Woolies and Coles Battle it out to Leverage Click & Collect

Click & Collect has been a major focus for the e-commerce industry as a whole but for the grocery industry specifically. The grocery model lends itself perfectly to being leveraged by the time-saving elements and convenience of Click & Collect. In fact, analysts expect that online grocery shopping will increase by 21.7 percent over the five years through 2018-19, compared with 2.1 percent growth among bricks-and-mortar stores.

According to IBISWorld, the Online Grocery Sales industry is expected to generate $3.3 billion in revenue in 2018-19, while bricks and mortar supermarkets are expected to generate $103.4 billion.

“Online sales currently only represent approximately three percent of total supermarket revenue, as Australian consumers have been slow to take up these services. In comparison, online retail spending accounted for over eight percent of traditional brick-and-mortar sales, over the year to June 2018,” said IBISWorld Senior Industry Analyst, Tom Youl.

E-commerce sales for the grocery sector took longer to develop for consumers given the desire for consumers to check the quality of food before purchase, especially for fruit, vegetables, meat and poultry. “Consumers typically only shop online for low-value and bulky groceries,” You said.  “These trends greatly constrained revenue growth, despite a steady rise in the proportion of Australians who purchase groceries online. However, the introduction of click and collect services has opened up the market,” Youl said.

Click & Collect offers an element of security for consumers, who can make sure all items are included and scan fresh goods for quality. It also means there’s time for those last-minute impulse purchases or forgotten items post-purchase.

While the services themselves are not new, the level of infrastructure invested has been ramping up in recent times from the major players like Coles and Woolworths. In 2017-18, the two companies added Click & Collect capabilities to almost 1,400 supermarkets.

As of 2018-19, Woolworths is estimated to hold 45.3 percent of the Online Grocery Sales industry to Coles’ 30.9 percent.

“While this edge is partly reflective of consumers’ preference between the two companies, Woolworths has also benefited from first mover advantage in click and collect store rollouts. However, Coles has fought back, responding to consumer demand by introducing a range of click and collect locations. Coles currently offers click and collect in over 1200 locations, which is about 200 more than Woolworths,” said Youl.

Coles has also added Click & Collect functionality to Coles Express petrol stations, increasing the company’s footprint and has invested almost $1 billion in two distribution warehouses (due to be operational by 2024-2025).

For more on the impact of Click & Collect and how the delivery landscape is changing, make sure you keep an eye out for our upcoming Spotlight SeriesDelivery: A Race Against Time?

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