Retailers look to click & collect online profits [Daily Tribune (Bahrain)]
(Daily Tribune (Bahrain) Via Acquire Media NewsEdge) ? ? European retailers have gone back to bricks and mortar in the hope of turning their online food businesses profitable racing to build pick-up points to capitalise on shoppers' increasing demand for "click and collect" grocery options. E-commerce has revolutionised trade in books, music, clothes and electronics in the last decade, but food has proved a tough segment to crack. Grocery represents almost 40 per cent of retail sales, but providing a profitable internet option for a high-volume, low-margin business with products that must be chilled is more complex and pricey than for non-perishables. Even Amazon has only made tentative steps into grocery, although it is now preparing to expand its "Fresh" business to 20 urban areas in 2014. If trials in Los Angeles and San Francisco work it says it may expand outside the United States, though has not specified where. That's an alarming prospect for other grocery retailers already struggling with falling store sales as austerity drives, rising prices and wage stagnation hit shoppers. So they are looking more closely at shopping habits and preparing to build in flexibility to boost their brands and profits. Busy customers often now prefer to collect an order, avoiding a delivery fee, than wait at home. A GMI survey commissioned by Mintel showed 39pc of online shoppers in Britain and 33pc in France collected goods in-store in the last 12 months. Mintel data shows young, affluent consumers retailers' favourites are most keen on click and collect. Retailers are experimenting with different pick-up models, from "drive-thrus" adjoining existing stores that are popular in France, to refrigerated lockers at petrol stations and new warehouses dedicated to online known as "dark" stores. Click and collect also means they can spend less on home delivery, often prohibitively expensive outside densely-populated urban areas. Food and consumer goods research group IGD predicts "drive-thru" will propel French online grocery sales to 10.6 billion euros ($13.98b) by 2016 from 6.7b in 2013, while it sees home delivery push UK online grocery to 11.4b euros in 2016 from 7.4b in 2013. Stephen Mader, analyst at Kantar Retail, said retailers are moving "aggressively" to grab as much online share as possible. "They are throwing caution to the wind in terms of profitability, " Mader said, adding that once they had built scale: "They will need to pay more attention to how much money it generates. " Retailers are investing most in the easy-win of drive-thrus bolted on to existing stores, from which staff pick online orders, rather than warehouses with automated order selection, which are costly but set to be more efficient in the long run. Europe's top retailers Tesco and Carrefour are building hundreds of collection points at stores, as well as a handful of online-only warehouses, but as neither breaks out numbers for online grocery profitability it is hard to see whether the method is working yet. Tesco, Europe's biggest online grocer, where e-commerce accounted for almost 5pc of sales in 201213, says the business is profitable but experts believe that is because it does not account for the cost of having staff pick up online orders at stores. "Picking from store is the easiest but it is disruptive to inventory forecasting. It is a shortterm solution. I see a dedicated supply chain (for drive-thrus). Although it is capital intensive, it is a much more scalable solution, " said Mader. ? ?
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