Two UK department store chains spar over click and collect
July 6, 2015 03:20 PM
Major United Kingdom department store chain John Lewis Plc says it plans to charge consumers who pick up small online orders in stores. Orders of less than 30 British pounds ($48) will incur a 2-pound ($3) charge.
The current free program is “unsustainable,” as the retailer incurs the cost of shipping many items from its distribution centers to stores for next-day pickup, a spokeswoman for John Lewis says. Enabling John Lewis customers to pick up online orders in local stores involves moving tens of thousands of parcels each night from its distribution center to more than 360 collection points across the U.K. to be ready for customers the following day, the retailer says.
“We offer our customers a wide variety of delivery options, but we know right now the delivery option of choice is next day Click & Collect,” says Mark Lewis, online director at John Lewis. “The majority of orders will remain free of charge while allowing us to invest further in the expansion of Click & Collect to ensure it continues to delight customers as it grows in popularity."
John Lewis announced the policy change last week, and a few days later competitor Marks & Spencer responded by announcing plans to expand its free click-and-collect program to more than 100 grocery stores, railway stations and airports.
John Lewis is ranked No. 11 in the Internet Retailer 2015 Europe 500. Marks & Spencer is No. 14.
One analyst who played a major role in the creation of the buy online, pickup in store service in the U.S. more than a decade ago calls John Lewis’s move “the most insane thing” she’s heard all year.
“Is John Lewis going to charge non-click-and-collect store customers extra as well, for keeping the lights on in the store, having personnel in the store, stocking shelves, etc.?” says Fiona Dias, principal digital partner at Ryan Retail Consulting and former president of the direct division at Circuit City and chief strategy officer at online delivery service ShopRunner. “No sane retailer would discriminate against their best customers this way.” Dias was at Circuit City when the consumer electronics retailer was among the first to offer buy online, pick up in store more than a decade ago.
Dias says it’s highly unlikely that “any sophisticated retailer in the U.S. or elsewhere would go down this path,” as most know their best customers shop both online and in stores. Retailers in the U.S. also use buy online, pickup in store to drive customer traffic into stores, which often leads to additional purchases, not to mention a deeper relationship in general with customers, she says.
“Someone at John Lewis needs to do better math on the value of their customers,” she adds.
While John Lewis would not comment on Dias’s take on its decision, the merchant says that since it launched click and collect (the term British retailers use for buy online, pick up in store) in 2008, it has grown to be the most popular fulfillment option for customers. The department store processes more than six million click-and-collect orders per year compared with 350,000 in 2008.
While John Lewis has not detailed its spending on the service, the retailer this year will invest more than 80 million pounds ($125 million) in its supply chain and 100 million pounds ($156 million) in information technology—the latter being five times more than in 2010.
While John Lewis charges some consumers a fee to pick up online orders in stores, Marks & Spencer is expanding its click-and-collect program to 100 of its Simply Food franchise stores and other locations, including railway stations, airports, gas stations and hospitals.
The merchant already lets customers pick up online orders at 300 Marks & Spencer stores and 200 wholly owned Simply Food stores.
“Store collection is incredibly popular, with over half of orders picked up from our stores,” says David Walmsley, director of MarksandSpencer.com “By extending the service to locations such as railways and service stations, which may form part of customers’ daily journey, we hope to make it even easier and more convenient for them to shop with M&S.”