Philip Clarke, Tesco's CEO, made a speech last week stating that: "...we’ve called time on the old retail 'space race'. We’ve recently opened our 1,000th click and collect collection point..." Is click-and-collect really quite so game-changing?
Well actually, maybe... But it's multichannel game-changing, not necessarily traditional retail-space game-changing by itself.
Not all top UK retailers publish the data, but from those that do, we can see that customers really like this clicks-then-bricks option:
** of eligible General Merchandise sales (i.e. excluding food and impossible items like washing machines and sofas)
* John Lewis state that 34% of John Lewis sales are collected in Waitrose Stores! So actually their figure is probably higher in total. Click-and-collect was offered at 97 Waitrose's and 35 John Lewis's
The latest published data from IMRG indicates that over 10% of all online transactions are now collected in store (up from 7.4% in the previous quarter): more and more major retailers are introducing it, and the take-up is often dramatic.
Some published commentaries are also quite illuminating. First of all this quote from Halfords annual report:
"Our product mix lends itself to a multi-channel offer as
customers often want further advice, a demonstration or fitting.
Online purchasing patterns reflect this, with 86% of sales on
Halfords.com reserved and then collected from a store"
In other words, these customers are basically using the Halfords website as a place to guarantee that the item they want is definitely in stock in a nearby store when the customer makes their visit. Once at the store, the store has little value as a showroom or place to transact, but very high value as a place to get added services impossible to execute online. Interestingly this tends to help validate the KnowHow based strategy for PCWorld and Currys - but it does require your products to be difficult for customers to just point-and-shoot in the first place. These Halfords customers aren't using the store-advice to choose their item, they are using it afterwards to configure it. This is a great differentiator against the online pureplays for bikes, and probably therefore also for laptops, but less good news for e.g. TVs.
Secondly, a note from Sainsburys:
"Customers use Click & Collect for about half of all online general merchandise orders – a figure which rose to
75% for the week before Christmas 2011."
Or in other words, if you could only trust the postal service, then click-and-collect might be less attractive. An alternative explanation is also possible: click-and-collect is almost always offered for free. Customers hate paying delivery charges, and faced with the option of a free collection service compared to a paid delivery, have a natural bias towards the perceived free service, even when there is a hidden travel/time cost. Of major UK retailers, only TopShop seems to be attempting to charge the same for click-and-collect as it does for home delivery. Unfortunately they don't publish statistics indicating how the take-up varies with these fees.
Another quote from John Lewis tends to suggest this TopShop approach is seriously misguided anyway. This, to me, is the most significant data point in the whole click-and-collect space:
“We are seeing about 34% of those visits translating into
additional sales in shop and that number is growing exponentially at the
moment. It’s typically or increasingly for purchases that the customer didn’t
think they would make. So it is quite outwith whatever they were going to
Customers want to click-and-collect, and then when they do, they find themselves buying extras in the store as well. Sounds like the ultimate retailer win-win.
It's noticeable that fashion retailers are lagging behind this curve. M&S, New Look and TopShop do, but surprisingly few others. Possibly this reflects the in-store space challenges, but Tesco's 1000 Click-and-Collect points now include quite a few Express and Metro stores, especially in central London. If Tesco can fit a collection point in an Express store for awkward boxed items like PCs, then surely it can't be so hard to fit a few parcels in e.g. a River Island store. In fashion, with its high returns rates for home-delivered orders, bringing the customer to store to a) spend more; b) try on, and return or exchange in the store environment must surely make sense?
Perhaps the most interesting experiment in this area in the UK right now is House of Fraser's Buy & Collect only store in Aberdeen.
"...its new 1,500 sq ft
House of Fraser.com shop is the first to offer purely a Buy & Collect
service... The new format, merchandise-free, store has opened in Aberdeen’s Union
of stocking goods that shoppers can take away with them, the emphasis [...] is on personal customer service. Goods
ordered from the more than 1,000 brands it stocks can then be delivered the
next day to either the customer’s home or to the store for collection."
Another similar shop (in Liverpool) is on the way, suggesting that the first pilot must be going pretty well. Other retailers, watch this space!