How We Will Buy Food In The Future
Food never goes out of fashion – we all need it and we always will.
Where is e-food at the moment in terms of breaking even?
In recent years, the e-food sector has seen a considerable increase in activity. Established suppliers – particularly German-based REWE which now offers a delivery service that covers over 70 towns and cities – along with new players and startups are testing customer acceptance using various concepts. Nonetheless, the service is not yet as well-established in Germany as it is in other markets. While the online share of the food retail market in Great Britain exceeded 5% and was almost 4% in France in 2015, the figure for Germany was still under 0.5%. At the moment, the high costs of the ‘last mile’, combined with a high degree of price sensitivity among German customers spoiled with discount prices as well as the low margins in the food retail market, mean that suppliers in Germany are barely breaking even with home delivery.
What about Click & Collect?
According to our analysis, Click & Collect services can break-even on the basis of considerably lower sales than their e-food counterparts. Goods can be collected in a store or at a central pickup point with the most practical place for the latter being at major transport hubs, such as motorway parking areas or train stations. When it comes to Click & Collect, customers value being able to avoid delivery costs as well as the flexibility the service offers in terms of picking up their purchases. For example, SBB Speedyshop, which is based in Zurich train station, targets commuters in particular. The service allows them to collect items they have ordered online or on their smartphones directly on their way home within a given period.
Could non-food items be a model for Click & Collect?
According to a recent survey, 16% of all German Internet users aged 16 and over have already used Click & Collect at least once. This is primarily in the non-food items sector. With retailers from all product segments, such as Douglas, OBI or Media Markt, whose online orders are already being collected by customers today, are prominently advertising the option of collecting items ordered or reserved online at pickup points. This emphasises the distinguishing characteristic of the multichannel approach in the battle against pure online suppliers.
What makes Click & Collect a source of revenue in the multichannel retail sector?
There are two main factors for success when it comes to a Click & Collect service – a service that is tailored to suit the individual needs of the customer, and the efficiency and reliability of the underlying processes. It is vital to understand the needs of the customers and their respective shopping missions. In some situations, the customer values the simplicity of the process above all. In these cases, immediately when they are selecting an item, customers can combine their preferred payment options with straightforward collection (Buy & Collect). In other cases, the customer may place particular value on ensuring the items are reliably available at the pickup point, where he or she can first inspect them or try them on before finally buying them (Reserve & Collect). This option appeals to ROPO (Research Online, Purchase Offline) customers in particular, who prefer to see the items in person following extensive research online.
What does this mean for pickup services?
It is essential to design and consistently optimise processes on the basis of a thorough understanding of your customers. How will the items be delivered to the pickup point – from an online warehouse or directly from the stock in the local store? How can we achieve 100% accuracy in inventory information? How do I create a positive customer experience? It is necessary to train your own staff so that contact with customers can be used as effectively as possible, e.g. for the purposes of cross-selling. It is also important to design the pickup point in accordance with the needs of the customer. A simple collection counter will not make it possible to utilise the full potential of the service.
Depending on the shopping mission, efficient, stylish collection lockers – with different temperature zones depending on the goods in question – should be used to make the pickup process as convenient as possible. Alternatively, a ‘collection lounge’ with trained staff, where customers can try on items, could be used to encourage customers to make additional purchases and increase loyalty to the retailer. There is no ‘one size fits all’ solution.