Click & Collect: Benefit or Burden?
The world of retail has become increasingly marked by a slavish subscription to the notion that whatever the customer wants, they must get. Yet, while such a reactive philosophy may buy short term goodwill with customers, it risks creating commercially unsustainable trading conditions.
This has become apparent in the case of “click and collect”, where some retailers proudly nailed their colours to the mast without performing the requisite due diligence, and without an informed strategy to properly integrate such a radically different approach to the final stage of fulfilment into their business model.
While customers may imagine that click and collect is financially and logistically advantageous for the retailer, in reality it has become a real behind-the-scenes headache for some. This is principally because the product still has to reach the point of collection, whether that’s in-store or at a third party location. And with next, or even same day delivery becoming an ever more popular option, this means a lot needs to happen in a very short space of time. For retailers, servicing this increasing desire for instant gratification has the capacity to hit profit margins where it hurts.
There are companies out there, however, resisting the prevailing winds, that have elected to levy a charge on lower value orders. John Lewis is perhaps the highest profile example, adding £2 as standard to orders below £30. Their rationale is simple: They believe it to be an unsustainable practice.
Yet others, such as House of Fraser, evidently disagree and feel sufficiently confident enough to publicly proclaim their long-term commitment to absorbing the costs associated with click and collect. Venturing, no doubt, that such a strategy will lead to increased footfall in store, turnover and market share. They have concluded that a click and collect offer now constitutes a minimum expectation on the part of consumers, with the hubbub having moved on to “same day delivery”, while “delivery by drone” is perhaps just around the corner as the next revolutionary development set to become normalised.
The John Lewis brand is certainly held in high esteem, and perhaps the company believes that this is enough of a differentiator in itself to warrant making the move to charge for click and collect. In this they are assisted by an affluent customer base that looks to quality of product and service, rather than cost, when determining where and how to shop.
One thing is certain: It will be a tricky position from which to backtrack for either side, should the need arise.
One could forgive retailers if they felt they were being presented with something of a Hobson’s choice here: Constrain their offer by eschewing click and collect and be seen as a laggard organisation, or run with it, thereby introducing additional financial burdens which then need to be offset.
There is, however, another way.
The answer is to look at the business holistically and view click and collect as a part of a larger machine encompassing physical stores, e-commerce, mobile apps and social media: Perhaps a loss leader, but no less valuable because of it.
For retailers, in-store customers waiting to collect represent a captive audience whose experience can be carefully orchestrated, where opportunities for up-selling and cross-selling abound. Meanwhile, in respect of mitigating fulfilment costs, there should be every attempt on the part of the retailer to integrate the supply chain and maximise the return on store stock. In addition, by adopting a flexible approach, retailers can deploy a multi-skilled workforce when and where necessary to respond to spikes in demand, ensuring a more efficient use of labour resources.
Click and collect is just one, albeit increasingly important part of a wider seamless omnichannel trend, with the 2016 Internet Retailing report on the UK’s top 500 retailers finding that 58% of retailers now offer it, up from 44% just a year ago. Those retailers who pitch their offer correctly are unlikely to win much recognition for their efforts, but get it wrong, and they could be making headlines for all the wrong reasons.
Posted 11 July 2016