As grocery retailers look for ways to make their curbside pickup businesses more profitable, membership warehouse club chain BJ’s Wholesale Club is using robots to drive margins by lowering labor costs.
The Massachusetts-based retailer, which has more than 230 locations across 20 states, shared on a call with analysts Friday (Nov. 17) discussing its third-quarter 2023 earnings results how automated technologies are making various tasks across different areas of operation more efficient.
“We’re making progress on our automation efforts as well,” BJ’s Wholesale Club Chairman and CEO Bob Eddy said. “By the end of this month, we will have our fully autonomous AI-powered robots in all of our clubs. The benefits of this automation include in-club inventory tracking, pricing precision, faster restocking and more efficient and accurate buy online, pick up in club and curbside orders.”
The economics of fulfilling online grocery orders can be tricky, with the channel requiring either a high degree of automation or a significant labor investment to pick and pack orders and get them into the hands of consumers. Yet, demand is high.
Most grocery shoppers now engage digitally at least some of the time. The PYMNTS Intelligence report “Consumer Interest in an Everyday App,” created in collaboration with PayPal, found that 45% of those who had bought groceries in the last month did so both via connected devices and traditional channels, and another 16% did so exclusively using connected devices.
Additionally, curbside pickup is the most popular eGrocery channel in the United States. PYMNTS Intelligence’s study “12 Months of the ConnectedEconomy™: 33,000 Consumers on Digital’s Role in Their Everyday Lives” found that most online grocery shoppers use curbside, with the second-most popular fulfillment channel being non-same-day grocery delivery.
For BJ’s Wholesale Club, digital comparable sales increased 16% year over year in the quarter, with the retailer seeing a 10% digital sales mix, primarily driven by pickup orders rather than delivery.
This is roughly standard. The PYMNTS Intelligence study “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services, found that 12% of grocery purchases are made online.
“Approximately 90% of our digitally enabled sales are fulfilled by our clubs with services like BOPIC and same-day delivery, which remain the primary drivers of our digital growth,” Chief Financial Officer Laura Felice told analysts. “We believe that digital convenience is a key advantage for us, and we will continue to lean into driving better digital engagement over time.”
Digital engagement with grocery is on the rise, and these channels tend to yield higher order sizes. The same “Tracking the Digital Payments Takeover” report revealed that 1 in 3 shoppers said they are very or extremely likely to increase their online grocery purchases in the next year. Moreover, the study found that the value of the average eGrocery purchase is 32% higher than the average brick-and-mortar haul.
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