Click-and-collect is outperforming the wider online channel in the UK, with expenditure expected to increase by 64 per cent between 2016 and 2021.
That compares to overall online retail sales growth of 38 per cent over the same period, according to research house Verdict Retail.
Click-and-collect will grow across all categories; however, expansion will be driven by clothing & footwear, which is forecast to grow 85 per cent over the next five years.
The data is sourced from Verdict Retail’s report: Channel Report Series: Click-and-collect in the UK 2016
“A growing number of consumers choose Click-and-collect when purchasing online – largely to avoid delivery charges,” observes Zoe Mills, analyst with Verdict Retail.
“Retailers must ensure that Click-and-collect is as efficient as possible, particularly by offering same-day collection, to ensure it doesn’t lose out to retailers with delivery subscriptions propositions.”
While increasingly time-poor consumers seek to minimise time shopping, she believes the growth of the Click-and-collect market will wane as the market matures. Over the next five years, the development of the click & collect channel will come primarily from consumer frequency rather than retailer adoption.
Verdict says retailers may favour investment in alternative methods of fulfillment over the next five years
The future growth of click & collect will be heavily impacted by retailer improvements to fulfillment, with the greatest threat to click & collect likely to come from home delivery subscription services, most notably Amazon Prime (launched 2005), Asos (launched 2009) and more recently Boohoo, which launched in 2016. Home delivery subscriptions are a saving scheme for consumers, where consumers pay delivery for a year; this is paid upfront and consumers pay no further delivery charges for the duration of the subscription. Other online players are also expected to follow suit, and even some multichannel operators, such as department stores are likely to research how they may benefit from adopting delivery subscriptions. In particular, in November New Look became the first multichannel player to launch a delivery subscription service.
Other fulfilment options are also being trialed by many retailers, such as Pudo (Pick Up Drop Off, which includes lockers and collection from neighbourhood stores), which despite a comparatively low take-up is expected to grow by 117 per cent between 2016 and 2021.
Click-and-collect encourages additional spend but delivery subscriptions encourage loyalty
In the past, retailers have favoured click & collect expansion because it can encourage additional purchases instore. In 2013, 29 per cent of consumers made an additional purchase when collecting their delivery; by 2015, this was 39 per cent.
“This suggests that retailers are doing well instore to encourage consumers to browse while collecting purchases,” says Mills.
However, retailers had not expected uptake to be so rapid and as such the associated costs of click & collect – picking, handling and transporting of goods – currently outweigh the potential instore spend generated. With click & collect only generating on average just over £13 per consumer in additional purchases, the lure of delivery subscriptions is great for retailers.
“Subscriptions, on the other hand, tie consumers to the retailer for one year; and as a result, consumers who are signed up are more likely to direct more of their spend to that retailer. This offers increased customer loyalty where Click-and-collect offers none.”
