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UK Retail Briefing - March 2015
Analyst Comment 
 
CLICK AND COLLECT – GETTING IT ALL IN PERSPECTIVE
The last time that Mintel looked into Click and Collect services, in Spring 2014 we found that 35% of people (internet users aged over 16) had used C&C in the last year – roughly half of the 77% of internet users who had bought something online in the last year.

So the demand for Click and Collect is too large to be ignored and it is hardly surprising that Asda has recently announced a major extension of its C&C facilities and Sainsbury’s (belatedly perhaps) has begun to offer the service.

Why use it at all?
One might think that the biggest attraction of Click and Collect would be the convenience of not having to wait in at home. But in fact, the most important factor mentioned turned out to be cost:

FIGURE 1: Top 3 factors that shoppers like most about Click and Collect, May 2014
 
Base: 701 people who had used Click and Collect for non-food purchases in the last year
 
Source: Lightspeed GMI/Mintel

But while cost comes top of the list, the majority of the other options given in the survey were to do with convenience and in aggregate they were more important.

Where do they use it?
Collecting parcels from the retailer’s store is still the most popular way to use Click and Collect.

FIGURE 2: Where do Click and Collect users, collect their purchases from, May 2014
 
Base: 1,852 internet users aged 16+ who have bought any non-food products online in the past 12 months

| %
In-store | 27
Convenience store (eg Collect +) | 12
Lockers | 6

Source: GMI Lightspeed/Mintel

So what?
Click and Collect is growing in popularity (the data from Argos alone makes that clear). In part this is because such services are relatively new and consumers are getting used to them and the advantages they offer. Retailers themselves are only now really gearing up for it, as the announcements from Sainsbury’s and Asda demonstrate.

But as we have already shown, convenience, in the broadest sense, is the most important reason for choosing to use Click and Collect and for many people home delivery will be the most convenient option. So C&C will never replace home delivery. People will use both options depending on what suits them at the time.

Why are retailers investing in Click and Collect? 
The question may seem obvious and indeed one reason is the obvious one. But we think there is a second reason why retailers should be encouraging it. 

Service
The first reason is the obvious one – convenience to the customer. Convenience is probably the single most important factor behind where people choose to go shopping, particularly if one includes elements of good service. The key for any retailer is to make it as easy as possible to buy from them and that is why they have launched online services in the first place.

A store based retailer now has to be outstanding either in-store or online and it must have the best possible delivery service as well. It must make the most of its store base in terms of display and building its brand, while making it as easy as possible to buy online as well. For a store based retailer it is now completely artificial to make a distinction between online and in-store sales.

In-store customers spend more
All the evidence indicates that online shoppers spend less. In fact this is hardly surprising. The internet is can be hard to browse. Online shoppers know what they are looking for and then decide whether or not to buy it. It is very hard for a retailer to make an opportunistic sale online – there is no passing trade. And that is why it is so important to persuade people to come into the store.

The disparity is most obvious in food retailing. 18% (of internet users) tell us that they typically use online for their main weekly shop. Yet online accounts for under 5% of all food retailers sales. The fashion figures are not quite so extreme, though they are still striking. 69% of internet users tell us that they have bought clothing online. 28% say that they spend more online than in-store. Yet we estimate that online accounts for only 15% of all clothing sales (and almost two thirds of that is from store based retailers).

Customers themselves sense that they may be missing out by shopping online. In our survey, 58% of people who had used Click & Collect agreed that it encouraged them to visit the store more often. Though 64% said it encouraged them to shop more online

Dedicated Click and Collect outlets
There are many new click and collect outlets being developed, from Doddle to John Lewis’ new outlet at St Pancras. All are experimental and it is too early to say which will work. Doddle allows customers to try on goods and the return them if necessary without having to take the goods home first. John Lewis in St Pancras is actually a small store with key elements of the John Lewis offer, especially electronics geared towards generating add-on sales. 

The problem for both of these ideas is that a dedicated Click and Collect outlet has to be convenient and that it likely to mean that it must be in a high footfall location and that, in turn, is likely to mean that it will be expensive.

Going forward
Click and Collect is a key element of any retailer’s armoury – whether that retailer is store based or a home shopping pure player. It has already become essential. It is not a growth driver as such, more of a growth defender, but it is part of the strategy of any retailer these days. It must be as easy as possible to buy from the retailer of your choice. Every retailer has to achieve excellence in all aspects of online retailing. That is the real impact of online. It has added another layer of complexity and another aspect of the business which has to achieve excellence. Click and Collect is just part of that.

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