Lowe’s to roll out parcel lockers nationwide

Home improvement retailing giant Lowe’s Companies Inc. (NYSE:LOW) said Tuesday it will install parcel-holding lockers at all of its 1,700 stores by next March as it seeks to capitalize on the growing trend of consumers buying their goods online and picking them up at a store.

The lockers are in use at Lowe’s locations in the New York tristate area, Philadelphia and Charlotte, North Carolina, which is 30 miles from the company’s Mooresville, North Carolina, headquarters. Lockers will be operational in most major U.S. markets by Thanksgiving, Lowe’s said. 

The buy online and pick up in store model, known more commonly by its acronym of BOPIS, is not new. But its popularity has accelerated as the COVID-19 pandemic triggered a surge in online ordering and contactless interaction. More than 60% of Lowe’s online orders are picked up at a store, the company said. The retailer rolled out a buy online and pick up at curbside service, known as BOPIC, during the pandemic.

A recent study by consultancy McKinsey & Co found that 60% of U.S. consumers who use a BOPIS service plan to continue using it after the pandemic subsides.

The BOPIS process has its advantages for the consumer and retailer. Consumers value the flexibility of picking up an item on their schedule and to not have to wait around for delivery. Retailers benefit by reducing pickup and delivery expenses because the consumer is going to the shipment, not the other way around. Another plus for retailers is that many consumers tend to buy additional items once they arrive at the store to pick up the online order.

The flip side is that a failed BOPIS transaction can damage brand goodwill because a consumer has gone out of his way to pick up a product only to find out it’s unavailable. Another risk for retailers is that overemphasizing a BOPIS service can siphon inventory away from the store, thus leading to stock-outs at the brick-and-mortar level. This is anathema to retailers who sell from both channels because brick-and-mortar customers tend to be more loyal and buy more than the typical online consumer. To protect against stock-outs, many retailers will over-order store inventory, which can be a costly process.

Robust visibility platforms connecting retailers and suppliers are the key to ensuring the retailer has adequate inventory to support online and brick-and-mortar transactions without having to over-replenish its in-store stock, logistics experts said.

The parcel locker service allows Lowe’s customers immediate access to pick up their orders and get in and out of the store faster, the company said. Each locker will be equipped with technology that generates a scannable barcode when an order is ready for pickup. 

A parcel can remain in a locker for seven days, according to a company spokesperson. Most customers pick up their parcels within the first two days after its delivery, the spokesperson said.

In August, Lowe’s announced that it will open 50 cross-dock delivery terminals, seven bulk distribution centers and four e-commerce fulfillment centers over the next 18 months. Of the 50 cross-dock facilities, 20 will be open during the second half of the year. Next month, the company will open a West Coast e-commerce fulfillment center in Mira Loma, California, to support direct-to-consumer e-commerce deliveries. The company opened its first such facility, in Nashville, Tennessee, in 2018.