Dive Brief:

• Costco is currently offering curbside pickup at three stores in Albuquerque, New Mexico, according to the club retailer's website.
• The same-day service, which is powered by Instacart technology and fulfilled by Costco employees, offers around 2,000 items, including grocery and non-grocery items. Product pricing is the same as in-store and each order carries a $10 fee and $100 minimum purchase.
• After years of resisting the service in light of its enviable store traffic, Costco is finally nodding to the popularity of pickup. The service has taken off during the novel coronavirus pandemic and is currently offered chainwide by competitors Sam's Club and BJ's Wholesale Club.

Dive Insight:

Retailers across grocery and other industries have scaled up click-and-collect in recent years, and many turbo-charged their efforts in 2020 as shoppers gravitated to the service, which allowed them to skip in-store shopping during the pandemic and save money compared to delivery.

But Costco has remained a holdout — and for good reason. It hasn't needed click-and-collect to attract and retain shoppers as other companies have. Its stores are shopper magnets built for product discovery. And given how busy Costco's clubs are, especially on weekends, adding designated parking spaces, order staging areas and extra employees to shuttle orders could disrupt the experience.

As recently as last fall, the company indicated it had little use for curbside pickup.

"There's some retailers that are doing it because they feel they have to," Costco CFO Richard Galanti said on a September earnings call. "We don't have our head in the sand on it. We look at it. We have people here that study it and maybe we'll surprise you one day, but at this juncture we're not prepared to do that."

Costco isn't completely walled off from reality, however. Curbside pickup has emerged as the preferred e-commerce channel for grocery shoppers during the pandemic, meaning millions of Americans have made it a part of their regular shopping habit. Club competitors Sam's Club and BJ's Wholesale Club have also expanded pickup significantly over the past year. Target's Drive Up curbside service sales grew 500% in December, and Walmart more than doubled the number of stores offering pickup from 1,400 locations in fiscal Q1 of 2018 to nearly 3,500 in August 2020. 

Costco is acknowledging this accelerating trend, but don't expect a large-scale rollout anytime soon. The company told USA Today, which first reported the curbside test, that it's testing the service on "a limited basis in one market at this time."

The company has offered in-store pickup on pricey items like electronics since 2018. It also offers same-day delivery via Instacart as well as two-day grocery delivery.