IDC Comment: U.K. Planning Law Favors "Click & Collect"

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27 Aug 2014

Miya Knights, Senior Research Analyst, IDC Retail Insights, mknights@idc.com,
Luca Bonacina, Senior Research Analyst, IDC Retail Insights, lbonancina@idc.com, @lucabonacina

London, 27 August, 2014 - The U.K. government is planning to ease restrictions on retailers extending their high street shops to facilitate "click & collect" services. The plans, announced this month, have polarized industry opinion as to whether the move is more likely to favor smaller, independent or larger retailers, but IDC believes the intention to enable closer ties between ecommerce and physical stores could accelerate the evolution of omni-channel retailing for those that embrace the plans.

The popularity of click & collect has grown rapidly in the U.K., proving just as popular with consumers as it is with omni-channel retailers. While shoppers value the flexibility it offers, the service also reduces the retailer’s fulfillment overheads by eliminating the cost of failed or successful home deliveries, so much so that many offer the service for free, in the hopes this will also drive footfall in-store as a boost to conversion rates and basket sizes. In fact, research commissioned to support the U.K. government plans found that 35% of U.K. online shoppers already click & collect, while it predicts that figure is set to double within the next three years.

Looking farther afield than the U.K., the latest IDC research into the business initiatives and IT priorities of Western European retailers suggests merchants will look to improve their profitability over the course of the year by establishing initiatives aimed at increasing retail sales, which include product and service innovation and the enhancement of the overall customer service level. With retail companies coming under increasing pressure to source and fulfill against omni-channel customer demand in ever decreasing timeframes, the reassessment of their execution and delivery capabilities — including delivery and shipment services — is an area on which Western European retailers are already focusing (resulting in approximately $700-million worth of IT investments – see IDC_RI #GIPW51W).

Although activity around enhancing execution and fulfillment capabilities is increasing at a regional level, the landscape at country-level is more heterogeneous. In fact, IDC research indicates:

  • As demonstrated by the aforementioned growth of click & collect services cited in support of its government’s plans, the U.K. is not only the most mature country as far as omni-channel is concerned, but it is also a pioneer when it comes to click & collect services. All the major players in the industry (Tesco, M&S, Asda, H&M, Burberry, Halfords, Argos, and Asos, as just a few examples) have been among the first companies in Western Europe to set up several delivery service options to offer their customers the best delivery experience based on their needs.
  • France is also trying to capitalize on this trend, but lags a little behind the U.K. Interestingly, French retailers (with Carrefour, Auchan, Leclerc, Leroy Merlin, Galeries Lafayette, and Oxylane being the most representative examples) have taken a different approach to click & collect services, and French merchants have backed a drive-through model (either through stores or warehouses). But traditional store-based picking is used for deliveries as well. In contrast to the U.K., the French government has evaluated the possibility of forcing retailers offering click & collect services to pay for a license ("Loi Duflot"); moreover, the Tascom tax may negatively impact the further development of click & collect services in this country for medium and large stores.
  • German retailers are offering click & collect services in some specific retail segments, such as consumer electronics (Metro AG: Saturn-Media Markt chain) Southern European countries (Italy and Spain), where the adoption of omni-channel retail business models is still marginal, lag behind the aforementioned European countries, and only the largest retailers, such as Zara, El Corte Inglés and OVS, or international players are currently trailing click & collect services.

Retail has reached a reset moment in Western Europe. Retailers are looking to move beyond less efficient and, therefore, less profitable multichannel and cross-channel business models amid ongoing economic uncertainty. This trend reflects the growing importance of omni-channel retailing. Major merchants are assessing their technology, business and organizational capabilities to deliver what their end customers are asking for — a completely integrated and fully immersive experience regardless of channel or touch point. To this end, IDC concludes that establishing advanced omni-channel fulfillment capabilities, spanning both online and warehouses or stores, will be of paramount importance for retail companies.

News Source : IDC Comment: U.K. Planning Law Favors "Click & Collect"
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