FORGET THE CLICK,
COLLECT MATTERS!
EXPLORING CONSUMER
ATTITUDES TO FULFILMENT IN
THE OMNI-CHANNEL WORLD
KEEPING PACE WITH NEW FULFILMENT DEVELOPMENTS IS
IMPORTANT FOR UK RETAILERS, BUT NOT AT THE EXPENSE
OF THEIR HARD EARNED CUSTOMER RELATIONSHIPS.
As consumers we want it all; we want to be
presented with a curated selection of products
just for us, which we can order and have
delivered in a variety of ways.
As a result, retailers continue to invest millions
in fulfilment services to create the omni-channel
experience that will keep them at the top of
the market.
We expect to be kept informed of where our
orders are to the minute, and we don’t want to
pay anything extra for the pleasure. This is a
veritable headache for retailers as it’s both
resource intensive and costly.
Two key issues emerge from this situation, firstly
new fulfilment systems tend to be add-ons or
third party hosted which creates a higher
chance of mistakes.
It’s a tough job to keep up with fulfilment
developments and make a profit. Customer
expectations are spiralling as competitors use
every tool available to make the purchase
journey as convenient as possible in their quest
for a greater share of wallet.
And secondly, retailers are starting to pass on
the costs to consumers through additional fees
and charges. For example, John Lewis recently
introduced a fee of £2 for any customer who
clicks and collects an order with a value of less
than £30.
OUR ‘FORGET THE CLICK, COLLECT MATTERS’ RESEARCH TELLS US MISTAKES IN
DELIVERY AND ADDITIONAL CHARGES ARE BOTH FACTORS THAT WILL INCREASE
DISSATISFACTION AND ENCOURAGE CONSUMERS TO LOOK ELSEWHERE.
OVER 80% OF CUSTOMERS WHO’VE HAD A BAD FULFILMENT EXPERIENCE SAY IT HAS
CHANGED THEIR PERCEPTIONS OF THAT BRAND FOR THE WORSE. CUSTOMERS ARE
ALSO MORE LIKELY TO ABANDON THEIR ONLINE PURCHASE IF THEY FEEL DELIVERY
CHARGES ARE TOO HIGH – AND ARE MORE LIKELY TO BUY THE GOODS ELSEWHERE.
Clearly retailers need to keep up with
consumer expectations but not at the expense
of losing the very customers they’re trying
to keep.
Technology developments and innovation are
now a constant, trying to keep up with every
fad is an unwise strategy.
Taking a step back and understanding
consumer needs in the context of the industry
drivers provides clarity about the long-term
fulfilment picture - making decisions about
investment that bit easier and not at the
expense of customer satisfaction.
WE TAKE A LOOK AT WHAT THE CONSUMER TRENDS ARE
IN UK RETAIL AND WHAT THAT MEANS FOR THE FUTURE
OF FULFILMENT…
THE QUEST TO BE
TOP OF THE
OMNI-CHANNEL
BRANDS IS HURTING
CUSTOMER
RELATIONSHIPS
UK RETAILERS ARE TRADING CUSTOMER SATISFACTION
FOR KEEPING UP WITH THE COMPETITION. THE WINNERS
WILL BE THOSE WHO FOCUS ON CONSUMER NEEDS TO
INFORM THEIR FULFILMENT DECISION MAKING.
The UK retail environment has seen sweeping
changes that has made meeting customer
demand for fulfilment a costly and complex
business.
The latest developments are often led by
competitor activity or IT developments rather
than consumer needs and some retailers are
choosing to pass on the cost of keeping up
to their customers, endangering the very
relationships that they are seeking to support.
We take a look at the industry drivers and what
this means for the future of fulfilment.
Retail in the UK is a huge industry with some
of the country’s biggest businesses at the
heart of it. The industry is worth 20% of the UK
GDP according to the BRC, and in 2014 UK
retail sales totalled £333 billion.
Online retail sales in the UK are expected to
grow by around 16% in 2015 to reach £50
billion, a significant market shift.
The retail industry has been under siege from a number of sides over the last few years, not just the
advance of digital technology that has brought about changes in the customer purchase journey –
once a simple pipeline, now as complex as a tree root system - but also from price pressures as
bargain hunting became fashionable in response to tough economic times and from new
competitors who have used an online-only presence to eat into traditional providers’ market share.
“It’s no exaggeration to suggest
that retail has changed more in
the last five years than the
previous hundred and there’s no
going back. This transformation
is taking place at an alarming
rate and retailers are facing
significant structural change”
BRC, May 2015
THE CHANGE
IN CONSUMER
BEHAVIOUR HAS
DELIVERED A
CHALLENGING
MARKET FOR UK
RETAILERS.
IN RESPONSE, UK RETAILERS HAVE HAD TO
INVEST LARGE AMOUNTS OF CAPITAL INTO I.T.
AND FULFILMENT SYSTEMS IN ORDER TO KEEP
PACE, AS DIGITAL TECHNOLOGY HAS EVOLVED
AND BECOME A CRUCIAL PART OF THE
CUSTOMER PURCHASE JOURNEY.
“Digital technology is influencing 33% of in-store retail sales in the
UK, equivalent to almost £100 billion in 2014” Deloitte, Nov 2014
SIMPLE CUSTOMER PURCHASE JOURNEY
PRE DIGITAL REVOLUTION
AWARENESS
PURCHASE
CONSIDERATION
ADVOCACY
The level of investment that UK retailers are prepared to spend on fulfilment shows no sign of slowing
down. A review of the latest annual reports highlights the fact that this race to be the omni-channel
champion is far from over.
Brand
Investments
Annual report
John Lewis
“Significant investment is planned in our IT infrastructure
and supply chain to support their efficiency and continue
to develop a market-leading omni-channel proposition”
2014
Tesco
“As part of improving our offer, we will invest in making our channels
even more efficient and convenient for our customers”
2015
Sainsbury’s
“Customers are looking to shop seamlessly across our
channels…and we are developing the technology to support this.”
2015
WBA (Boots)
“As part of our omni-channel strategy, we are making
technology investments in our websites and applications for
mobile phones”
2014
Home Retail
(Argos &
Homebase)
“The Group is investing heavily in multi-channel capability, with
improvements in digital capabilities. We are exploiting existing
infrastructure to develop market-leading fulfilment options”
2015
COMPLEX CUSTOMER PURCHASE JOURNEY
POST DIGITAL REVOLUTION
DISCOVERY
CONSIDER
DISCOVERY
DISCUSS
EVALUATE
RESEARCH
CONSIDER
COMPARE
REVIEW
PURCHASE
USE
RECEIVE
ADVOCATE
REVIEW
website
social media
RECEIVE
traditional ads
in person
comparison sites
media content
THE RACE TO OFFER A RANGE OF FULFILMENT OPTIONS
IS DAMAGING CUSTOMER RELATIONSHIPS
Although the addition of new technology and
fulfilment methods appeals to customers’
needs in terms of convenience and product
availability, there is a downside from a
customer relationship point of view, as
complex IT systems cause service issues that
could endanger the relationship customers
have with brands.
The fast pace of change combined with the
uncertainty over the future state of fulfilment
means that many systems are being installed
as add-ons or are third party hosted.
The disconnected nature of these systems
from the main IT architecture increases the
probability of something going wrong, and
retailers are the ones who get the blame.
In our ‘Forget the Click, Collect matters’
research we found that 52% of customers
blame the retailer either in part or in full when
something goes wrong with their delivery.
This has a negative effect on customer
satisfaction, as over 80% of customers who’ve
had a bad experience say that it impacts on
their perceptions of the retailer and over 60%
of customers say a bad delivery or click & collect
experience makes them less likely to shop at
that store in future.
Worryingly from a reputation point of view,
customers actively share their dissatisfaction
with others, as shown in the graph below.
Customers share bad fulfilment experiences
in conversation, online or on social media
68%
Poor delivery
27%
Poor click & collect
From the point of view of the decision makers in the boardroom retailers simply have to invest in
fulfilment to keep pace with competitors and technology. There seems to be a never ending list of
new technologies that require investment, which is eating into hard-won margins and some
companies are starting to pass these costs on to their customers:
JAN 2015 - ASDA INCREASES ITS MINIMUM SPEND FOR HOME DELIVERY FROM £25 TO £40
IN ORDER FOR ITS CUSTOMERS TO QUALIFY FOR THEIR DELIVERY PASS SERVICE
MAY 2015 - AMAZON DOUBLES THE MINIMUM ORDER VALUE TO QUALIFY FOR FREE
DELIVERY TO £20
JUNE 2015 - TESCO INTRODUCES A £4 SURCHARGE ON TOP OF DELIVERY FEES FOR ANY
GROCERY ORDERS UNDER £40
JULY 2015 - JOHN LEWIS INTRODUCES A £2 FEE FOR SHOPPERS COLLECTING WEBSITE
PURCHASES OF UNDER £30 FROM ONE OF ITS STORES
HOWEVER PASSING THE CHARGES ON TO CUSTOMERS IS HIGHLY LIKELY TO CAUSE
CUSTOMER DISSATISFACTION AND IMPACT ON HOW FREQUENTLY CUSTOMERS WILL
SHOP WITH THAT BRAND.
In our ‘Forget the Click, Collect matters’
research we found that free delivery is by far
the biggest preference with 62% stating they
would opt for this over other options.
Another recent research project found that
33% of those who abandoned their online
shopping part way through the process stated
the cost of delivery as the reason. It’s a brave
retailer who decides to introduce new charges
to its customers.
Customers may well tolerate these increases
for a period of time, provided they feel they’re
getting value for money, but there will be a
tipping point when they start to look for
alternatives.
It seems to be counterintuitive that retailers
build these fulfilment systems at great expense
only to pass on the charges to their customers
which is turning customers away and
increasing dissatisfaction.
THE KEY QUESTION FOR THE UK RETAIL INDUSTRY NOW IS TO UNDERSTAND WHAT
CUSTOMERS OF THE FUTURE WILL WANT FROM A RETAILER AND IDENTIFY HOW
THAT WILL IMPACT ON FULFILMENT STRATEGY.
In our view there are six key trends that are driving retail. Understanding these drivers can guide
businesses to select the fulfilment options that are here to stay rather than those that are
fleeting fads.
Consumer Drivers
Industry Drivers
Experiential retail:
Consumers want experiences either for their
own personal satisfaction, to share with friends
and family, or to post on social media.
Online sales growth:
Buying online continues to be an easy and
convenient option for consumers. The growth
shows no sign of slowing.
Personalisation:
Having products and experiences tailored
specifically to them is a continued need from
consumers and a key to brand engagement.
Convenience culture:
The industry continues to evolve to offer retail to
customers where and when they are, e.g. at new
locations like commuter hubs and 24/7 opening.
Price consciousness:
The recent austerity years taught consumers to
be savvy shoppers. Bargain hunting became
fashionable and this will not change in the future.
High street resurgence:
The adaptable high street is slowly reinventing
itself as a technology enabled destination with a
retail/leisure mix that consumers are looking for.
These six drivers will be the cornerstone of success in retail for the future. These will also be key to
the success or lack of success for future fulfilment innovations as any new format or technology
will need to appeal to a number of these options to have staying power.
Selecting the fulfilment strategies that meet these customer needs and match industry drivers can
save money and time, allowing businesses to keep pace with change in a more efficient way.
FUTURE FULFILMENT ACTIVITIES ASSESSED BY CONSUMER AND INDUSTRY DRIVERS:
Drones
Delivery
systems
Robotic assistants
New stores
High stree
resurbence
Convenience
culture
Online sales
growth
Comments
Appealing to some but likely to be a fad
Easily ignored, doesn’t replace personnel
Some promise, part of the sharing economy
Click & Collect
Lockers
A convenient option with advantages for
both consumers and companies
Commuter
Click & Collect
Meets a number of drivers, looks promising
Allows people to save time and get their
deliveries in a location they choose
Pay ahead
& Collect
Some usefulness for food retail.
Allows consumers to save time
3D printing
More useful for B2B than B2C
Virtual stores
Virtual changing
rooms
Social network
shopping
Personal
technology
Industry Drivers
Peer delivery
Cafe Click & Collect
Formats
Price
consciousness
Description
Personalisation
Type
Experiential
retail
Consumer Drivers
Brings big brands back to high streets
Provides an efficient option for brands and
delivers a personal experience for customers
Likely to have some influence in the future,
although more as a marketing tool
Mobile payment
Not a game-changing technology
Home scanning
More of a sales tactic than consumer driven
Beacons
Makes shopping a more personal event
By cross-checking the emerging fulfilment options by consumer and industry drivers, it becomes easy
to see the developments that are unlikely to have a major impact on the industry and equally those
that meet a broad range of needs.
In our ‘Forget the Click, Collect matters’ research we found that today 43% of consumers would
find collection points with changing rooms appealing. It’s likely that these consumers would find
virtual changing rooms similarly appealing in the future.
One thing that is apparent is that there are few fulfilment options that appeal to price consciousness.
This provides fertile ground for new entrants to come into the market to offer something that
appeals to the cost conscious consumer, particularly if the big retailers continue to pass on their
costs to customers
KEEPING PACE WITH NEW DEVELOPMENTS IS IMPORTANT FOR UK RETAILERS,
BUT NOT AT THE EXPENSE OF THEIR HARD EARNED CUSTOMER RELATIONSHIPS.
IT’S CLEAR ONLINE SALES WILL
CONTINUE TO GROW AT A FAST PACE
THANKS TO THE WAY CONSUMERS
ARE SHOPPING TODAY AND THE
TECHNOLOGY DEVELOPMENTS THAT
ARE CONSTANTLY PROVIDING NEW
WAYS TO SHOP.
These new options appeal to consumers, at
least in the short term, because of their
convenience or innovation. They also raise
expectations for all retailers not just those who
are technologically driven.
Traditional bricks and mortar retailers realise
they need to meet customer expectations and
according to companies’ own statements they
are setting aside large amounts to do just that.
However it’s less clear what drives the
decisions behind the investment. Customer
needs tend to be assessed only very briefly as
part of the process rather than being at the
heart of the change.
Instead of following their competitors or being
led by technology, brands should consider
what their own customers want from them and
what the trends are that are driving the
market.
From there each brand should develop a
future view about what fulfilment options are
here for the long term and what makes sense
for their brand to deliver.
Considering that one of these long-term drivers
is price consciousness, retailers need to think
hard about the implications of increasing fees.
By passing on their costs to customers retailers
are creating a reason for customers to look
elsewhere, to compare costs, or even to take
their business to a competitor.
Clearly brands need to invest in fulfilment to
meet customer expectations but not at the
expense of damaging the relationships they
have with customers.
Technology innovations will come and go,
keeping up with the latest fad is an unwise
strategy. The far more valuable factors are
customer engagement and experience which
are harder to win and easy to lose.
Taking a step back and understanding
consumer needs in the context of the industry
drivers can provide clarity about the long-term making short-term decisions about fulfilment
investment that bit easier and not at the
expense of customer satisfaction.
OUR ‘FORGET THE CLICK, COLLECT MATTERS’ RESEARCH
CAN PROVIDE YOU THE CLARITY ON CONSUMER NEEDS
FOR FULFILMENT, GET IN TOUCH WITH US TO SCHEDULE
YOUR TAILORED PRESENTATION.
hello@trinitymcqueen.com
Trinity McQueen London
Trinity McQueen Leeds
24 Greville St
Farringdon
London
EC1N 8SS
Victoria Wharf
4 The Embankment
Sovereign Street
Leeds LS1 4BA
+ 44 (0) 203 008 4482
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