As an increasing number of staples of the UK’s high streets and shopping centres close branches, lay off employees and outright disappear, many have pondered how brick-and-mortar retailers can revive their fortunes in the age of ecommerce.

From focusing on the retail experience to mastering mobile, conquering multichannel and expanding into innovative technologies like AR and VR, a variety of solutions have been proposed. Some retailers are implementing these to great success, while others continue to struggle.

One company believes that it has found a way to drive increased footfall to traditional brick-and-mortar retailers and help bring them back to life. Doddle is a parcel collection and return service that partners with retail brands like Debenhams and Morrisons to place pick-up locations in-store. By combining the two, customers can pick up and return their online shopping at the same time as doing their grocery shop – or get inspired to buy some additional items when they come to collect a purchase.

“It’s a popular and useful service for their existing customers, and it drives new customers into store,” says Mike Richmond, the CCO of Doddle.

I spoke to him about the growing trend of click-and-collect and how it can benefit brick-and-mortar retailers; the role that Doddle aims to play in bringing traditional retailers back to life; and why retailers should be putting the delivery experience at the centre of their strategy.

ecommerce

From railways to retailers

Doddle’s CEO and founder, Tim Robinson, was previously a Managing Director at Network Rail, and brought this experience with him when he founded Doddle, which was originally conceived of as a click-and-collect service for railway stations. The idea was that online shoppers who were making a journey by train could conveniently pick up or return their items along the way.

“You’ve got supply chain consolidation, you’ve got the growth of ecommerce, you’ve got customers going through train stations – about 400,000 people travel through King’s Cross every day. If you can create a place for customers to collect, try on and return their shopping, that solves a problem for retailers, for carriers, and for consumers.”

These outlets were set up as Doddle-branded “shops” in railway stations and offered both collection and return, as well as changing rooms in some locations. Initially, Richmond says, Doddle intended to develop these into retail units.

“That was always the goal – to get enough volume into a single location, and make customers, retailers and carriers love it enough, that we could justify a retail unit,” he says.

However, the UK parcel delivery market is extremely competitive, making it difficult for Doddle to turn a profit on moving parcels alone, and after 18 months the company realised that it needed to switch to a model with lower overheads.

“We were proud of what we’d achieved, in terms of working with the best online retailers, the customer adoption, and our NPS – so we took the technology we’d developed and started deploying it in other retail locations.”

A natural win-win

Doddle established a mutually beneficial partnership with retailers such as Debenhams and Morrisons who already had a widespread brick-and-mortar presence. For Doddle, it meant being able to install collection points at locations across the country with minimal overhead costs (Richmond describes Doddle’s collection point technology as “essentially a glorified mobile phone and a label printer”). For the retailers, it meant a welcome influx of foot traffic into their brick-and-mortar stores.

As online shopping continues to thrive, in-store click-and-collect is growing exponentially as a share of multichannel retail sales. Between Q1 2010 and Q3 2017, the percentage of orders fulfilled by click and collect for multichannel retailers in the UK grew by 25 percentage points, from 12% to 37%, according to the IMRG Cap Gemini Benchmarking Survey 2017.

Third-party pickup – in which a customer buys an item and collects it from a third-party location – is also expected to grow 107.3% between 2017 and 2022, according to the GlobalData Click & Collect Report 2017. This is alongside a 55.6% growth in click and collect deliveries, and a 31.7% growth in home delivery.

It’s this rapid growth that Doddle is capitalising on as online shoppers increasingly avail themselves of flexible collection and return options – and by partnering with traditional retailers, helping them to benefit as well.

“In the good locations, we can deliver 100 new visitors per day,” says Richmond. “The opportunity is huge.” He estimates that a high street retailer with the full complement of pick-up and drop-off services – not just Doddle, but additional delivery services like Collect+, Hermes, DPD, DHL and FedEx – could easily double its footfall.

But how many of these visitors will actually purchase an item, and how many will simply leave once they’ve collected their order? Richmond notes that this can vary depending on the retailer – in a supermarket like Morrisons, visitors are likely to pick up an item or two at the same time as collecting their parcel. A retailer like Debenhams, meanwhile, will see fewer spur-of-the-moment purchases, but each individual purchase will have a higher value.

“In our experience, in a Morrisons, 70% of customers will buy something else,” says Richmond. “And of them, some of them will buy a few items, and some will do a full shop. In Debenhams, the product is different and it’s a different mix – but you’ll still get 25-30% conversion in that location.

“Pick-up and drop-off – also known as PUDO – benefits the online retailer because it provides another delivery option for the customer, and it benefits the physical retailer because they get new customers coming to the store every day. It’s a natural win-win.”

The evolution of the store

While click-and-collect has the potential to greatly benefit retailers, Richmond is understandably hesitant to hold it up as the key to saving the British high street. “I don’t think it’s a silver bullet,” he says. “But I think click-and-collect – in all its forms – has a significant role to play in helping high streets everywhere – not just in the UK. Because what it does is start to change the purpose of the store.

“The store is increasingly becoming about two things: one, the experience and showrooming, and two, it’s becoming part of the fulfilment infrastructure. It becomes a place where you can interact, but also a mini hub for shipping stuff that your customers want.”

Colourful illustration depicting stores and buildings of different sizes by the side of a road

Richmond highlights that high street retailers and other brick-and-mortar retail brands should play to the strengths of their physical presence and do everything they can to drive customers in-store – not just focus on online sales. “All of the evidence supports that a customer who buys online and comes in-store – a multi-channel customer – is the most valuable type of customer. You’ve got to push as hard as you can to get those customers in-store.”

He cites M&S and John Lewis as retail brands that have done this well, by encouraging customers to buy online and then collect in-store: as a result, both retailers see more than 50% of their online orders collected in-store.

However, Richmond argues that British retailers aren’t capitalising on click-and-collect “as well as they maybe could”. Rather than simply offering click-and-collect as an option, he suggests, retailers should use their knowledge of customers to deliver an additional experience for them once they’re in the store.

“The opportunity there is – I know you, as my customer, are coming into my store today, and if I knew everything about you as a customer, I could offer something that might encourage you to do more in-store – coffee, or clothing, or services that I can offer to get you to engage with me again when you come into the store. That’s starting to happen, but it’s not really taking off yet.”

12 examples of digital technology in retail stores

In the future, Richmond says that Doddle’s goal is to focus on enabling retailers to capitalise on the shift towards pick-up services, and in particular physical retail stores being used as part of online fulfilment, that is currently taking place. “We want to help retailers drive things like instant click-and-collect. There are probably only three or four retailers in the UK that allow you to go online and buy something, and then pick it up straight away – and that’s crazy.

“Stores are your biggest defence against Amazon and the online pure-play retailers. What you should be focusing on is: how do I make sure, when I’m selling something to a customer, if I know it’s in the store, that they can pick it up immediately? Yet there are very few sellers who currently do that.”

Putting delivery at the heart of retail strategy

Though he might be slightly biased as someone who works in the delivery space, Richmond firmly believes that retailers can improve their overall strategy by making more of delivery. “Something we feel very strongly about is that delivery can be the defining characteristic of an online retail experience. Because it’s the final point in the journey, it’s incredibly important to the online experience as a whole.

“You could spend a hundred pounds on an item, but if it arrives in a crappy box – or if it arrives late – that whole experience is ruined for you.”

Doddle is therefore campaigning for retailers to “over-invest” in delivery and make it a central point of their online retail strategy, which the company believes will bring about “a huge amount of benefit in terms of online sales”. Richmond points to Amazon as an excellent example of this: by focusing purely on great, fast delivery with Prime, Amazon was able to capture a huge share of the ecommerce market – even before it began expanding into other areas.

Why service design and delivery trump interface UX for exceptional customer experience

“For most retailers, delivery is still a cost, or a necessary function, rather than potentially being the defining characteristic of an online retail experience,” says Richmond. “You see retailers investing in programmatic advertising, or investing in the product display on the website, in a bid to drive customers down the funnel – but when you become a customer, you see much less investment in the delivery supply chain.

“Ultimately, it’s about putting a little bit more investment into every aspect of delivery – and that includes returns, which are just as important as the delivery experience – and the resulting gains will outweigh the additional investment.”

subscription_model_delivery

The key to combating serial returners? Data

It’s true that some online retailers, like ASOS, have achieved huge popularity with shoppers thanks in large part to a generous returns policy. However, being over-generous with returns can be a big issue for retailers as well, with many looking to crack down on “serial returners” who return and refund a large percentage of the items they buy. I asked Richmond what retailers can do to prevent this while still providing a great returns experience for customers.

“[Serial returners are] definitely a huge risk to the whole online retail model,” Richmond agrees. “And that particularly applies to fashion brands.

“I think data is the answer – using data to inform your business’s approach to returns. To date, every single retailer has a blanket returns policy for every customer, regardless of their behaviour. But the reality is that some customers will exhibit very different behaviour in terms of profitability – returning nine out of ten items, returning them late, maybe returning them after they’ve been worn; which means that their chances of reselling those items are pretty poor.

“Whereas others will just return one item, within a day, and it’ll be back to that retailer within three days. So, retailers should be encouraging those customers, and discouraging the poorly-behaved customers.

“I think what we’ll start to see is segmented returns policies: driving behaviour that encourages consumers to do the right thing. At some point, retailers will need to be more realistic about curbing the tide of returns.”

In fact, ASOS recently announced a change to its returns policy which does partly adopt this approach: while the retailer isn’t yet making moves to encourage good return behaviour in customers, it has announced that it will be identifying customers with an “unusual pattern of returns activity” and deactivating their accounts, in a bid to clamp down on serial returns. ASOS will also be issuing gift vouchers in return for items after 25 days, rather than a straight refund.

“The challenge is that there’s so many elements to it,” Richmond adds. “One of the big factors is how long you hold onto a product before you return it – if you return it at the end of a returns window, a fashion cycle is six weeks, or eight weeks, so that might be a 30% difference in the recovery value of an item. I think we’ll start to see more focus on that as retailers spend more money and think about the ROI of using data in their returns supply chain.

“We might even get to the level of having individual returns policies – where your returns policy is different from mine – rather than segmented ones, although that’s probably a few years off.”