John Lewis is to charge for small click-and-collect orders, suggesting it is failing to persuade shoppers to spend on additional purchases.
John Lewis is to charge for small click-and-collect orders, in a move that suggests it is failing to persuade shoppers to spend enough on additional purchases in store to offset fulfilment costs.
The move sees John Lewis charging £2 for collection of orders less than £30, and goes against the tide – over the last three years John Lewis, Next, Debenhams and Marks & Spencer have been competing fiercely to improve their click-and-collect offers, with later order cut-off times, and free next day collection with no minimum spend becoming standard.
The key driver for offering free click and collect is to benefit from the additional footfall and retailers are improving their ability to get collecting customers to buy something additional in store.
In Verdict’s March 2015 survey of 10,000 online shoppers, 32% said that they purchased something else on the last occasion that they used click and collect, up from 29% in the same survey question a year earlier.
The problem is that as more people adopt click and collect, the average additional spend is falling. In March 2015 it sank to just £17.81, from £21.37 a year earlier.
Factoring in those who do not spend extra in store shows that the average uplift reduces to £5.70 from £6.20.
This is being driven by changes to the click and collect shopper demographic. While it is still weighted towards the more affluent, click and collect is attracting more C2 and DE shoppers and so generating spend from them in store is more difficult.
Our survey also shows clearly that those that spend less than £30 on a click-and-collect order are less likely to spend in store – 31% versus 34% for those ordering £30 or more – and the average extra amount they spend is also lower at £13.79 versus £19.28.
While the concern is that John Lewis will lose click-and-collect sales to its rivals by introducing the charge rather than convince low spend collectors to spend more with it or bundle orders, it realises that these are shoppers it can afford to lose.
The pressures John Lewis is under are similar to those faced by its rivals, which may well decide to follow suit.