Retailers Going Mobile
By George Anderson
Doctors may not do much of it anymore, but the house call is alive and well.
Companies including grocery stores, pet groomers, auto detailers, dry cleaners and others are delivering products and providing services at customers’
homes and businesses and demand is growing.
Marshall Lieberman, who goes to consumers’ homes and businesses to detail their cars and trucks, said convenience tops the list behind why consumers
use his service. “They can pay attention to their business and do whatever they have to do and they can have a clean car by the time they want to go to lunch.”
Wireless technologies that enable businesses to obtain information and process credit card transactions are a big reason behind the expansion of
companies performing house calls, according to John Lehman, director of business development for CardService Merchant Systems.
“Mobile-everything is growing by leaps and bounds, and that is, in large part, due to the technology that makes it all possible,” he said.
The impact that high fuel costs are having on consumer behavior and purchases is becoming documented but it also affects businesses that are built
on going to the consumer.
Jill Vaughn, owner of TLC Mobile Dog Grooming, said, “Gas is definitely a factor, and if someone is far, far away, I tell them I have to add a gasoline
surcharge, and they understand that.”
Moderator’s Comment: Will home delivery and house call services continue to grow? What factors will influence this growth (or lack of it)?
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George Anderson – Moderator
Home delivery will be a very large market within 5 years. Both FedEx and UPS have been investing billions to support the home market. The driving factor is the Baby-Boomers and the aging of America. As a very large segment of our population lose their mobility i.e. take away the driver license, home delivery will be the primary shopping and service method. Just look at sales on the Internet and how it has surpassed catalogue sales for proof.
Customer clusters seem to be impacting this movement as much as anything. The Del Webb Sun City Active Adult developments, for instance, are booming hotspots for home delivery, with thousands of upscale homes inside a few square miles. I believe that businesses wishing to establish a foothold in home delivery businesses need to begin in saturated areas like Sun Cities where nearly everyone is home every day, and has the money to afford delivery charges. A different kind of saturated customer cluster with which we’re all familiar is Queens, NY, where residents can get nearly anything delivered.
Additionally, I’ve often wondered why businesses can’t share home delivery systems. For instance, why can’t you get combination orders delivered from Pizza Hut, KFC, and Burger King? Wouldn’t it be great to get Subway or Quizno’s at home? With all those great fast food TV ads shown at night, wouldn’t it be great to reach for the phone and have it delivered?
It seems we are converging on the following factors, yes?:
– Driver: convenience (not having to go to the retail outlet).
– Obstacle: not being at home when the delivery is made.
– Driver: more stay-at-home folks (aging Boomers).
– Driver: less time to make stops at retail outlet.
– Obstacle: costs more to deliver to individuals.
Is there some other factor that we are overlooking?
It seems that the obstacles we have so far raise the questions below. Anyone want to tackle these? If these are overcome, is the answer then an UNQUALIFIED “yes”?
– Can you charge more for this service? Or better yet, can you reposition your entire product line so that it generates thicker margins overall?
– Does staying at home mean you want to? Or does it mean you want to get out more in order to have more social contact?
– Is there a way to deliver in evening hours (e.g., Swann’s Foods)?
It will grow in areas where the number of vehicles per household is declining. This usually coincides with increased population density, income, and expanded mass transit.
I’ve been watching a sales channel that you could actually put in the “home delivery” category – direct sales. Designers such as Bill Blass and other apparel, jewelry, and personal care purveyors from high-end to low are taking a renewed interest in selling their wares through home parties and one-on-one sales. As fewer retailers dominate, gas prices rise, personal attention at the store level wanes, and advertising gives less bang for the buck, more maufacturers/brands will open direct sales divisions as a supplemental strategy.
House calls and delivery services will grow if retailers can make them profitable. The graying of America creates the demand, as does the tremendous desire for convenience. But if the margins are slender at the store, then it’s unlikely that “free” house calls and delivery can be sustained. Certain grocers in NYC that offer “free delivery” are now excluding advertised specials, for example. The money has to come from the customer.
For the most part, people have to be at home when you deliver, or do the service, so that’s an automatic damper on this. I smiled when I saw Ron’s remark about milk; I used to deliver our farm’s milk door to door with my dad, way back when. We generally delivered in the pre-dawn, so most people could get up and bring it inside to the fridge. We lost a few customers who we couldn’t get to before 8 a.m., because they’d be gone already and the milk would go sour out in the sun (or freeze, if it was winter). I researched home delivery of food once (meat products, where they’d stock your freezer) and a couple of the providers I spoke with complained about how fewer and fewer people were home during the day and how it hurt their business. And, all the cops I know have been telling me for quite some time that most cases of breaking and entering happen during the daytime, because nobody’s home!
It’s called “following the cheese.” These are all good ideas. Go where your customers are and make it more convenient for them to buy your products.
Another great example is Redwing Shoes. they make high quality work boots that have been around for 50 years, but they found their share was being eroded by Wal-Mart and other discounters. What do they do? They outfit a large truck that looks like a shoe store inside and move it around from factory to factory catching workers when they go in and come out.
Convenience!
I’m going to once again use the milkman analogy to review the potential for home delivery. Many of us born in the ’60s and before remember getting milk delivered to our homes once or twice a week. Even my family, owners of a small group of supermarkets, used this service. Gradually, however, shoppers began buying their milk and other dairy products from supermarkets and convenience stores and the milkman was delivering to fewer and fewer homes. At some point, perhaps when only 40 percent of a neighborhood was buying from the milkman, it was no longer feasible for the dairy to continue the service. Now think of this analogy in reverse. As more and more people in neighborhoods start routinely buying from home delivery services, the economics of the model start to become feasible. This is especially true in urban and suburban areas.
The trends are certainly there for this business model to re-emerge. As Warren points out, home delivery is only convenient if you are at home. While the bulk of our population still commutes to work and finds it more convenient to stop on our way to/from work/lunch, the burgeoning senior population should help this model do well. If tele-commuting ever really catches on in earnest, it will boom.