Click-and-collect gaining more curb appeal

It’s not exactly a sexy, foodie-sounding name. Nevertheless, click-and-collect, the online grocery strategy that requires customer pickup of merchandise at store curbside or elsewhere, is on a faster track.

Both Kroger and Walmart recently unveiled efforts, putting this concept in the spotlight at two of the biggest food retailers.

Those two companies aren’t on the leading edge with these moves. As of the beginning of this year, SN reported that 20 of the retailers on its Top 75 list already operated some form of click-and-collect (while 23 provided grocery delivery and 15 offered both services).

However, Walmart and Kroger have advantages in the form of in-house mentors. Walmart’s sister company Asda already operates click-and-collect facilities in the United Kingdom. Kroger’s acquisition of Harris Teeter earlier this year brought knowledge based on that retailer’s click-and-collect service.

Walmart last month opened its first click-and-collect center in the U.S., a drive-up pickup facility located in Northwest Arkansas. The location carries about 10,000 SKUs. Customers order online or by mobile phone and Walmart workers bring the order to their cars.

Kroger launched a pilot program at a store in the Cincinnati division last month. The company will use it as a learning platform before expanding within the division and chain.

While convenience is a primary draw of click-and-collect, success will also hinge on pricing. In a new direction for SN’s Price Check, the feature will now showcase retailer click-and-collect price matchups in markets throughout the country. In the first such comparison, Peapod’s curbside pickup service for Stop & Shop offered a lower-priced basket than Roche Bros. in the Westborough, Mass., market, taking into account service charges for both retailers.

Service fees and minimum order sizes are two strategies retailers use to make click-and-collect into a more sustainable business model. In the Westborough case, Peapod required a $60 minimum order.

“Big orders help retailers in click-and-collect,” said Bill Bishop, chief architect of Brick Meets Click. “This is helpful for gross profit in light of fixed costs.”

Meanwhile, some retailers are taking innovative approaches on store-pickup orders. Target Corp. just introduced a new e-commerce application in the San Francisco area for a limited number of stores. Called Curbside, the app enables mobile shoppers to locate a store and schedule same-day pickup. It also uses location-based technologies to give notice to stores when a shopper arrives for pickup.

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Click-and-collect should be viewed within the larger category of online grocery to really understand how shopper behavior is changing.

According to updated data from Brick Meets Click, about 1 in 10 grocery customers purchased at least some grocery items online in the past 30 days. That amounts to approximately a 4% share of total grocery spending. Given this pace, Brick Meets Click forecasts that online shopping will represent between 11% and 17% of grocery purchases in the majority of U.S. markets within 10 years.

So while click-and-collect is an important strategy in itself, it may be even more useful in teaching retailers lessons about customer preferences in the online space.

“Click-and-collect may not be a final answer, but it’s a good way to find out what kind of interest customers have, and refine how you execute to make this as profitable as possible,” Bishop said.

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