Click and Collect helping fuel the growth

You may well have noticed that more and more retailers are offering a collection option for products bought on their website. But have you realised how fast this service is growing?

The latest retail figures show that whilst overall sales are flat or even falling, internet sales which were themselves barely growing earlier in the year are once more on the increase. There are of course lots of reasons for this but one appears to be the growth in click and collect – an option provided by the bricks and mortar retailers for customers to place their orders on line but then collect from a nearby store.

A number of retailers, such as Tesco and B&Q, started offering a partial service a couple of years ago but had limited take up.  However as customers start to realise the convenience this offers, the greater choice, and most of all the fact that most retailers don’t charge for this service, demand has started to rocket.  Sainsbury have a massive roll out plan to provide a collection service in over 800 of its stores by the end of the year, and John Lewis has just announced it is doubling the number of collection points in its Waitrose stores to 120 by October to serve shoppers without a nearby John Lewis store. The website lists 29 retailers now offering this service and there are likely to be more. And it’s clearly popular, with retailers reporting from a third to more than a half of their customers already using this service.

For most retailers this is still a non-food offer, but Tesco have gone further by offering a drive through grocery collection service in a select number of stores.  This means you can order on line and pick your shopping up from the store at lower cost, avoiding the need to be at home to receive the delivery. Tesco even loads your car for you.

The good news for bricks and mortar retailers is that this is finally giving them some ammunition with which to fight the purely on-line retailers but for how long?  Amazon have hinted in the past that they may have to open stores and are progressing with the installation of collection boxes in 7-eleven stores in the USA, and also in shopping centres in the UK.

What is still not clear is what impact this will have on store layouts. People do not always turn up straight away to collect their parcels, and as volumes increase more and more storage space will be needed to hold product- space that would otherwise be valuable sales area. Maybe in the future we will see a merger of the logistics function with marketing. The collection point could be a shared facility that is also a show room and a brand marketing tool, at least among up-market brands. In fact we could see a different sales model develop eventually, combining the branded shop front with the almost unlimited range of products that can be offered when shelf display space is not a limiting factor.

In recent years there have been numerous pilot projects to set up collection points in local shops and service stations but the economics have not stacked up. These pilots could not offer the service free of charge, which seems to be key to success. This really seems to be an area where the bricks and mortar retailers have the edge.