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Attitudes towards Retail Home Delivery and Collection Services - UK - October 2016

“With online volumes continuing to rise, order fulfilment, be it delivery or collection, is becoming an increasingly important aspect of a retailer’s offering and one that consumers will increasingly base purchasing decisions on. It is not necessarily about the speed of a service, it is about offering the customer options to suit each individual purchase and need.”
– Nick Carroll, Senior Retail Analyst

This report discusses the following topics:

  • Delivery passes: Worth the cost of entry? 
  • Drones: The next frontier for retail logistics? 
  • Gearing delivery options to ease pressure on logistics

With increasing volumes online comes increasing wants, demands and needs from consumers and therefore retailers must have a broad set of delivery options at their disposal. The choice between the two also should not be binary for the consumer and retailer delivery options must be flexible both at the time of ordering and during the last-leg delivery process. Re-routing of orders in -transit has begun to be seen in the market and this is likely to be the future of order fulfilment, for example agile last-mile logistics which can react to consumers’ own situation. The biggest players in the online space are already investing heavily in their last-leg fulfilment logistics, and increasingly bringing them in-house, to be more flexible in the services they can provide to their customers.

This Report is a consumer research focused Report although some market data, including market size estimates for the collection market, is included to give context to the consumer research. The primary focus of the consumer research is on the use and attitudes towards order fulfilment from online orders although other delivery dependent retail channels, such as traditional direct selling, and services, such as store-based deliveries, are touched upon.

Throughout the Report we talk in general terms about collection and delivery. For the purpose of this Report they are defined as such:

Delivery is defined as an order that is delivered to a customer’s home, work, place of education or any other location that they have used as a traditional postal address.

Collection is used as broad term to describe the numerous collection services offered in the UK retail sector. Broadly speaking collection orders can fall into one of three fulfilment methods:

  • Click-and-collect in-store: This is where payment is taken online and the order is made available for collection at a retailer’s own store.
  • Reserve-and-collect in-store: This is where no payment is taken at the point of purchase, rather the items are reserved to be collected and paid for in a retailer’s own store.
  • Click-and-collect at third-party locations: This is where, usually, payment is taken online and then products are made available to collect at a location that is not the retailer’s store. Examples of third-party collection services include collection services such as Collect+, where products are made available at other participating stores, dedicated collection outlets such as Doddle and either retailer brand or third-party locker services where products are delivered to and held in lockers for collection.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Online retailing continues its double-digit growth
              • Figure 1: All online retail sales and online sales as a % of all retail sales, Including VAT, 2011-16
            • Online retailing continues its double digit growth
              • Figure 2: Store-based and online-only retailers share of all online sales, Jan 2008- Jul 2016
            • Consumer confidence recovering following Brexit result
              • Collection market valued at an estimated £7 billion in 2015
                • Figure 3: Estimated percentage of all retail online sales (including VAT) accounted for by collection and delivery, 2013-16
              • Innovations
                • Drones incoming
                  • Chop Chop
                    • The consumer
                      • Delivery still most regularly used
                        • Figure 4: Delivery methods used in the last 12 months, August 2016
                      • A more even distribution of returns
                        • Figure 5: Method of returning items that were delivered/collected in the last 12 months, August 2016
                      • Products delivered and collected
                        • Figure 6: Products delivered and collected, August 2016
                      • Most find delivery more convenient than collection
                        • Figure 7: Why delivery is used most often, August 2016
                      • Fear of the redirect driving collection usage
                        • Figure 8: Why click-and-collect/reserve-and-collect is used most often, August 2016
                      • Plain and simple
                        • Figure 9: Attitudes to speed, pricing and convenience of retail collection and delivery services, August 2016
                      • Rising costs would turn people away
                        • Figure 10: Attitudes to changes and innovations in delivery and collection services, August 2016
                      • What we think
                      • Issues and Insights

                        • Delivery passes: Worth the cost of entry?
                          • The facts
                            • The implications
                              • Drones: The next frontier for retail logistics?
                                • The facts
                                  • The implications
                                    • Gearing delivery options to ease pressure on logistics
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Online retailing continues to grow…
                                            • …and online-only retailers continue to gain share
                                              • Market for express services on the rise
                                                • Consumer confidence hit in the wake off Brexit, but has begun to recover
                                                  • Collection to represent almost a fifth of the online market in 2016
                                                  • Market Drivers

                                                    • Online continues to grow strongly
                                                      • Figure 11: All online retail sales and online sales as a % of all retail sales, including VAT, 2011-16
                                                    • Online-only retailers gaining online market share
                                                      • Figure 12: Store-based and online-only retailers share of all online sales, Jan 2008- Jul 2016
                                                    • Seasonal variation in demand
                                                      • Figure 13: Online retail sales as a % of all retail sales, Jan 2014-Sep 2016
                                                    • Demand for courier services growing
                                                      • Figure 14: UK market for courier and express delivery services, 2011-15
                                                    • Consumer confidence took an initial hit following Brexit
                                                      • Figure 15: How consumers describe their current financial situation, Aug 2015 – Sep 2016
                                                      • Figure 16: Trends in consumer sentiment for the coming year, Aug 2015 – Sep 2016
                                                  • Collection Market Size

                                                    • Collection market continues to grow
                                                      • Figure 17: Estimated value of click-and-collect orders (including VAT), 2013-16
                                                      • Figure 18: Estimated percentage of all retail online sales (including VAT) accounted for by collection and delivery, 2013-16
                                                    • Collection breakdown
                                                      • Figure 19: Estimated breakdown of the value of collection orders, by where orders are collected, 2015
                                                    • Grocery under-indexes in terms of collection
                                                      • Figure 20: Collection as an estimated proportion of online sales, by grocery and non-grocery, 2013-16
                                                    • Other considerations
                                                        • Figure 21: Estimated market size for traditional non-store retail sales (including VAT), 2013-16
                                                    • The Consumer – What You Need to Know

                                                      • Delivery remains the most used
                                                        • Size matters
                                                          • Delivery is simply more convenient for many consumers
                                                            • Missing deliveries a driver of collection usage
                                                              • Keep it simple
                                                                • Collection and delivery passes can drive sales
                                                                • Delivery and Collection Usage

                                                                  • Over half have collected goods but most still regularly use delivery
                                                                    • Figure 22: Delivery methods used in the last 12 months, August 2016
                                                                  • Home delivery remains most used
                                                                    • Figure 23: Detailed delivery methods used in the last 12 months, August 2016
                                                                  • Collection skews younger
                                                                    • Figure 24: Detailed delivery methods used in the last 12 months, by age, August 2016
                                                                  • Use of collection also tied to working status
                                                                    • Figure 25: Detailed delivery methods used in the last 12 months, by working situation, August 2016
                                                                  • Repertoire of delivery services used
                                                                    • Figure 26: Repertoire of delivery methods used in the past year, August 2016
                                                                  • Method of returns
                                                                    • Figure 27: Method of returning items that were delivered/collected in the last 12 months, August 2016
                                                                  • Back from whence you came
                                                                    • Figure 28: Method of returning items that were delivered/collected in the last 12 months, by delivery services used most often in the last 12 months, August 2016
                                                                • Products Delivered and Collected

                                                                  • Clothing the most delivered and collected
                                                                      • Figure 29: Products delivered and collected, August 2016
                                                                    • Female consumers most likely to collect clothing
                                                                      • Figure 30: Clothing, shoes and accessories: level of delivery and collection usage, by gender, August 2016
                                                                    • Groceries
                                                                      • Figure 31: Groceries and alcoholic beverages: level of delivery and collection usage, by age, August 2016
                                                                    • Repertoire of products delivered and collected
                                                                      • Figure 32: Repertoire of products delivered and collected in-store, August 2016
                                                                      • Figure 33: Repertoire of products delivered and collected in-store, by age, August 2016
                                                                  • Why They Use Home Delivery Most Often

                                                                    • Almost half of home delivery users find it more convenient than click-and-collect
                                                                        • Figure 34: Why delivery is used most often, August 2016
                                                                      • Delivery more important to those living outside of urban areas
                                                                        • Figure 35: Why delivery is used most often, by location lived in, August 2016
                                                                      • Delivery passes also encourage delivery use
                                                                        • Figure 36: Why delivery is used most often, by ownership of a delivery pass and age, August 2016
                                                                      • Other considerations
                                                                          • Figure 37: Why delivery is used most often, August 2016
                                                                      • Why They Use Collection Most Often

                                                                        • Avoiding the redirect
                                                                            • Figure 38: Why click-and-collect/reserve-and-collect is used most often, August 2016
                                                                          • Price a decider for collection
                                                                            • Figure 39: Convenience and pricing as a driver for delivery method usage, August 2016
                                                                          • Returns also a driver of collection usage
                                                                              • Figure 40: Why click-and-collect/reserve-and-collect is used most often, August 2016
                                                                          • Target Groups

                                                                              • Figure 41: Attitudes to speed, pricing and convenience of retail collection and delivery services, August 2016
                                                                              • Figure 42: Target groups for delivery and collection services, August 2016
                                                                            • The three target groups
                                                                              • Age a deciding factor in preferences
                                                                                • Figure 43: Profile of target groups, by age and socio-economic group, August 2016
                                                                              • Urbanities speed focused
                                                                                • Figure 44: Target groups, by area lived in, August 2016
                                                                              • Speed can be a deciding factor on where to shop
                                                                                • Figure 45: Agreement toward statements around the speed of delivery or collection services, by target groups, August 2016
                                                                              • Half would rather buy in-store than pay for faster delivery
                                                                                • Figure 46: Agreement toward statements around the convenience of delivery or collection services, by target groups, August 2016
                                                                              • Keeping it simple
                                                                                • Figure 47: Agreement toward statements around the ease of use and innovations of delivery and collection services, by target groups, August 2016
                                                                            • Attitudes to Delivery Methods

                                                                              • Imperative that retailers keep online delivery costs down
                                                                                • Figure 48: Attitudes to delivery and collection options and pricing, August 2016
                                                                              • Younger consumers struggle with the selection of delivery options
                                                                                • Figure 49: Agreement to statements around delivery and collection options and pricing, August 2016
                                                                              • Retailers could benefit from encouraging returns in-store
                                                                                • Figure 50: Attitudes toward collecting and returning products, August 2016
                                                                              • Younger males more likely to be tempted by impulse purchases
                                                                                • Figure 51: Agreement to the statement “click-and-collect encourages me to make more impulse purchases”, by age and gender, August 2016
                                                                              • Delivery passes encourage usage
                                                                                  • Figure 52: Attitudes to subscription services and innovations in retail fulfilment, August 2016
                                                                                • Younger consumers more interested in delivery passes
                                                                                  • Figure 53: Attitudes to subscription services and innovations in retail fulfilment, by age, August 2016
                                                                                • Postman public
                                                                                  • Figure 54: Attitudes to subscription services and innovations in retail fulfilment, August 2016
                                                                                • Urban drones
                                                                                    • Figure 55: Attitudes to the statement “Drone delivery is something that interests me”, by area lived in, August 2016
                                                                                • Leading Players – What You Need to Know

                                                                                  • Online market shares
                                                                                    • Amazon: aiming to control more of its delivery network
                                                                                      • Ocado: growth coming through logistics investment
                                                                                        • Argos: integration with Sainsbury’s now key
                                                                                          • Growing demand for courier and collection services
                                                                                            • Innovations
                                                                                            • Competitive Strategies – Leading Players

                                                                                              • Leading online players
                                                                                                • Figure 56: Top Ten leading online retailers, by share of all online retail sales (excluding VAT), 2015
                                                                                              • Amazon
                                                                                                • Argos and Sainsbury’s
                                                                                                  • John Lewis Partnership
                                                                                                    • Ocado
                                                                                                    • Competitive Strategies – Leading Delivery Operators

                                                                                                        • Courier and express delivery
                                                                                                          • Royal Mail
                                                                                                            • Dynamic Parcel Delivery
                                                                                                              • DHL International
                                                                                                                • Hermes
                                                                                                                  • UPS
                                                                                                                    • Yodel
                                                                                                                      • TNT
                                                                                                                        • DX Group
                                                                                                                          • UK Mail Group
                                                                                                                            • Third-party collection
                                                                                                                              • Doddle
                                                                                                                                • Collect+
                                                                                                                                  • InPost
                                                                                                                                  • Innovations

                                                                                                                                    • Convenient delivery
                                                                                                                                      • Chop Chop
                                                                                                                                        • Figure 57: Chop Chop: How it works, September 2016
                                                                                                                                      • To me ToYou
                                                                                                                                        • Helping small businesses compete in the logistics battle
                                                                                                                                          • The shopping centre of the future?
                                                                                                                                            • Figure 58: An artist’s impression of the new Funan shopping mall Singapore, September 2016
                                                                                                                                          • Drones of the future
                                                                                                                                            • Figure 59: Prototype Amazon Prime Air Drone
                                                                                                                                          • At the press of a button
                                                                                                                                            • Figure 60: Amazon Dash Buttons
                                                                                                                                          • Slimming down to stay in shape
                                                                                                                                            • Figure 61: Ikea Order and Collect, Westfield Stratford, September 2016
                                                                                                                                          • Putting the boot in
                                                                                                                                            • Home lockers
                                                                                                                                              • Click-and-don’t collect
                                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                • Data sources
                                                                                                                                                  • VAT
                                                                                                                                                    • Financial definitions
                                                                                                                                                      • Abbreviations
                                                                                                                                                        • Consumer research methodology

                                                                                                                                                        Attitudes towards Retail Home Delivery and Collection Services - UK - October 2016

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