Costco Starts Limited Testing Of Curbside Pickup

The company previously only offered pickup on expensive items like jewelry and electronics, saying it was costly to offer more broadly. Some Wall Street analysts have questioned whether Costco should expand the service to other goods as curbside pickup explodes in popularity.

Richard Galanti, chief financial officer at Costco, said that the company wanted to test it out in a small market.

"We're always trying different things. We still scratch our head a little bit on it. We figured we'd try it in a discrete market where there's just a limited number of locations," he told CNN Business. "And it's really nothing more than a test at this point."

Costco has dedicated parking spaces for customers driving in to grab their orders at each of the stores in Albuquerque. Employees prepare the online orders and bring them out to customers' cars. Customers will shop for orders and pay through Costco's website.

Costco has six locations in Massachusetts and one in New Hampshire. Rival warehouse club BJ's, based in Westboro, launched free curbside pickup in Massachusetts back in August. Sam's Club, which has two stores in New Hampshire, rolled out curbside pickup last June.

Costco's new pickup option has a higher minimum order threshold and fee than other chains. Walmart, Kroger and Whole Foods offer free grocery pickup for orders above $35.

In the past few years, Costco has said curbside pickup for groceries doesn't make sense to offer, mainly because the club doesn't have much room in its jam-packed stores and parking lots to pull off the logistics of pickup. The option requires a staging area inside the store for workers to assemble orders, extra cooler space to keep items fresh and dedicated parking spots for customers driving in to come grab their groceries.

"You have to have a place to store the stuff," Galanti said in interview last year. "You can't store it at room temperature. You've got to separate it into refrigerated, frozen and dry."

Costco, which operates on razor-thin profit margins, also says it's too expensive for its business to have employees dedicated to putting together customers' orders and bringing them out to their cars.

And Costco wants shoppers to come into warehouses, where they often make unexpected purchases while browsing around. Pickup takes away this opportunity for Costco to drive sales.

"We want you to walk the warehouse and see what we have to offer," Galanti said.

(© Copyright 2021 CBS Broadcasting Inc. All Rights Reserved. CNN's Nathaniel Meyersohn contributed to this report.)