GlobalData Plc
  • Click & collect to grow rapidly out to 2021 but delivery subscriptions may curb longer-term growth

Click & collect in the UK is outperforming the wider online channel with expenditure expected to increase by 64% between 2016 and 2021, compared to online growth of 38% over the same period. Click & collect will grow across all categories; however, expansion will be driven by clothing & footwear, which is forecast to grow 85% over the next five years.

While increasingly time-poor consumers seek to minimize time shopping, growth of the click & 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.

Retailers may favor 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, 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 multi-channel 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 multi-channel player to launch a delivery subscription service.

Other fulfillment options are also being trialed by many retailers, such as PUDO (Pick Up Drop Off, which includes lockers and collection from convenience stores), which despite a comparatively low take-up is expected to grow by 117% between 2016 and 2021.

Click & collect encourages additional spend but delivery subscriptions encourage loyalty

In the past, retailers have favored click & collect expansion because it can encourage additional purchases in-store. In 2013, 29% of consumers made an additional purchase when collecting their delivery; by 2015, this was 39%.  This suggests that retailers are doing well in-store to encourage consumers to browse while collecting purchases.

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 in-store 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 & collect offers none.

Zoe Mills, Retail Analyst for GlobalData, comments: “A growing number of consumers choose click & collect when purchasing online – though largely to avoid delivery charges. Retailers must ensure that click & collect is as efficient as possible, particularly by offering same-day collection, to ensure they don’t lose out to retailers with delivery subscriptions propositions.”

– Information based on GlobalData’s report: Click & Collect in the UK 2016

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