Click-and-Collect Helps Ensure Grocery Convenience

ALEXANDRIA, Va.—For retailers moving into e-commerce, click-and-collect—not delivery—has become the preferred starting point, according to GroceryDive.com. The reasons are simple. Click-and-collect utilizes existing stores and workers, and it’s not as expensive or as complicated as shuttling groceries to consumers’ homes.

Thanks to a rapid rollout from companies like Kroger and Walmart, grocery pickup is expected to become a $35 billion business by next year, reports financial firm Cowen. And it’s anticipated that by 2020, one-quarter of consumers will have used the service in an effort to save time, avoid checkout lines and have more flexibility. 

But as consumer adoption grows along with the number of competitors, click-and-collect promises to become more complex for retailers, which must work to solve the service’s main consumer headaches.

“For click-and-collect, the biggest pain points right now are identifying when a car is in the store’s vicinity and ready to retrieve [a customer’s] order,” said Sucharita Kodali, analyst at Forrester. “The other is packing the order. It may take sometimes an hour or more to pack an order, sometimes even longer if you don’t have enough pickers in-store.”

In markets nationwide, shoppers can order groceries online, then drive by a local store to pick up the merchandise. Kroger and Albertsons offer the service at hundreds of pick-up locations, while Instacart, which partners with both retailers and began offering pickup last year to complement its core delivery service, has seen greater-than-anticipated demand from retailers.

Currently, Walmart has been leading in click-and-collect and will expand the free service to more than 3,000 stores by the year’s end. Between 11% and 13% of Walmart customers now use the service, and it will comprise roughly one-third of the retailer’s sales by next year, Cowen predicts.

Walmart is making its pickup service even more compelling. At a recent industry conference in Las Vegas, Tom Ward, Walmart’s senior vice president of digital operations, said the company is using data to identify “less-busy” pickup times for customers, and to make “smart” product substitutions whenever products are out of stock. The chain also refined its tracking technology to reduce wait times and to allow workers to pinpoint the exact parking spot of individual customers. “We want to be able to take out any level of friction from that experience,” Ward said.

According to Scott DeGraeve, a former Peapod executive and now chief operating officer with e-commerce firm Locai Solutions, retailers are installing more sophisticated order management systems to conduct the flow of orders. While grocers originally relied on multitasking front-end workers when they moved online, they now assign employees solely to the task of picking and packing orders.  

As the online grocery share grows, retailers will have to continue to look beyond their store inventories to stock and fill orders. Walmart has retooled one New Hampshire store to accommodate a mini-robotic fulfillment center for speedier order processing to do just that.  Meanwhile, other retailers have agreed to test pilot automated fulfillment options, from mini centers manufactured by firms such as Takeoff Technologies to the sprawling Ocado warehouses on deck for Kroger.

Locai has developed a store-of-the-future prototype where, in a multilevel structure at the center of the selling floor, robots pick and fill orders. The bots focus on shelf-stable and frozen products while store workers or customers select perishable goods around the perimeter. Shoppers can order from an in-store kiosk or order online and pick up from a dedicated parking bay.

For many regional grocers and independents, however, automation remains an unproven technology that may cost more than its return on value.

“Although a number of retailers are investing in technologies geared toward automation, they have their upper limits in the grocery industry,” said Brian Moyer, CEO at the grocery e-commerce platform Freshop. “You see big companies with a lot of money like Blue Apron fail trying to ship perishable products even when they are charging a lot of money.”

“The reason online grocery is still so small is because the solution isn’t serving the needs of everyone. People don’t find value in it, or they are not willing to pay what it costs to have someone else do their shopping for them,” Kodali said. “You have to be many things to many people. That is the challenge of retail.”

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