Click & Collect - Saviour of retail?

Read other articles in the April issue of Business Review Australia

Traditional bricks and mortar retailers are facing significant challenges due to the wave of digital disruption sweeping the industry. Shopping and spending is shifting online as technology progresses and consumers become more digitally-savvy. This year, Asia Pacific will actually surpass North America to become the world’s largest market for business-to-consumer e-commerce sales, with sales of nearly $1.5 trillion (eMarketer). Australians in particular have embraced online shopping, spending more than $14 billion online in 2013 – a surge of more than 9% from $12.8 billion in the previous year.

Essentially, shopping is shifting from bricks to clicks.

Retailers need to react and change their approach to satisfy this customer demand. From personalised marketing communications to flexible delivery options, retailers are increasingly learning that offering more choices to their customers often delivers significant value further down the line. Perhaps the best example of this new focus on customer satisfaction is a concept called Click & Collect.

Unlike traditional “pick-up-in-store” scheme, Click & Collect allows customers to check if a product is available and then reserve it to pick up in store, or another convenient location, at a later time. In the face of margin-squeezing competition, Click & Collect is proving to be an increasingly popular shopping style and offering retailers the opportunity to win a greater share of the wallet. In fact, it will soon account for half of many retailers’ online revenue, according to recent estimates.

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Many of Australia’s biggest retailers have already adopted Click & Collect models. Last year, supermarket Woolworths trialed the country’s first airport grocery collection service, allowing customers to shop online or via their smartphone app and then pick up their order from a store in the Melbourne Airport. Its competitor Coles also offers Click & Collect services, allowing customers to order the same day and pick up at select store locations or in the new locker fridges placed at select Express Service Stations. With major department stores including David Jones and Myer also jumping on board, the Click & Collect trend is growing in Australia, along with customers’ expectations. 

Building a seamless journey

The overwhelming rhetoric around Click & Collect is positive, with choice, convenience and flexibility at the heart of most offerings. However, while the advantages for customers are many – from saving money on shipping fees to being able to see or try the products in person – retailers face a number of challenges in their quest to bring true Click & Collect convenience to the masses.

Click & Collect models test a retailer’s capability to deliver multichannel customer experiences. Testing, debugging and harmonisation are key to minimising potential mishaps and bottlenecks. Investing in quality control is critical, as Click & Collect is an entirely new buying experience for many consumers and first impressions are worth their weight in gold.

In the rush to produce a suite of channels optimised for different devices, it can be easy to forget to check that each channel is e-commerce ready. Mobile Web search is projected to surpass desktop to drive Click & Collect traffic by 2015, but this trend will only be successful when retailers’ mobile convenience lives up to users’ expectations. Ease of use and navigation take on whole different meanings when rendering online content tailored to different screen sizes of mobile devices.

Consumers often jump around when looking to engage with retail brands. They are rarely channel loyal, and are as happy interacting with a brand via social media as they browse their mobile-optimised e-store. Retailers must juggle the fickle, seemingly random demands of the consumer with the need to provide a seamless online experience that not only makes the customer journey easy, but also results in a sale.

Click & Collect also offers the opportunity for better inventory management and a reduction in churn, but only if retailers get it right. There needs to be careful coordination between the front and back office, as well as throughout the supply chain, to ensure that products are available to the right customer, in the right place, and at the right time.

Another benefit of Click & Collect is that it also can help increase footfall in store, offering companies the chance to promote products with a higher margin to a larger audience. For example, customers who usually buy online may now find it more convenient to collect in-store to avoid delivery prices/schedule. However, this tactic comes with its own set of challenges, including identifying the right retail strategy for the right stores and ensuring there is enough stock to satisfy demand.

Perhaps one of the biggest challenges is for retail marketers to stop thinking in silos and start developing a true omnichannel strategy that provides a high level of personalised customer service. Consumers now dictate when and where they would like to collect/purchase their products, and retailers need to adapt to this shift in sentiment.

Harmonisation is key

Click & Collect on its own will not work as either a sustainable retail strategy or an impactful customer service proposition. It has to work in tandem with every other part of the business, from sales to marketing to logistics. Once this happens, retailers can start to use Click & Collect as a tool to attract new customers and gain a better understanding of exactly how their customers wish to interact with them.

Click & Collect has the potential to be the driving force in the future of retail. Used correctly, and with the wider business, it can help retailers not only retain valuable customers, but also can increase their share of shopping occasions and tempt new customers to try their services. As consumers become ever more demanding in what they want from a shopping experience, it’s hard for any retailer to ignore this fascinating trend.

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by Sana Dubarry, Director of Strategic Consulting, EMEA, Epsilon & Michael Kustreba, Managing Director, APAC, Epsilon