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Landlords Should View Click and Collect as an Opportunity, Not a Threat


Landlords Should View Click and Collect as an Opportunity, Not a Threat

When it comes to online shopping the UK is leading the charge globally. In 2016, £133bn was spent online with UK retailers, according to figures from the IMRG Capgemini eRetail Sales Index – an increase of £18bn on the 2015 figure. UK shoppers also spend more online per household than consumers in other countries. A report published by the UK Cards Association earlier this year showed that UK households spent the equivalent of $5,900 using payment cards online in 2015, compared with just $4,500 in the US.

Impact of online retail on the high street

A growing proportion of these online sales are for click and collect orders. At the end of 2016, BI Intelligence estimated the UK click and collect market was worth $6.8bn, but by 2020 this figure is expected to grow to $10.6bn – equivalent to a 78% increase.

 

The growth of online sales has already had a noticeable impact on the nation’s high streets as traditional bricks and mortar retailers have faced stiff competition from pure-play online operators.

 

Many long-standing UK retailers fell into administration or rightsized their portfolios to fend off this threat following the global downturn and it’s a trend that is expected to continue in the next few years – just a couple of months ago department store chain Debenhams announced plans to close UK stores and possibly some warehouses in response to the growth of “mobile interaction”.  

The click and collect opportunity

However, rather than be viewed as a threat, growing click and collect sales arguably present an opportunity for retailers and landlords – especially given that the UK average spend on click and collect orders is £81 [Source: CACI]. That’s because many click and collect customers go on to purchase further items when they arrive at stores to collect their orders.   

 

Figures from retail and location consultancy CACI show that 12% of those that use click and collect go on to make an additional purchase in that store at that time. And of those click and collect consumers, 61% go on to make a purchase elsewhere in a retail centre during their visit.

 

Some forward-thinking landlords have already capitalised on this trend, by creating collection hubs in their centres that all of their retail tenants can use. This avoids the problem of retailers having to set aside dedicated space in their own stores to fulfil click and collect orders. Other retail landlords are letting units to parcel collection/delivery companies like Doddle or allocating space for Amazon Lockers.

 

If UK click and collect sales continue to grow over the next few years as projected by the likes of BI Intelligence, then pressure will build on space provision for appropriate shopper fulfilment.  So landlords will need to understand their tenants’ omnichannel strategies in order to best provide infrastructure that works for their customers and maximises downstream consumer spend.New Call-to-action

ABOUT
James King
James King is a Senior Director at VTS. Prior to joining VTS, James was an Associate Director at CBRE, where he specialised in advising Central London landlords on leasing and development in the firm’s market-leading Landed Estates retail team.

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