Click and collect is booming, but how do retailers cope with such dramatic increases in demand? Penelope Ody investigates the sustainability of the store collection model.
In theory it is a win-win for customers and retailers alike. Shoppers place their orders, pop into a local store during their lunch hour to collect, where super-sales staff have the chance to encourage add-on purchases, and the customer departs, happy and contented. No need to wait at home for a delivery and a cost-effective solution for the retailer. Reality is often very different and anecdotal tales of lost orders and long queues at the collection counter abound. Instead of being a positive customer experience, click and collect (c&c) is likely to spawn a raft of critical posts in the twitter-sphere – as even a cursory glance at Trustpilot or any social media site quickly demonstrates.
If retailers are having problems now, then the next couple of months, as we approach the Christmas peak, will only make things worse. Already some department stores are reporting peak c&c orders of up to 500 a day, while research by consultants Kurt Salmon suggests that these numbers could quadruple by 2017. “Click and collect is supposed to be convenient,” says Judy Blackburn, Director at Kurt Salmon , “but standing in a queue for 20 minutes waiting to collect the order is quite the opposite. Retailers need to put the tools in place to manage customer expectations more effectively. That could mean greater use of timed collections, for example, better workplace management systems so that enough staff are available, or real-time applications to warn customers via mobiles that there could be a queue and suggest they come to collect later in the day.”
It can also mean expanding the collection options to the Post Office , Collect+, locker schemes such as ByBox, or the various pop-up collection points emerging at railway stations and car parks.
In store, collection queues are not the only problem: finding space in crowded stock rooms to store several dozen packages each day can be challenging for specialty shops, while stores which have installed collection desks by their main entrances may need to enlarge them significantly as orders ramp up. “When there were 15 or 20 packages to be collected each day it was all fairly easy,” says Craig Sears-Black, Managing Director of Manhattan Associates UK & Ireland , “but when there are several hundred it is a different matter and retailers need new systems to manage put-away and retrieval.”
The result is mini-warehouse systems which can match parcels to numbered locations on suitably designed shelves to give a rapid reference to staff and enable easy retrieval. In the US, retailers such as Ann Inc, J Crew [irdx RJCW] and Belk have already introduced such technology and Sears-Black has three UK customers currently at the implementation stage. But – as he also points out – many retailers are fulfilling c&c orders from their distribution centres with the items arriving by parcel carrier or in bulk with the daily delivery, and that requires disciplined staff to log locations and put away the several dozen items efficiently. Leaving them in a box in the back room is simply storing up problems for later in the day.
“Orders also tend to be collected in waves,” he adds, “usually at lunch time or after work, so there can be significant peaks in demand and that needs to be matched to the labour scheduling system. Perhaps retailers will need to adopt timed collection slots and limit the numbers that can be available at any one time rather than have customers queue for half an hour.”
Sam Anderson, Senior Consultant with Salmon, believes many customers are unlikely to comply: “I want to collect orders when it is convenient for me,” she says, “not at a time the retailer suggests, so if there is a restriction that would probably act as a deterrent to purchase.”
While many retailers are currently facing a dramatic increase in c&c Salmon clients Argos [irdx RARG] and Halfords [irdx RHAL] have been offering a variety of reservation, ship to store or click and collect models for years: currently 90% of Halfords’ online orders are collected in store. “Where companies are fulfilling from store then the orders tend to come in throughout the day and are treated as just another customer,” says Anderson, “so you don’t have a large number of parcels to deal with at any one time. If the orders do arrive in bulk from the DC then the store should automatically receive a list giving all the details or else they can use bar codes to scan the information into their collection system.”
For Alex Fovargue, Retail Specialist at SAS UK & Ireland it is still far too early to accurately predict any patterns in order placement or collection. “Retailers are struggling to forecast demand for click and collect as it is all so new,” he says. “Normally you’d have two or three years of data on which to base your predictive model but most retailers don’t have that. How, for example, does the click and collect pattern vary with the weather? How does it impact store visits? Over time, when there is sufficient history, it will be much easier to match demand with capacity but at present retailers are having to ameliorate customer service – by offering a free coffee, for example, while shoppers wait.”
Currently, he adds, a store manager may only appreciate the scale of the day’s c&c problems when 200 packages arrive with the morning delivery. “Most labour scheduling systems work a week ahead so it is not easy to call in additional staff at such short notice, although zero hours contracts can obviously help,” he says.
Retailers may have to set constraints on C&C orders
Typical retail data silos don’t help either. In theory it should be easy enough to alert customers to high levels of demand at the collection desk and suggest that they avoid a lunch-time collection. “The problem is that data is in stove pipes,” says Fovargue, “and it is highly unlikely that the click and collect system can connect to the CRM system which contains the contact details of customers. Data isn’t joined up and there is no real-time immediacy.”
As well as real-time data, Lee Gill, VP Retail Strategy at JDA Software, argues that store fulfilment – as with Halfords and Argos – should ultimately be the preferred solution for c&c orders rather than current models based on DCs or dark stores. “Store fulfilment is the most cost-effective,” he says, “but that needs good forecasting and demand models and click and collect orders are currently not as predictable as store purchases.” On the list of “must also haves” he puts not only workforce management, to ensure enough staff are available to cope with demand, and the in-store picking and put away tools favoured by Craig Sears-Black, but also space planning – to ensure that the store has the correct mix of storage and selling space to cope with orders at peak – and a store assortment that reflects not just real-world shoppers but those also ordering online. “Click and collect is growing faster than home delivery,” he adds, “and in time there will be patterns in ordering and collecting goods which are predictable and will be successfully matched with staff capability.”
Until then views are divided on whether the availability of c&c, like home delivery grocery orders, should be openly curtailed. Like Sam Anderson, Gill maintains it would be “commercial suicide” for a retailer to start telling its customers when to collect or that collection from store X is not available and they must go to store Y or collect on a different day. Craig Sears-Black is not so sure. “Retailers may have to start saying ‘no’,” he says, “and set constraints on the number of orders that can be collected in any one day. We’re seeing some concerns about this in the US where stores want staff to be available to sell not to be in the back room shifting parcels.”
If, as Kurt Salmon suggests, c&c orders will increase four-fold in the next three years then that “500 parcels at peak” could become 2,000. Even if today’s 100 parcels a day becomes 400, and if each takes just two minutes to retrieve and hand over then that takes 13 hours or so of staff time to process and possibly as much again to place the parcels in designated racks and log location details at the start of the day – even longer to collect and pack orders fulfilled from store. And that will mean some very fundamental changes in store operations.
“If click and collect does grow by that much then how much ‘normal’ shopping activity will it change?” asks Judy Blackburn. “How will stores manage footfall while maintaining service levels and brand image? Will some sales assistants become full-time parcel shifters?”
In August, the Government announced an end to the need for planning permission for collection lockers so perhaps, if those lunch-time queues really do become intolerable, we’ll all be opting to collect from convenient lock-ups instead – which rather changes that win-win model as shoppers will no longer actually need to go into stores.