Target’s Curbside Pickup Pact With Starbucks Demonstrates Cross-Selling Potential

Target is adding Starbucks products to its curbside pickup business.

The retail giant stated Wednesday (Nov. 23) that is expanding its rollout of the option to 240 stores after an initial trial earlier this year. The move highlights how restaurants and retailers can cross-sell to drive sales and digital engagement.

While store-in-store initiatives between restaurants and retailers are becoming increasingly common, this capability to pay for items from each within a single order and to obtain them via a single fulfillment channel remains by far the exception. Yet, it is just this kind of single-payment, reduced-friction integration that can most enable each business to benefit from the other.

In this case, Target can benefit from sales opportunities presented by consumers’ craving for Starbucks items, while the coffeehouse chain can drive purchases via the convenience of tacking a beverage onto an existing retail purchase.

Yet, many of restaurants’ partnerships do not enable this kind of single-purchase cross-selling. For instance, grocery giant Kroger’s partnership with restaurant technology company Kitchen United MIX to provide in-store, multi-brand locations for restaurant pickup requires consumers to order via the restaurant company’s app, website or on-site kiosks. Many of mega-retailer Walmart’s restaurant partnerships similarly depend on consumers ordering separately from the food seller.

Curbside pickup penetration is further along in grocery and retail spaces than in the restaurant industry, such that eateries’ curbside pickup businesses can benefit from such partnerships with stores. Nearly four in 10 consumers order groceries online for curbside pickup every month, according to data from the July edition of PYMNTS’ ConnectedEconomy™ study, “The ConnectedEconomy™ Monthly Report: The Rise of the Smart Home.”

The report found that 37% of consumers had ordered groceries online and picked them up curbside in the previous month, and most of them did so once a week or more. Plus, the study found that 36% of consumers had done the same for retail items in the same period.

Meanwhile, research from PYMNTS’ 2022 Restaurant Friction Index found that a slightly smaller share — 33% — of consumers said that curbside pickup options would encourage them to purchase from a given restaurant.

By not only linking the payment process but also connecting it to the curbside pickup channel, Starbucks and Target each are able to meet consumers’ need for convenience. Those who use the option because they are used to purchasing their Target items for curbside pickup may be more likely to engage digitally with Starbucks in the future, having experienced the convenience of the channel. Target, in turn, has the opportunity to benefit from the groundwork Starbucks has laid in getting its customers to buy online.

Given these benefits for each, it seems likely that other retailer-restaurant partnerships will follow the template set by this one, linking the purchasing process and enabling cross-brand pickup via a single order.

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