UK Click & Collect Review 2015 Extract

Transcription

1 UK Click & Collect Review 2015 Extract This review is intended to present an objective and pragmatic view of click & collect and develop understanding of the solution for multichannel retail stakeholders, its current use and potential.

2 1Introduction The IMRG Collect+ UK Click & Collect Review is designed to present an objective and pragmatic view of click & collect a relatively recent development in e-logistics. However, even positioning it specifically as an e-logistics innovation is somewhat misleading because it has a clear influence on sales conversion, customer satisfaction, operational costs and even store design and location. The aim of this review is to develop multichannel retail stakeholders understanding of the solution, its current use and it s potential. It is not intended to produce any particular conclusions or specific recommendations as these will be dependent on each retailer s individual circumstances and they will have to consider: Customer profile Store footprint The desired customer experience However the information provided in this review will provide an important foundation for retailer strategies and signpost areas for consideration when making decisions about the deployment of click & collect solutions. Subject to the development of click & collect which over the last three years has been dynamic we expect to update this review periodically to keep industry informed and intend that this shall become the definitive source of information on the subject. I am delighted to support IMRG in its publication of the first, definitive industry perspective on the retail phenomenon of click & collect. In just one decade, click & collect has gone from early trials amongst innovative retailers to a standard component of the multichannel retail proposition. From 2009, Collect+ has pioneered third party collect and return services in the UK. Our company has certainly benefitted from the enthusiasm with which customers have adopted this flexible, convenient and accessible addition to the portfolio of delivery options from retailers of all sizes and markets. This review is both extensive and authoritative and offers a broad insight into the evolution of click & collect most importantly the way in which it has evolved in the UK, which is undoubtedly the leading digital retail market in the world. All click & collect options are thoroughly covered in the report, including retailers in-store services and those offered by third party providers such as Collect+, as well as the emergence of locker solutions. The report is clearly aimed at informing retailers that are new to click & collect, but it also aims to challenge and provoke the thinking of those who have already embarked upon their journey. Both myself and my team at Collect+ hope you find this report insightful and most importantly useful as you enter the next phase in click & collect developments within your businesses. Neil Ashworth, CEO, Collect+ IMRG Collect+ UK Click & Collect Review

3 4Why is click & collect now such a hot topic? Although the recent development of click & collect in the UK has been dynamic, it is actually one of those overnight market developments that has in fact been around for 15 years but has only come to the top of the e-logistics agenda over the past three years to meet a number of strategic market needs. Cost For many years B2C delivery (Business to Consumer) has been a low margin activity for carriers but with the annual double digit increase in home delivery volumes this market could not be ignored. However the need to accommodate increasing volumes (and the events of Christmas 2010) led UK carriers to harden their rates during 2011/2012 in order to allow investment in the capacity and the technology needed to cope with demand and increasing retailer and customer expectations. This coincided with regulatory decisions around postal prices meaning that these too increased raising the foundation prices for home delivery. Capacity Driven by the increase in online retail deliveries it was becoming apparent that the capacity for UK carriers to deliver everything to customer homes was becoming stretched, particularly during the Christmas peak. This issue came to a head in 2010 when, due to extreme weather conditions, parcels were stuck in depots and on trailers and in desperation carriers and retailers asked shoppers to come and collect their Christmas orders. Many did so and this contributed to a fresh awareness of future customer demand for a more structured solution. Following this experience UK carriers began taking a more prudent approach to peak capacity planning and actively limited the volume of parcels they were prepared to accept for the Christmas peak period in subsequent years. Since 2010, carriers have invested in additional delivery capacity but also in 3rd party parcel store and locker networks which together with in-store retailer options have created significant new final mile capacity. For carriers, this means: The potential for the delivery of multiple parcels to one business address which is generally more cost-effective than delivery to multiple domestic addresses Delivery to a parcel store or locker is certain to be accepted first time so avoiding repeat delivery attempts 2 2. On average between 3% and 4% of home deliveries cannot be made at the first attempt and have to be re-delivered or collected by the customer. Source IMRG MetaPack UK Delivery Index. Once again this gave retailers another reason to look at new lower cost delivery strategies including multi-carrier / multichannel options and in-housing of some deliveries. Click & collect in its various guises supported these approaches. Contingency Brought sharply into focus by the problems of 2010, UK retailers realised that they could no longer rely on the home delivery option alone. Click & collect provides an additional way in which shoppers can specify and anticipate the receipt of their online order. Choice and convenience The UK s online shoppers are arguably the most sophisticated in the world with the highest spend per capita over an extended period of years. In other words, UK shoppers know what they want and increasingly that is choice and convenience. The IMRG Blackbay UK Consumer Delivery Survey (see section 5) demonstrates the importance of the ability for shoppers to select a delivery option that allows them to get their online orders at a time and place convenient to them. Click & collect provides another such option. Customer experience Finally, as retailers began to invite customers to collect their orders they discovered that, especially in-store, they could better manage the customer experience, upsell and cross-sell additional products and handle returns more efficiently. Over the past two years retailers have found that click & collect drives in-store footfall and incremental spend and has become more than just another delivery channel. It is now a marketing device. IMRG Collect+ UK Click & Collect Review

4 5Consumer motivation If retailers and carriers have now identified the benefits of click & collect, what about the UK s online shoppers? Although starting from a low base, the latest results from the 2014 IMRG Blackbay UK Consumer Home Delivery Survey shows that shoppers are now becoming familiar with click & collect. Although the majority of shoppers still generally prefer a delivery to home, (subject to price and specific circumstances) they now recognise that click & collect provides another way to make online shopping easier. The chart below shows the proportion of surveyed shoppers who consider click & collect to be an important convenience option. The results in this chart suggest that the in-store option is most likely to be used but a significant proportion of UK shoppers would be interested in the 3rd party parcel store and locker options for both the initial delivery or re-delivery should they not be at home when the first delivery attempt is made. The attractiveness of 3rd party networks may further increase as retailers look to optimise their store portfolios. What motivates shoppers to select these services and why now? Compared with some other geographic markets, UK shoppers have been comparatively slow to adopt click & collect as a means for getting their online orders. Prior to 2008 UK shoppers had little opportunity to try these services, mainly because UK retailers were not promoting them. The earliest examples of in-store click & collect were probably: Argos, with collection from store as part of its core business model Woolworths in 2002/3 Tesco Direct in 2006 House of Fraser which first launched its buy and collect service in rd party parcel store and locker solutions had been tried on the back of field engineer pick-up networks but until 2009 the Post Office was really the only network with an established brand. Despite this its Local Collect service was not widely used. Now, for the reasons previously explained in section 4 an increasing number of retailers provide click & collect options at checkout and shopper awareness is increasing, not only for receiving parcels but also for returning and sending parcels in their own right. It would be fair to say that the 3rd party parcel store and locker networks have been established to take advantage of all three service options delivery (collection by the customer), returns and dispatch (shoppers sending parcels) but that currently most 3rd party volume comes from the last two. Source: IMRG Blackbay UK Consumer Home Delivery Survey The IMRG Collect+ UK Click & Collect Review will be updated with the 2015 results in May IMRG Blackbay UK Consumer Home Delivery Survey 2014 identifies that 87% of respondents normally have orders delivered to home. 5. A YouGov report (commissioned by JDA) found that of the 2,398 people it questioned on the 29th and 30th December 2014, 39% had used click & collect over the Christmas period and 53% of these did so because of its convenience. IMRG Collect+ UK Click & Collect Review

5 6Perception, expectations and use This section explores not just how each of the click & collect options is being used in each country but also the perceptions of this solution. Click & collect options used Independent results from several survey questions reveal the clear current preferences for UK shoppers and how these differ from Germany and France. The chart below shows which click & collect services solutions shoppers would opt for if the options were available: Source 1: Hermes Parcel Deliveries 2014 Usage and Attitudes Survey Source 2: MetaPack Delivering Consumer Choice 2014 For both surveys, although the sample size and methodology may differ, we see that: Source: IMRG Blackbay UK Consumer Home Delivery survey 2014 When looking at which click & collect options are frequently used, we see again that lockers are currently the least employed: Source: IMRG Blackbay UK Consumer Home Delivery survey 2014 This is further confirmed when we look at a comparison between the UK and its two near neighbours, Germany and France. In the UK the most popular click & collect option is in-store The most recent IMRG research 16 supports this with 73% of respondents having used in-store click & collect / reserve & collect and 10% intending to do so in the near future In Germany lockers are at least equivalent to in-store in popularity but parcel stores are most often used In France the parcel store is very well established and by far preferred for the majority of shoppers The MetaPack Delivering Consumer Choice Survey provides additional insight into the use of lockers: UK only 10% of respondents have used a locker service; and: Most (90%) found it easy 84% would use again 78% would recommentd 17 Germany - 50% have used a locker service; and: 91% found it easy to use 84% would use it again 85% would recommend France - only 9% have used a locker service and: 86% found it easy to use 82% would use it again 76% would recommend 16. IMRG edigitalresearch ecsi Click & Collect Survey January Research by InPost confirmed that 72% of UK shoppers it surveyed would recommend it to others. This rises to 97% in more established markets. IMRG Collect+ UK Click & Collect Review

6 7UK market coverage, volume and trend Despite the recent surge in interest, in the UK many retailers are yet to offer click & collect at all and for those that do the level of use varies considerably. Click & collect can apply to: Multichannel / omnichannel retailers relying only on their own large store networks Multichannel / omnichannel retailers with large store networks also using 3rd party networks to extend their click & collect footprint Retailers with smaller or regional store networks also using 3rd party networks to extend their click & collect footprint Pure-play retailers entirely reliant on 3rd party networks for offering a click & collect service Looking specifically at multichannel retailers we have more insight thanks to the IMRG Capgemini Quarterly Benchmark Report which has tracked the use of click & collect by multichannel retailers for four years. Within each of these groups the provision of click & collect is dependent on the ability of individual retailers to offer and promote this channel. There is little data (covering all types of retailers), on the proportion of UK online orders that are fulfilled through click & collect. However using available IMRG and published data we are able to make some reasonable estimates. An IMRG survey in April 2014 interviewed 46 online retailers on the subject. The charts below show that the proportion of retailers offering some form of click & collect has increased over the past year; most significantly with multichannel retailers. In terms or order volume, overall we estimate that in 2014 the number of click & collect orders was in the region of 80 million with the majority of these through the in-store route. Source: IMRG Quarterly Benchmark Report 27 Not surprisingly, retailers with store networks outperform the market average and show a steadily rising trend for click & collect. In early 2014 the MICROS Multichannel Report 28 also showed that the number of retailers offering in-store click & collect had increased to 44% of the survey base, rising from 32% the previous year. For larger retailers with more extensive store networks the figure was higher at 57%. 27. Defined as Total gross revenue generated through pre-paid web order for collection in store or other drop off points as a percentage of total gross revenue for the quarter (transaction completed online). 28. The MICROS Multichannel Report is based on research of 239 retailers conducted between October and December IMRG Collect+ UK Click & Collect Review

7 1The Future Finally we take a brief look to the future which given the pace of innovation and development in this space, may not be too far away. A number of ideas that were not even being discussed a year ago are now being trialled. Our intention here is to inform and imagine and we have (largely) resisted the temptation to offer an opinion on whether these ideas are viable or will have a real impact. Lockers As automated locations lockers already have the ability to provide additional services including banking, mobile phone top up, messaging and advertising services. If services such as these can be added to lockers they could increasingly become destination locations which will further drive their use as online collection and returns points. For example, in Singapore SingPost now has 8 concept stores accessed through an auto-lobby which allows customers to use a range of mail and parcel services, including click & collect lockers known as a POPStation. Retailer direct 3rd party networks In order to provide a consistent brand experience and high level of control over non-store click & collect orders there are signs that some large retailers are looking to set up their own 3rd party relationships. ebay has confirmed the roll out of its click & collect service with Argos, to be offered through over 650 stores nationwide House of Fraser has launched a trial with a noncompeting retail network, Caffé Nero. The aim is to provide a high level of customer experience where shoppers can not only collect orders but can browse at leisure over a cup of coffee Car manufacturers (notably Volvo) can enable the driver of a car to remotely authorise a delivery agent to securely access the boot of their car (at work, the train station etc.) to leave a parcel. This creates as hybrid safe-place / click & collect service. Although lockers placed in car parks / park and ride locations would serve the same purpose, this would rely on the car being parked in the same place each day. The Volvo solution allows the delivery agent to locate the car wherever it is. Same day delivery In section 7 we reported on the first example of a same day click & collect parcel store service operated by Pass My Parcel for Amazon. This is reliant on the availability of stock within a reasonable distance of the click & collect location and the ability to collect and deliver cost effectively. As such this option may be very retailer specific. However if the stock is available services such as those provided by newspaper and magazine delivery companies, or same day couriers as utilised by City Sprint and Shutl, can support this. Drones Drones are currently much talked about as a means to provide low cost home delivery. Most likely limited by carrying capacity and range, the use of drones may be restricted to deliveries where stock can be held relatively near the final delivery point. Where this is the case drones may support same day click & collect in the same way as described above. If these initiatives work other such relationships will not only increase the number of parcel store locations available to customers but will challenge the service standard provided by 3rd party operators. In Boot In Scandinavia, where click & collect is more established and is for many households the normal delivery method, in-boot delivery is being trialled. 44. Retail Systems October IMRG Collect+ UK Click & Collect Review