up Returns service, the customer would instead simply hand over their item to a Target employee and receive their refund quickly.
Image Credits: Anthony Rathbun/AP Images for Target
The service, however, is not yet widely available, Target tells us, but will begin rolling out this spring to stores across the U.S. This rollout is expected to be completed by the summer, reaching Target's nearly 2,000 nationwide locations. Customers will be able to check their store's local website to see if their location offers the service as Drive Up Returns scales.
Target notes curbside returns had been extensively piloted across select markets with both staff and customers, so some of its stores will already have access to Drive Up Returns as of now. We understand Target won't be hiring additional staff to enable curbside returns, but will instead use its existing team members.
The option to start a Drive Up Return will be accessed through the Target mobile app, similar to how Drive Up itself is today. But it will have a limitation -- the returns will only be available through the app for purchases made through the customer's Target.com account, whether items were purchased in-store or online. That means it will be easier for Target cardholders or those who scan their barcode at checkout to take advantage of Target's Circle rewards to use this option. Meanwhile, customers who paid cash and have only a printed receipt would still need to park and go inside to handle their returns.
In addition, the service is designed only for new, unopened items that are being returned within 90 days of purchase, or up to a year for Target-owned brands. Returns of items because of defects or other more complicated issues may still require going inside the store.
The money from the return will be refunded to the customer's original form of payment, Target says.
This is a notable change to how a key aspect of commerce today operates. Many retailers prefer their customers to enter the store for returns as it may prompt further purchases. Retailers often place displays near the store's entry to tempt customers to shop for grab-and-go items and seasonal promotions, or to market deals.
Kohl's, for instance, even leverages its position as an Amazon return drop-off location to its advantage. It places its Amazon returns desk in the back of its store, forcing customers to wander its aisles before being able to return their items. It then prints a receipt with an in-store discount to encourage consumers to shop at its store instead -- which many often will, if they weren't satisfied with their Amazon purchase and are still looking for a replacement. During the pandemic, Kohl's said it added 2 million customers in 2020, thanks to its Amazon returns partnership.
Target, then, is risking losing out on this incremental purchase revenue by making returns a curbside service. But it could potentially capture more customer interest upfront, as it develops a reputation as a more convenient place to shop, compared with the competition.
The new service was announced this week alongside Target's fourth-quarter earnings where the retailer beat Wall Street expectations for the first time in a year, with $31.4 billion in revenue versus the $30.72 billion expected. But the quarter only delivered a slight 1% year-over-year lift in sales. The company attributed the lackluster growth to current economic conditions which saw consumers focused more on necessities, noting that grocery, beauty and household essentials were driving its sales.
Target has a history of leveraging technology innovations to modernize the shopping experience for its customers, including its Drive Up service, which expanded nationwide in 2019. It added fresh grocery pickup in 2020 and adult beverages the following year. The changes required store remodels in some cases to address these new consumer shopping behaviors. It also acquired Shipt for $550 million in 2017 to enable grocery delivery for its customers, which is now integrated with its website and app.
Target has tested other means of utilizing Drive Up, too, like bringing Starbucks orders to customers' cars. During its earnings call, the company referenced the Starbucks pilot but didn't offer a timeline for its rollout.
"This is what it means to be a truly omnichannel retailer, giving our guests the flexibility, ease and convenience to shop the way that works best for them and scaling capabilities across every facet of our business," Target CEO John Mulligan told investors about the new returns service. "Online, in-store, Drive Up, it doesn't matter how they choose to shop with us. We're here to make their Target run better than ever."