The French Revolution
A stunning fact captured my attention this week in a Walmart Canada presentation; only two per cent of total retail sales are made online in this country, compared to around 7 per cent in the U.S.
Of course, there are differences between Canada and the U.S. in terms of the tax treatment of sales and the breadth of options available, but if that two per cent represents all sectors, then online grocery retailing is almost non-existent. It got me thinking again about how the online channel could develop in this market…
It’s not to say that there are no online grocery offers–I’ve seen the trucks out making deliveries myself in Toronto and Vancouver.
But that, in part, is the crux of the problem; from a retailer’s perspective, the final leg delivery of online purchases works economically in dense urban areas, but once you move out into suburban, less populated areas, it gets much more complex and costly.
Demand for online shopping is set to grow though–shoppers are looking for more convenience and, at the same time, they also have more access to advanced technology, especially through smartphones.
On the other hand, retailers remain keen to sweat their existing assets, not necessarily to create new ones. The answer may lie in France.
Over the last two years the ‘drive’ or ‘click and collect’ format has proved to be incredibly popular with French retailers and shoppers. Essentially, shoppers place their orders online and then drive to a designated pick-up point at an existing store, or a dedicated ‘drive’ facility to collect their goods. Their purchases are packed into the car by store staff.
There are many variations of this and interestingly, to meet demand, some retailers have established ‘dark stores’, closed to shoppers, but used by employees to pick goods for online orders. Shoppers either collect the goods directly at the ‘dark store’ or, for example, at a local convenience store that is part of the same chain.
Many shoppers find the dark-store system more convenient than waiting at home for a delivery to arrive. They can call in for their shopping on the way home from work for example, and spend no more than five minutes from arrival to departure.
From a retailer’s perspective, it can still be an economic challenge. Especially if there is no delivery charge to offset the time spent by staff picking the goods.
The strategy is evolving though and the development of ‘dark stores’ is helping to make the operation much more efficient through the use of advanced technology, such as voice-picking.
Could it work in Canada? It definitely has potential, and offers both shoppers and retailers some advantages over a more traditional online grocery model.
At a time when shoppers are increasingly migrating towards discount stores, it could be an important tool in driving them back towards conventional supermarkets.
Or how about ordering from a wide and fresh range at a conventional store and picking up from your local discount store, helping the retailer to keep the shopper within the Group? Now that would be quite a revolution!