Walmart and 5 Other Retail Stocks That Could Get a Boost From Curbside Pickup - Barron's

Walmart's curbside pickup service. Courtesy of Walmart

As the retail landscape evolves, curbside pickup is an increasingly popular option for consumers. That’s good news for behemoths like Walmart (WMT) that boast a huge network of stores, argues Cowen & Co.

The back story. For several years, many retail stocks couldn’t find a bottom, with investors worrying that Amazon.com (AMZN) and e-commerce in general would kill off the bricks-and-mortar store. That narrative changed last year: For the first three quarters of 2018 (before the late-year market turmoil), retail shares were on a tear, with the SPDR S&P Retail ETF (XRT) finally passing its old 2015 record levels and reaching new all-time highs.

Many larger retailers have started to hit back against Amazon, leveraging their network of locations to offer services like reserve in-store and quick returns. Meanwhile, Amazon’s purchase of Whole Foods Market and its decision to open a physical Amazon store in New York was confirmation, many believed, that bricks-and-mortar wasn’t going the way of the dinosaurs, after all.

What’s new. Cowen’s Oliver Chen is out with a new look at curbside pickup, another feature that traditional retailers can offer via their physical store footprint. While only about 15% of U.S. shoppers have tried the option thus far, he writes that it is “the natural evolution of the traditional in-store shopping experience,” and one that can allow for increased personalization and drive repeat business, while also paving the way for automated dispensaries in the future.

He notes that thus far, curbside service gets high satisfaction marks from customers, as it eliminates the need to wander aisles and stand in checkout lines, and argues it will become an increasingly important area for retailers.

Looking ahead. Chen writes that the adoption of curbside pickup will be rapid, with at least a quarter of the U.S. population trying it by the end of 2020, helping it to grow into as much as a $35 billion business. He adds that the service “should see very strong growth over the medium term as...scaling curbside is a major initiative for many of the biggest broadline and grocery retailers in the U.S. including Walmart, Target [TGT], Kroger [KR], Whole Foods, and others.”

Editor's Choice

This, of course, plays into the hands of the biggest retailers. Like so many new options that have arisen in the age of e-commerce, curbside pickup requires heavy investment to execute, and many smaller players don’t have the resources to invest—or a wide network of stores to make locations convenient for consumers. Chen’s top picks to play this theme include Walmart, Target, Nike (NKE), VF Corp. (VFC), Lululemon Athletica (LULU), Ralph Lauren (RL), and Amazon, all of which get Outperform ratings from the firm.

Chen has long been bullish on Walmart, Target, and Amazon, arguing that they’re some of the best-positioned retailers for the future, as they have deep pockets to fund innovation, a broad base of products, and resonate with consumers’ hunt for value. As Barron’s has noted, convenience is a major tool in retailers’ arsenal when it comes to attracting and retaining shoppers, and curbside pickup plays into that thesis.

Successful bricks-and-mortar stores of the future may still have to focus on offering a unique experience to consumers, but that’s just part of the puzzle. A customer who looks at shopping as a hobby or activity on a Saturday afternoon isn’t looking for the same thing when she needs to stop by on the way home from work on a Tuesday.

The SPDR S&P Retail ETF is up 1.6% to $44.63 in recent trading.

Write to Teresa Rivas at teresa.rivas@barrons.com

Let's block ads! (Why?)

Read Again https://www.barrons.com/articles/walmart-and-5-other-retail-stocks-that-could-get-a-boost-from-curbside-pickup-51553613170

Bagikan Berita Ini