STORES - October 2010 - (Page 82)

POSTSCRIPT endc a p U.K.’s First Drive-Through Supermarket BY DAVID GRAY David Gray is U.K. retail analyst for Planet Retail. U.K. supermarket chain Tesco has opened the country’s first drive-through supermarket at its Extra store in Baldock, Hertfordshire. Customers are now able to order groceries online and drive to the store to collect them at a designated time, where staff will place them directly in the car. The service costs a flat £2 ($2.94), which compares favorably with Tesco’s delivery service, which starts at £3 ($4.41). The service was designed by Tesco’s online business unit and is intended to appeal to those who are too busy to accommodate a two-hour delivery window. If successful, the pilot scheme will soon be extended to Romford, Essex, and will then be rolled out across the country. Tesco began offering groceries online in 2000 and was the first of the U.K.’s big four grocery chains to extend its online service into non-food with the 2006 debut of Tesco Direct — a service it soon improved with the introduction of Click and Collect, whereby consumers order non-food items for in-store pickup. With the expansion of the online grocery sector in the U.K., it seems sensible for Tesco to continue innovating, giving the retailer the best chance of capturing a bigger chunk of this market. Looking at individual retailers’ growth rates within online grocery, most have been running well into double digits — with Sainsbury’s close to 20 percent and Tesco (grocery including Direct) running at 14 percent year-over-year through February. The traditional store-based model utilized by Tesco involves pickers entering the shop floor and collecting orders for online grocery customers. These pickers then bring the filled orders back to the store warehouse where they are loaded onto the vans that deliver them to customers’ homes. With the introduction of this new trial service, all online grocery orders for collection by customers will be loaded onto one van, which will then be unloaded into individual customers’ vehicles. If the initiative is a success it seems likely Tesco would look at a system of loading orders directly into customers’ own vehicles. The service is not without its limitations, however: The majority of Tesco’s online grocery orders are processed through its Extra stores, meaning that if the program were rolled out nationwide, pickup would be most prevalent in the secondary/suburban markets where many Extra stores are located. (It is also worth noting that Tesco is gradually introducing “dark” stores – locations that would be used exclusively to fill the orders of online customers.) Not an entirely new concept While this type of service is new to the U.K., it has already been introduced in the United States and France. Notable U.S. examples include Weis Markets, as well as the Publix Curbside service launched earlier this year. The concept has been around for a number of years in France, where pioneers include hypermarket operator Auchan, which launched the first Auchandrive in the Lille region in 2000. A few key points about the French concept: Some drivethrough hypermarkets are stand-alone formats constructed in a fashion similar to service stations, although most are still developed next to or as part of a hypermarket. Most do not charge a delivery fee and also offer customers the option to generate their order via onsite electronic terminals. All in all, the concept looks to be a good one considering the minimal cost of implementation and additional shopper benefit of increased convenience. It also follows Tesco’s strategy of offering universal appeal as it caters to all shopper requirements. It seems unlikely, however, that the concept will develop in a vein similar to that of the French hypermarket operators, with the service always being tied to the retailer’s online grocery offer. In addition, it is quite possible other U.K. retailers with highly developed grocery offerings will follow Tesco’s lead. WWW.STORES.ORG Easy implementation On the face of it the move seems to be a logical extension of the company’s online operation – in effect introducing another service aimed at catering to all its customers’ requirements. This is synonymous with Tesco’s overall strategy to appeal universally across all income groups. The service should also require little additional cost, as it will utilize Tesco’s existing online infrastructure. 82 STORES / OCTOBER 2010 http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES - October 2010

STORES - October 2010
Editor’s Page
President’s Page
Retail People
Customer Experience
Game Changer
Power Players
NRFtech Recap
Concept 2 Watch
Customized Shopping
Consumer Behavior
Software & Analytics
Crowd Control
Payment Fraud
ARTS Update
Point of View
NRF News
Retail Industry Calendar
End Cap

STORES - October 2010