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Are click and collect programs on the way out? Sort of.

Last Updated Jan 6, 2019 at 12:36 pm MDT

(PHOTO: iStock)

HALIFAX (CITYNEWS) – With virtually everything at our fingertips with smartphones in our hands, more and more grocers are striving to connect to customers using that technology.

Click and collect programs have recently become incredibly popular with Loblaws stores like Superstore one of the leaders adapting to online grocery shopping habits. But are those programs built to last? A Canadian professor thinks the program isn’t done evolving just yet.

“Because of the Amazon effect, grocers are starting to think about their next steps in terms of online food shopping and they’ve quickly recognized that the click and collect model only goes halfway,” said Sylvain Charlebois, professor in food distribution and policy at Dalhousie University.

“Consumers still have to go into their car and deliver their own food back at home. And when you think about the amount of time we actually go to the grocery store and the volume and weight we carry–as the population gets older it will become more attracted to think differently about food deliveries in general.”

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Charlebois points to Amazon’s Prime program creating a benchmark for delivery services and grocery stores are imitating that model. “The first one [moving toward that model] happens to be Loblaws.”

He thinks the click and collect is a stepping stone and it’s part of a “natural path” toward delivering groceries. Think of it as a litmus test.

“Grocers weren’t necessarily ready to sell food online and frankly they weren’t sure if Canadians were ready. But Canadians are increasingly becoming more interested in buying food online,” he said. “[Grocers] wanted to know what kind of food is more popular and when sales occur. They have more market knowledge now to move forward on full-blown programs like delivering food at peoples homes.”

A delivery fee at the checkout

So what’s the hold-up? As always, it comes down to money.

“It’s very costly to deliver food. There’s no doubt about that.” Charlebois companies are now tasked with finding a way to generate more customer loyalty in the online grocery shopping department while still making money.

“But nobody wants to pay for delivery because it’s food. That’s the problem. People aren’t expecting to pay a premium to actually get that convenience.”

That being said, Charlebois expects online food sales to continue to grow and eventually account for five per cent of food sales–that’s around $8 billion. “More and more of the food retailing industry is converting to online food shopping, whether it’s meal kits or through apps like Uber Eats. More and more people are wanting to eat out at home, so to speak.”

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He said the driving force behind that shift is the two youngest generations. “Millennials and Gen Z grew up with the internet so it’s not as difficult for them to empower someone they don’t know to pick their tomatoes and cucumbers and have these products delivered at home.”

And he thinks as the population ages this will become commonplace.

The ‘inevitable’ shift

“[A grandparent] might not be as autonomous as used they to be so obviously someone will have to do the grocery shopping for them. Whoever is doing that will appreciate everything can be done online and be delivered to their place. They can stay at home longer…And with the winter–some days you want to get food but you don’t want to go out so this way you can do it on a screen and have it delivered later.”

Loblaws is banking on those under the age of 39 to continue forcing the market in that direction, according to Charlebois. He said with 16 million members in the PC Optimum program, the company only needs 100,000 to upgrade to their premium loyalty program to be able to fund a fleet of delivery drivers.

“That’s still a lot of capital… That’s their goal, to convert 100,000 people within a year. I actually do expect that goal to be reached early on.”

He predicts it won’t be long before we see similar programs coming from places like Sobeys and Costco.

“I think this is inevitable.”