Click & Collect becoming essential
Flagships will act as show rooms to celebrate the brand, online as fulfillment, smaller footprints in lesser locations for the supporting store network and more integrated stores in terms of technology. Tomorrow’s store estate will also be enhanced by other features such as mobile (QR code) walls, pop up stores and click & collect stations. ResearchFarm believes that, especially against the tough macroeconomic outlook and the rise of e-commerce, retailers and landlords need to focus on getting tomorrow's operations and store formats just right – as the footfall question becomes ever more pressing.
Multichannel integration has taken on a different meaning than it had in previous years. It is now all about click & collect, which remains the fastest growing fulfillment option by far. Whereas - roughly since the turn of the century - for bricks and mortar operators it was all about becoming multichannel to capture sales migrating to the online channel, now it is all about online driving how the physical store estate of the future has to look like, with pick up stations, click & collect only outlets and Wi-Fi capabilities in store. Even the number of possible profitable locations and what exactly is stocked in these locations is now to a significant extent determined by the internet. Over the next five years we expect to see many more click & collect pick up points in existing stores as well as dedicated pick up only stores, emulating the post office of yore.
As the unrelenting rise of click & collect continues with the success of service providers such as Kiala in France, Collect+ in the UK, DHL in Germany and a host of innovative solutions from Scandinavia, the delivery options offered become a real key differentiator for retailers and customers start to base their purchasing decisions on this. As a result we believe that footfall levels to community neighbourhood stores with long opening hours and to gas stations, which have partnered up with major retailers to become pick up and returns solution providers, will increase, as shoppers will collect their online orders outside normal working hours on their way to and from work.
The Amazon lockers in the US and the UK tell their own story. In Germany the start of MediaMarkt/Saturn Hansa’s online operations has surprised managers, as the amount of in-store pickup and collection reached as much as 50% of all orders.
Naturally click & collect takes much of the pain away for shoppers, who can pick up their purchases at a time convenient for them and for retailers, as it changes the economics of the most cost intensive part of online - the deliveries - and also increases efficiencies in the reverse supply chain, when goods get returned.
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The emergence of click & collect as a real sales driver
Arguably, the click & collect phenomenon emerged first in France. Much of this development has been driven by legal constraints such as zoning laws in France and high hurdles for the opening of new hypermarches. The law for opening smaller scale outlets on the other hand was relaxed leading to a convenience store and discounter boom. One way to differentiate for hypermarket players has been online and click & collect has acted as both a footfall driver (Casino) as well as a cost effective solution to online grocery retailing as the difficult last mile is placed in the hand of the consumer. Chronodrive’s drive model is now emulated by grocers all across the Continent.
Offering click & collect capabilities has become a real point of differentiation and incremental sales driver for many retailers. Indeed many customers will simply go elsewhere if they are not being offered this service. This incidentally was also one of the major reasons behind the opening of House of Fraser’s click & collect stores in Aberdeen and Liverpool.
For many online customers avoiding fees and extra costs for deliveries is a major reason for choosing click & collect solutions. This is especially true in austere times in a macro economic environment characterised by government cuts and general retrenchment. We believe that it will remain a feature until the economy recovers and free deliveries have become a commonplace in the service proposition of online and multichannel retailers.
Moreover many customers are using click & collect to plan shopping trips and to go for top up shopping at the retailers where they have reserved an item or surrounding retailers. As such there are opportunities for retailers, they can utilise click & collect to drive spend into impulse categories and can recommend complimentary items to customers when they come into the store to pick up their purchases. This should be especially powerful in clothing, where accessories to the reserved purchase can be recommended by the sales teams for example.
Looking ahead, the click & collect revolution might take on a different meaning altogether, if retailers will use their store estates as fulfillment hubs for deliveries as well (shutl), radically changing the cost dynamics of online shopping once again.
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Next week we will continue with our series on the store of the future by looking at the smartphone revolution
If you would like to find out more about our latest report please click here.
Next week we will continue with our series on the store of the future by looking at the smartphone revolution.
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