Will click & collect finally compel retailers to remodel stores?

Discussion
Photo: Best Buy
Dec 01, 2017
Nikki Baird

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

Some repercussions of omnichannel’s impact on stores can be predicted and others you have to live through. The challenge of finding storage for cross-channel orders — whether click & collect or ship store — is one of the latter. Especially when you’re talking about big-box retailers or retailers in strip malls rather than indoor malls, click & collect is only growing. Unsurprisingly, this holiday season is expected to be the highest volume click & collect ever. And next year probably will be too.

In stores, systems that were designed as temporary stop-gap fixes are becoming overwhelmed by the order volume. Orders have to be stored in the back room because there’s no room to store them near the front of the store. Items are getting dropped or lost. Pickup counters go unstaffed because labor has not been realigned for the new reality. Customers are waiting and unhappy. Employees are running all over the place in highly inefficient processes that save the sale, but bleed profits.

Ironically, this may mean retailers are finally focusing their attention on two major investments for stores: remodels and employee technology. Retailers have only been talking about the need for these improvements forever, because they’ve known since the first consumer mobile phone entered the store that employees were going to end up on the losing side of that proposition.

If click & collect is the killer business case that supports adequate investments in employee handhelds, great. Just don’t forget all those other business cases waiting in line behind it, which didn’t have enough power on their own to compel the investment.

But we’re getting more glimpses of the store of the future. A recent visit to a Best Buy showed the entire front quarter of the store, normally reserved for cash registers, was closed. All purchase traffic was being routed to the online pickup desk — even cash & carry sales. In the meantime, the storage room for online orders was stuffed to the gills. That’s going to have to change.

DISCUSSION QUESTIONS: Do you think retailers will need to make massive investments to adequately handle click & collect and ship-from-store, or will quick fixes suffice? Do you see the investments focused more on remodels or employee technology?

Braintrust
"What I don’t get is why retailers continue to lag behind both technology and shoppers when it comes to crucial store experiences like BOPIS."
"In reality 'fast and easy' will encourage more BOPIS, while 'sell more' will send the customer to Amazon."
"I have been saying this for years. For many stores, the new remodeling is going to cost big bucks. Is it worth it? For me, no."

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20 Comments on "Will click & collect finally compel retailers to remodel stores?"

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Mark Ryski
BrainTrust

The situation is a little different for every retailer, however, Nikki’s argument is spot-on. Generally, most stores were not designed as distribution points and so in-store pickup processes have largely been ad hoc and stop-gap. This is becoming a serious pain-point for customers and staff. I believe retailers will need to invest in both remodels and employee tech to adequately handle click and collect and ship-from-store service models that are becoming pervasive and expected.

Charles Dimov
BrainTrust

I agree with you Mark. We just published that retailers on the OrderDynamics OMS (providing in-store pickup capabilities), experienced an astounding 41.9 percent growth in order volumes compared to the 2016 Black Friday through Cyber Monday period.
That basically means that customers in North America have caught on to omnichannel/in-store pickup … and aren’t going back. Getting our stores, layout, setups and processes ready (not to mention tech) needs to be a priority to capitalize on this as a positive trend.

Ken Lonyai
BrainTrust

Nikki makes a great point: BOPIS is here to stay and to both make the customer experience as delightful as possible and execution cost efficient, the service must be designed into the store format.

Overwhelmed customer service desks and slapdash counters don’t cut it now that BOPIS is beyond a novelty and pretty much a staple of retail. Careful planning to maximize traffic flow and floor space utilization are a necessity. Plus, a well-planned flow can give exposure to add-on sales from displays that are strategically placed in the area of the pick-up desk. The same goes for curbside pickup.

Neil Saunders
BrainTrust
Changes are very necessary, both front and back of house. The UK’s John Lewis — which has massive volumes of click and collect product — is a case study in change. Front of house they have revamped collection areas, making them extremely comfortable and customer friendly; more space has been devoted to these areas and they are now in a more prominent part of the store. Back of house, they have devoted a lot more space to storage for products to be collected. To compensate for this extra space needed both front and back, they have reduced in-store storage and… Read more »
Brandon Rael
BrainTrust
Nikki makes some compelling points here. While the BOPIS process may lead to short-term increases in sales traffic, there are far greater in-store operations considerations that need to be factored in. Unless you are a big box retailer and have the resources, systems and infrastructure to balance both online fulfillment and BOPIS while supporting your brick-and-mortar customers, this scenario will be become increasingly challenging to support. We have evolved from the point where there was a clear distinction between online e-commerce orders and in-store purchases, to one that is a more fluid commerce experience. However, as Nikki shares, there has… Read more »
Bob Amster
BrainTrust

The investments may not be “massive” but they will have to be made. The “will-call” storage space has to be allocated, the associates retrained to deal with a new function and the check-out process needs to be accommodated. As already stated, “BOPIS is here to stay” and the in-store operations and design have to evolve to accommodate it elegantly.

Sterling Hawkins
BrainTrust

Bob and Nikki are right on. And the balance of remodeling with employee technologies is different at different retailers and certainly by retail vertical. That balance is further adjusted when updating store designs for other technologies coming soon including autonomous delivery and robotics in-store. The best approach is to keep the store footprint as flexible as possible with an eye on what future technologies need to be considered.

Dave Bruno
BrainTrust
I agree with Nikki that most stores will need to re-think their experiences to accommodate the rise of BOPIS. However, I think her greater point is that we should rethink the entire store experience “of the future” (I hate using expressions like that, hence the air quotes, but in this case I think it actually applies) and redesign our stores in context of what we believe our customers will expect from the store experience in its entirety. While BOPIS is certainly a huge part of the future experience, we must also consider how we want to enhance the store’s role… Read more »
Tony Orlando
BrainTrust
I have been saying this for years. For many stores, the new remodeling is going to cost big bucks. Is it worth it? For me, no, as recouping the investment would take me beyond being dead. For others, especially the big stores that dominate, I would say yes, as they risk losing out to someone else. For supermarkets, the cost to pick and store the product is an expense that many of them are not factoring into the total cost, as Amazon, Walmart and the clubs currently are not charging for this. Something has to give, but pressure to grow… Read more »
Anne Howe
BrainTrust

What I don’t get is why retailers continue to lag behind both technology and shoppers when it comes to crucial store experiences like BOPIS. The continued lack of investment makes Amazon the easy option for shoppers. Every time a shopper gets caught in a cluster of frustrating pick up, it’s another reason to skip the store in the future. By next year it may be too late!

Art Suriano
BrainTrust
There is no doubt that retailers are going to have to invest in store remodels and redesigns for not only “click-and-collect” and “ship-from-store” but a massive list of other needs as well. The problem for too many retailers is that they haven’t kept up with store designs and technology for years and, as a result, they are far behind. Now the cost is too high so what they do first is usually the question. The second problem is that many retailers are facing significant debt whether from being purchased by private equity or from borrowing too much money. Those obligations… Read more »
Gene Detroyer
BrainTrust
In a supermarket there is a reason why the milk is often in the farthest part of the store and it isn’t to keep the milk cold. It is to make the shopper go through other parts of the store in hopes they will buy something else when all they want is some milk. My fear is that many retailers will look at the pickup as an opportunity to make people navigate the store rather than jump in and out. Imagine the CEO asking “How can we sell more?” rather than asking “How can we make this fast and easy… Read more »
Steve Montgomery
BrainTrust
As has been noted, changes will have to be made. The extent of that depends on the retailer, what they sell and their e-commerce plans including delivery, etc. In the meantime, while many are trying to figure all that out they will have to address the current issue of how their serve their BOPIS customers. If you are a retailer that sells large items do you want them to go out the front door or to a loading dock? That answer seems simple, but what if your mix includes far more frequent purchases of smaller items that could be picked… Read more »
Herb Sorensen
BrainTrust
So online retailing has grown to 10 percent of the total market, while brick-and-mortar retains its 90 percent share — at this point. I’ve see a fair amount of click and collect that is more or less a disaster, and I’ve seen plenty of empty drive-thru pickup stations, including Amazon’s earlier this year. But nobody wants to confront why an industry built on moving pallets around, to stores, having unpaid stock-pickers (aka shoppers) doing the picking and delivery to themselves, can’t just smoothly move to a process where THE RETAILER has to provide paid labor to replace all that free… Read more »
Tony Orlando
BrainTrust

Well said. The consumer today will push stores to the brink of bankruptcy trying to squeeze additional free services, because they think they are entitled to it. Somewhere in the process a profit must be generated, and for me BOPIS is not the answer. The pressure is intense to give the customers what they want, and damn the profits we are growing market share (said no one with a brain). Oh well, let the big boys slug it out, and for those that still want a friendly shopping experience I’ll try to provide that for them.

Shep Hyken
BrainTrust

A quick fix should suffice. Make it EASY for the customer. Customers are still coming to your store. In many cases they are purchasing an item to pick up, not for convenience (although it is), but to make sure the item is in-stock and waiting for them. Investments should be focused on making it easy and convenient for the customer, while at the same time positioning the “collection point” in the right place to support more in-store sales.

Rich Kizer
Guest
So far our discussions with retailers on click and collect positioning in stores has at times created perplexing issues, some of which have been mentioned in this forum. Speed of delivery and ease of transactions are big with customers. Putting things in front of or close to doors has not encouraged these customers to continue venture into the store. If the line is too long, or if it is not adequately staffed, retailers report time-pressured customer aggravation. Now we are waiting to see how the curbside pickup works out for Nordstrom. We are all on the proving grounds this year.… Read more »
Ralph Jacobson
BrainTrust

Retailers of most product categories will need to evolve their floor layout to accommodate this trend. However, this need not be a massive investment. Most retailers can realign the front end of their stores with relatively inexpensive fixturing to manage the processes effectively. Employee technology is not a separate issue, though. It is part of this evolution in the stores and can help augment the effectiveness of the processes. Store associate applications available today can leverage real-time personalization to respond to shoppers’ in-store pick up needs and optimize the whole process.

James Tenser
BrainTrust
Re-imagination of retail formats is a huge issue in the era of digital retail. Order-staging is a primary area for operational innovation. It requires completely fresh thinking about how self-service retail environments can be configured coexist with picking and pickup. Nikki, this is one of your best observations in recent memory. The time is nigh for retailers of all stripes to revisit store concepts from the floor tiles up. Unfortunately, I expect that many will first try and fail to address Click & Collect challenges with software and employee training. Both are necessary, but they will not be sufficient if… Read more »
Richard J. George, Ph.D.
BrainTrust
I tend to agree with the technology and store remodel issues discussed by the other respondents. A missing point beyond the logistics of BOPIS is what the store is going to look like. For one, the center of the grocery store will continue to shrink. Many purchases here are in the form of replenishment versus shopping. The challenge is to remodel this part of the store with more exciting and inviting shopping opportunities. One vision I have is of a food store with its current perimeter expanded and romanticized, similar to the European street markets, with stalls/displays of delicious fresh… Read more »
wpDiscuz
Braintrust
"What I don’t get is why retailers continue to lag behind both technology and shoppers when it comes to crucial store experiences like BOPIS."
"In reality 'fast and easy' will encourage more BOPIS, while 'sell more' will send the customer to Amazon."
"I have been saying this for years. For many stores, the new remodeling is going to cost big bucks. Is it worth it? For me, no."

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