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Will we see a Click and collect price war?

According to new research from Verdict, click and collect sales are positioned to double by 2021.

It is easy to see why click and collect is growing at such a pace: the attraction to the customer that it was either free or significantly cheaper than delivery to a specified address.

However, as the customer’s need for speed amplifies, which it is doing daily, and retailers accelerate next day delivery trials to satisfy those customers, how do retailers cost click and collect?

The obvious answer is to price click and collect competitively and cost it as realistically as possible to avoid scale issues further down the line.

Most retailers would prefer customers to visit a store to collect their order, it is cheaper and it gets product in front of the customer that they may have missed online. So if home delivery becomes quicker and offers better value to the customer taking time into the equation, should retailers be looking at offering click and collect for free again?

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The model is continually evolving and more delivery options being developed to add into the mix.

Sainsburys are trialling same day online orders with the click and collect delivery option being ready to collect within 4 hours. There is also the launch of their Chop Chop app which offers 1 hour delivery within 3 miles of Wandsworth.

We know Sainsburys have a delivery pass, and priced at £60 per year seems very good value for home delivery. But click and collect is free for orders over £40, and orders under £40 are only charged at £4.

We have had the grocer’s price war which not abating yet, and the next war will be delivery value: Faster for less. The attraction of a membership fee is its simplicity so Sainsbury’s delivery pass, Amazon Prime etc could be a model we will see more of in the future. Setting the price is key though and with volumes growing quickly, the dependence on a good forecast is apparent.

In the short term profit is secondary to volume and being blunt, market share. But the tipping point will come again, when retailers will be forced to find more margin. There are other avenues to recoup costs. For example Ebay are looking at renting space in Sainsburys for collection points. Perfect use of space.

It will be fascinating to see how retailers juggle cost and convenience for the customer of the next couple of years, how Amazon change the landscape again and how malleable the customer is to changing delivery prices and speed.

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