RACHEL MARTIN, HOST:
The latest battle for your grocery business is happening online. Curbside pickup allows customers to order groceries on the Internet and then pick them up at local stores. So which consumers are embracing the service, and why might retailers prefer it over online delivery? Here's Sally Herships and Cardiff Garcia with The Indicator from Planet Money.
SALLY HERSHIPS, BYLINE: There is a war going on in the grocery store. The grocery industry is huge. Sales in the U.S. in 2017 were $674 billion, but the margins are razor-thin. So retailers have to do whatever they can to get your business. And one of the ways they're trying to do that is by offering something called curbside pickup.
CARDIFF GARCIA, BYLINE: That's when you order your groceries either online or by the phone, and then you go to the store to pick them up. And more and more stores are offering this service.
HERSHIPS: There are about $23 billion of orders for groceries placed online each year. That is according to Coresight Research. And right now, that 23 billion is evenly split between curbside pickup and delivery. They are neck and neck. But grocery stores would so much rather that their customers use curbside pickup for so many reasons.
GARCIA: In big cities, stores are desperately trying to stay ahead by offering you delivery. But there's another battlefront - the smaller cities, the suburbs, places with a lot of sprawl and parking lots and rural areas. That is where curbside pickup is increasingly the weapon of choice. So that's where we are headed, to the battlefront, to the grocery store parking lot.
HERSHIPS: We're in Arlington, Va., at a Harris Teeter. This is where Jennie Rothschild is about to pick up her groceries. She works full-time as a public librarian. She also has three kids, two of whom are under the age of 5.
UNIDENTIFIED CHILD #1: Mama, Mama, Mama.
UNIDENTIFIED CHILD #2: Hey, get your feet off the seat.
JENNIE ROTHSCHILD: It's been a long day. They're hungry, but we need to get the food so we can eat it. There's no food at home.
HERSHIPS: There's already an employee out here. He has a clipboard, and he asks Jennie for her name. Her family uses curbside pickup about once a month.
ROTHSCHILD: I think the first time I ever used this was because the kids were sick, and you don't want to bring sick kids into a grocery store.
HERSHIPS: So the guy appears, and he puts the groceries in Jennie's trunk.
GARCIA: And that's it. She just has to sign her receipt and leave.
HERSHIPS: Jennie loves curbside pickup. It's just super convenient. But retailers also love it for so many reasons. One of the most important is because delivering groceries is expensive, even if it seems like it's not.
GARCIA: Think about all the costs that go into delivery. There's the cost of hiring a human being to walk down the aisles, push a cart, pick out the groceries that you ordered online, then take them outside and load them into a truck. And then the driving - there's gas and tolls and insurance. Add it all up, and it's expensive. So delivery doesn't always make economic sense in a lot of places.
HERSHIPS: But curbside pickup can have its problems, too. The economics for retailers haven't been totally figured out yet. A lot of stores charge just $4 or $5 for pickup. But just like with delivery, they still have to pay a human employee to walk up and down the aisle and fill a cart. So curbside pickup is cheaper than delivery, but it is still an added cost.
Sally Herships.
GARCIA: Cardiff Garcia, NPR News.
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