Click & Collect remains underplayed
Click & Collect has been around since 2000 when it was invented at Argos as a result of the retailer being in the unusual position of knowing with great accuracy the inventory it had in its stockroom because of its unique hybrid catalogue/stores business model.
However, it was not until at least a decade after its launch that the retailer felt click & collect represented a meaningful part of its operations as customers increasingly adopted this convenient way to purchase goods online and the retailer promoted the proposition to customers as more convenient than home delivery.
In the wider retail industry even today it is arguably still underused by many organisations – and consumers – despite its obvious upsides to businesses with a multi-channel model. It is a sustainable solution on both an environmental and financial basis. In many cases the collection of online-ordered items can be undertaken very quickly – providing instant gratification – if the goods are in the store selected by the shopper. And if they are not in that outlet then quickly sourcing them from a nearby store is also a possibility with today’s technology.
It is certainly more cost and time efficient than pushing goods out from distribution centres, through delivery providers, and on to people’s homes. This is littered with potential problems such as missed deliveries, stolen goods, and the all too frequent need for people to return unwanted items. It all adds to the costs that retailers have to handle.
Click & collect can help them overcome these issues. Such is its value to Primark that it does not offer home deliver at all but has instead chosen in recent years to solely provide collection in-store for online orders. Paul Marchant, CEO of Primark, has often questioned whether a low-margin, low-price model such as Primark could ever make money selling online when you factor in the cost and resources needed for delivery.
Instead, with click & collect it can focus on leveraging its physical footprint, which he says drives more customers into stores and therefore boosts average basket sizes. Click & collect had initially been on trial in certain product categories but the company has confirmed that it is likely to be expanded out into other categories and certainly rolled-out to overseas markets.
This ability of click & collect to help retailers squeeze value out of their store estates is undoubtedly a factor behind the recent decision by Tesco to open a further 100 IKEA click & collect points within its supermarkets. For every customer that visits the store to collect an IKEA order they are a prospective shopper for Tesco while they are in the outlet.
For IKEA it provides an opportunity for it to place its proposition closer to customers and compliment its big box estate – and increasing portfolio of city centre stores. The expanded footprint of the click & collect service now puts 90% of its customers within a five-mile radius of a collection point.
Click & collect also features heavily in the bricks and mortar strategy of Next. It chooses to operate each store on not only the typical equation of rental costs versus sales per square foot in the store but also on how much click & collect is used to service online orders. Without a store in an area then the online sales drop within a radius of the outlet because of the inability of customers to use click & collect. They are also unable to use the store to return unwanted goods they bought online.
The many upsides to click & collect make it an obvious service that pretty much all retailers should offer their customers and, according to some service providers in the fulfilment field, there should be no charges attached to click & collect. Maybe the reason some retailers have not fully embraced this most obvious of opportunities is because unlike Argos all those years ago they are still lacking the necessary visibility of their stock across their supply chains.
Glynn Davis, editor, Retail Insider
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