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Grocery pickup creation of value: Customers’ benefits vs. spatial dimension
Journal of Retailing and Consumer Services 39 (2017) 145–153
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Journal of Retailing and Consumer Services journal homepage: www.elsevier.com/locate/jretconser
Grocery pickup creation of value: Customers’ benefits vs. spatial dimension a,⁎
b
Dany Vyt , Magali Jara , Gérard Cliquet a b
MARK
a
IGR-IAE, Graduate School of Management, University of Rennes 1, Rennes Cedex, France IUT of Saint-Nazaire, University of Nantes, Nantes, France
A R T I C L E I N F O
A B S T R A C T
Keywords: Click and collect Customer value Grocery pickups Retailing Spatial dimension
This article examines an Internet grocery shopping model very frequent in the UK and in France: the grocery pickup system. It strives to answer this research questions: does this system create value for consumers? The methodology relies on in-depth interviews with retailers and data from French retail grocery industries. The exploratory approach through experts’ interviews concerning the content of retailers’ selling propositions for consumers reinforces the theoretical framework related to customers’ value and grocery pickup. It appears that long term value could exist through the satisfaction of functional, experiential and relational benefits responsible for the uniqueness of the retailer's positioning. Given the asymmetry between retailers approach and consumer's one, the second part is focused on a particular aspect of the functional benefit: closeness in retailing. Then, an entropy measurement in a French context from two large samples of 1576 hypermarkets and 1473 grocery pickups are conducted. Results show that grocery pickup locations fulfill this sine qua non successful condition. Nevertheless, it is made evidence that this new channel is most of the time developed in overstored areas.
1. Introduction Retailing expansion throughout the world is probably one of the main economic features of the second part of the 20th century and today retailers are among the largest companies in the world, overtaking former huge manufacturers. Founded in 1962, Walmart has more than 11,000 stores in 30 countries around the world and reached a turnover of more than US$ 482 billion during the fiscal year 2015. The networking, or reticulation, of these retail companies has shifted retail management from very local concerns to true regional, national, and even international issues, and network spatial management is now a big stake for these companies (Cliquet, 1998). Internet is now upsetting retailers’ strategies even in the grocery sector forcing them to propose this new channel and to respond to pure players like Amazon settling physical stores or buying brick and mortar retail chain (Whole Foods). Hypermarkets display a retail system designed to let consumers buying whatever product in a minimum of time through an in-store selfservice organization in a “big boxes”. The development of Internet sales has enforced retailers to envisage specific systems to mix both in-store sales and Internet sales. French hypermarkets companies, following UK examples like Tesco, decided to open grocery pickups as it is called in the U.S. These grocery pickups allow their customers to order and pay on Internet and then to drive to a specific station located either close to an existing store or to a contender's one to collect their products. In
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1
Corresponding author. E-mail address: [email protected] (D. Vyt). Source: Springer J. (2016, April). Walmart expanding grocery pickup, Supermarket news.
http://dx.doi.org/10.1016/j.jretconser.2017.08.004 Received 2 April 2017; Received in revised form 17 July 2017; Accepted 2 August 2017 0969-6989/ © 2017 Elsevier Ltd. All rights reserved.
France, Auchan Group started with a dedicated subsidiary called Chronodrive in 2004 and Centres distributeurs E. Leclerc (called Leclerc below) followed in 2007 by adding grocery pickups to their hypermarkets opening then a new marketing channel. Today, more than ten years after the first opening, France registers more than 3632 grocery pickups, which means nearly twice as many as hypermarkets. This grocery pickup system, called “drive” by French retailers, corresponds to a retail format evolution based on Internet burst in retail sectors and the development of multi-channel distribution networks. With this Internet grocery shopping model, consumers can shop whenever and wherever they want. In France, this new system can account for 30% of the growth of a retailer: it appears as a real internal growth potential for networks. In the US, Walmart develops this new channel and expands grocery pickups to 23 markets1 and new locations are planned. However, brick and mortar retailers have to fulfill certain conditions to successfully become multichannel retailers (Agnihotri, 2015). Grocery pickup is a way, on the one hand, to response to consumers’ new buying modes (Beck and Rygl, 2015), and on the other hand, to compete with pure player retailers and now with Amazon one-hour deliveries (and even half an hour in Paris and London according to Amazon's website). For instance in the US, Walmart grocery pickup system represents a way to conquer new territories such as mid-size markets where home delivery is more challenging and neglected by
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retailing wheel (McNair, 1958), but simply an evolution of the store itself by completing its range of services to consumers.
pure players. In this multichannel shopping context, retailers may question the location of their grocery pickups, and more generally speaking, the spatial consistency of their network. This research investigates, on the one hand, customers’ attraction in order to see whether grocery pickups bring any real value, and on the other hand, the importance of the spatial dimension in retail networks management by focusing on grocery pick-ups and wonders whether they are effective tools to fulfill closeness in retailing and to optimize their territorial coverage. This article is structured as follows. The first section presents some theoretical background to better understand how a grocery pickup stands in the retailing evolution. Then, it deals with consumers’ benefits (functional, experiential and relational) and the future of grocery pickups for retailers through interviews with experts. Given the asymmetry between retailers approach and consumer's one (Schultz et al., 2016), the second part is focuses on a particular aspect of the functional benefit: closeness in retailing. Indeed recent research in the grocery pickup filed made evidence that geographical closeness is the first selection criteria for customers. The question is: can the spatial development of grocery pickup increase retailer's territory coverage? So, the second section questions retail spatial strategies by mobilizing the relative entropy measurement. Results of the third section show evidence that the grocery pickups do not represent any competitive advantage for retail network spatial strategies. Finally, the discussion of the findings is presented, including implications, limitations and research perspectives.
2.2. Grocery pickup in a multichannel strategy The grocery pickup system stems from the idea by ROBO (Research Online Buying Offline) or ROPO (Research Online Purchase Offline) (Kalyanam and Tsay, 2013). Despite some high-quality syntheses of the literature on multichannel (Doherty and Ellis-Chadwick, 2010; Kent and Gear, 2017), interrelationships between channels are still questionable. Are grocery pickups a utilitarian channel, or is it a perfect substitute for traditional brick and mortar store? Online and offline channels are undeniably very connected whether is loyalty or satisfaction to a retailer (Wallace et al., 2004; Byoungho et al., 2010). For example, using brand extension theory in a Chinese bank context, Yang et al. (2013) demonstrated that online channel adoption is linked to offline channel service quality. A multichannel strategy encounters many disadvantages and the multiplication of channels does not necessarily imply an increase in the number of customers (Rosenbloom, 2007). If the size of the potential market stagnates, the addition of a new channel entails additional costs for the brand and therefore a decline in profitability (Van Baal and Dach, 2005). Worse, researches have denounced a possible cannibalization between channels (Rosenbloom, 2007; Seck, 2010; Colla and Lapoule, 2012, 2015). Another stream of research shows that multichannel strategies create opportunities for synergies across channels (Verhoef et al., 2007; Zhang et al., 2010). Wallace et al. (2004) demonstrate that channel complementarity increases the satisfaction of the shopper, thus leading him to be more loyal to the store chain. It seems that the relationships between the channels also depend on the life cycle of each sale mode. Indeed, Fornari et al. (2016) studied the impact of stores opening for an initial pure retailer and made evidence that initial cannibalization ultimately turns into positive synergies between the channels. Kollmann et al. (2012) analyzed the multichannel system from the consumers’ point of view and concluded that cannibalization and synergetic effects between channels depend on customers and their channel switching propensity. Recent research in the field of grocery pickup shows that the purpose of this grocery pickup is to consolidate the service relationship established by the company with the customer (Douard et al., 2015; Vyt et al., 2017). This channel is perceived as a complementary service and tends to make the customers more loyal. Regarding multichannel retail mix harmonization, grocery pickups do not respect the usual practices of multi-channel retailers in terms of assortment. While most multichannel retailers use online shopping to complement the offline offer of brick and mortar stores (Zhang et al., 2010), grocery pickups offer a narrower and shallower assortment than traditional hypermarkets or supermarkets. That is to say that grocery pickups propose few goods categories and a limited assortment in each category. The assortment of a grocery pickup is three times less than that of a supermarket and nearly six times that of a hypermarket.3 Fig. 1 shows that the business model is barely fifteen years old and has already 3325 units that cover the French territory. Despite its recency, this Internet grocery shopping model has every year more and more consumers: more than 6 million households used grocery pickups in France in 2016. This development model now captures around 5.5%4 market share of consumer products, with an average basket of around 68 euros to be compared with 43 euros in hypermarkets and 31 in supermarkets.5 Concerning data, interrelationships between channels are complex.
2. Grocery pickups value: customers’ benefits in question 2.1. Grocery pickup implementation Argos, a UK retailer and a subsidiary of Home Retail Group, with 809 shops in 571 towns in the UK and in Ireland,2 was the first to open a grocery pickup in early 2000. In the food retail sector, Tesco was the pioneer and the first to be really successful (Colla and Lapoule, 2012). Then the French Groupe Auchan launched Chronodrive in 2004. This system is composed of a two-step process: 1) the consumer visits a retail website to browse, buy and pay for selected products; 2) the consumer drives to the store or to any place where products can be picked up, unlike cybermarkets which are based on a home delivery system. The consumer delegates to the retailer the task of preparing his order: grocery retailing has switched from self-service to free service. A pickup point can be either located close to a store or isolated from any store in the same chain. In the first case, customers using the Internet order their products and pay for them and drive to the store where the service is available to pick them up at least two hours after they’ve ordered. This is called a drive-in system. Order picking operates from stores that have the products at hand. In the second case, called drive-out, there is no physical store, but only warehouses serving as collecting points. This expansion strategy is mainly used in an offensive conquest of a territory (Marouseau, 2013). The drive-in consists of locating a near point of sale, a bonded warehouse and order picking. In this context, the retailer implements here a defensive stance (Colla and Lapoule, 2012) without any real motivation to conquer territories; it rather seeks to maintain its position in a given geographic area. Grocery pickup prices are either similar to stores or sometimes even lower in order to attract new customers. This free service corresponds to the current consumption patterns of consumers who show little willingness to pay for grocery deliveries (Goethals et al., 2012; Hübner et al., 2016). And Tesco decided in 2016 to cancel the surcharge on "click & collect" orders for sales under 35 euros via the Tesco Direct website. The grocery pickup is probably not a true evolution of the
3
Source: Nielsen Scantrack, 4 juillet 2017. Source: Kantar WordlPanel, Distribook, Février 2017. 5 Source: Nielsen homescan & scantrack, 4 juillet 2017. 4
2
http://www.timeo.co.uk/argos-opening-times/ and www.argos.co.uk/webapp/wcs/ stores/servlet/ArgosStoreLocatorMainMobile?langId=110&storeId=10151.
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According to Keller (1993), “Functional benefits are the more intrinsic advantages of service consumption and usually correspond to the tangibles attributes. These benefits are often linked to fairly basic motivations” (p. 4). This need is expressed concretely through the purchase of low involvement products, especially grocery items such as water, milk, laundry soap, canned products. Thus, in 2016, the grocery pickups represent 8.8% of poultry meat sales, and 7% reading plain water.6 Mevel and Morvan (2015) add that functional benefits play a more important role than other benefits when the grocery pickups is new (customers do not have a long experience with the channel). The satisfaction of functional benefits is neither perceived nor conscious to the consumer, leading to "basic requirements," being easily imitable. However, based on our in-depth interviews, retailers have to remain vigilant in two aspects: the choice and stock-outs of their grocery pickup stations. Grocery pickups’ assortments are extensive. They provide a huge quantity of products (not only food items but also non-food products) in a huge quantity of categories in order to satisfy the functional needs of consumers. For instance, in France, Cora has the most important assortment with 31,961 SKUs7 on average for its drive-in system, and in the US, Walmart grocery pick-up has 30,000 SKUs.8 In this case, traditional stores provide the infrastructure to accommodate this shopping mode. However, retailers are aware that it is possible to have a more limited choice, particularly in terms of solitary stations (7000–8000 SKUs on average) even if they aim at satisfying daily needs: “The choice is ok. It is less than in hypermarket, but it meets all the necessary units” confirms a network manager. Thus, all retailers increased their on-line assortment: + 21% for the drives-out of Casino and even + 21% for the solitary stations of the Carrefour. Even though it does not create any value, stock-outs can damage the click and collect in the same way as traditional outlets where the repeated lack of a branded product will cause dissatisfaction, leading to a store change (Campo et al., 2000; Connan-Ghesquière, 2011). “We don’t have all the products at the same time due to stock-outs. The stock-out rate is not explosive, but when there are stock-outs it is more apparent than in hypermarkets” (from an in-depth interview with a grocery pickup manager). Grocery pick-ups must therefore ensure that they offer a complete assortment to satisfy functional benefits and to ensure repeat purchases (Fernie et al., 2010). More than functional benefits, consumers can find experiential and relational benefits. By satisfying these benefits, retailers ensure a differentiated and unique image (Keller, 1993), difficult for competitors to imitate, therefore creating significant value.
Fig. 1. Number of Grocery Pick-Up Stations in France. Source: Drive Insights, 2016.
Indeed, Carrefour which is not very present on the grocery pickup channel, is still the number one food retailer in France in 2016, but encounters a decline of 0.5 points whereas Leclerc, the number one on the grocery pick up channel in terms of stations and penetration rate, increases its global market share (online and offline) buy 0.4 point. Even if the territorial development of the grocery pickups seems to influence the performance of the networks, it is difficult to establish a causal link whether there is a cannibalization process or a real complementarity. 3. Grocery pickups and consumers’ benefits A literature review about customers’ benefits reveals sources of the value creation. This framework is reinforced by an exploratory research revealing current managerial practices towards grocery pickups customers. Hence, improvements emerge to maximize this value creation. Our exploratory study was based on in-depth interviews with grocery pickup managers and network managers. Experts’ interviews are recommended in this research because of the absence of theory specifically dedicated to this phenomenon and to reveal its critical aspects. The interview guide was structured around the three theoretical consumer benefits: functional, experiential and symbolic (Keller, 1993). Once a retail format reaches maturity, benefits from functional expectations to the consumer are insufficient. They become basic requirements, not ones creating value. Thus, a study of all expected consumer benefits, functional, experiential and symbolic or relational (more adapted to a specific service perspective) is interesting. 3.1. Functional benefits Functional benefits have already emerged from the grocery pickup, as it relieves consumer purchasing constraints like time pressure, for instance (Colla and Lapoule, 2012). Retailers are well aware of the issues of the grocery pickup's practicality as an explanation for the growth of this new channel. According to a grocery pickup network manager, “grocery pickup is ideal in terms of convenience for time-saving and shopping convenience. No longer carries four times the products". Indeed, usually the consumer manipulates products between the point of sale and his home. He takes the products in shelves, places them in his basket and then releases them during the checkout control. Then he puts them back in his basket before finally putting them in the trunk of his car. Retailers’ efforts to reduce time of preparation and removal illustrate the response to this functional need. In most cases, delivery time is reduced from two hours to thirty minutes. Retailers can go even further when competitive issues are at stake. This is a way to counteract a competitor by reducing delivery times to zero, especially a when a brick and mortar seller develops a grocery pickup service: “Delivery time is reduced to zero in some grocery pick-ups especially in the offensive ones. This is our competitive advantage over picking drive-ins. That's how you kill a Carrefour drive” (from a grocery pickup manager in-depth interview).
3.2. Experiential benefits According to Keller (1993), experiential benefits provide a sensory pleasure or cognitive stimulation and are part of the hedonic consumption of the customer. Holbrook and Hirschman (1982) state that “this experiential perspective is phenomenological in spirit and regards consumption as a primarily subjective state of consciousness with a variety of symbolic meanings, hedonic responses, and aesthetic criteria” (p. 132). Filser (2002) and Dupuis and Le Jean (2004) add to the knowledge of generating experience. Filser, in 2002, offered a synthesis of various past contributions dedicated to experiential marketing. These two major contributions (Dupuis and Le Jean, 2004; Filser, 2002) show that marketing oriented to an experiential dimension generates creative solutions, original and additional opportunities untested by retailers. Based on their qualitative research, Colla and Lapoule (2012) reveal 6
Source: Iri, Distribook, February 2017. Source: Drive Insight, Distribook, February 2017. 8 Source: http://grocery.walmart.com. 7
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to listen to him; to explain and to find a positive solution” (from an in-depth interview with a grocery pickup manager). To conclude, the corporate dimension can create the highest value for customers, because personality and trust towards the retailer cannot be imitated by others; however, retailers cannot increase customer value without satisfying functional expectations first. This approach is in line with the findings of Shamim et al. (2016) – the corporate brand experience plays an important role in positive customer behaviors. One way of dealing with these problems of productivity and profitability could be to wait for some closings. In retail groups like Leclerc, Intermarché or Système U, which are retail cooperatives, members could decide one day to end the grocery pickup experience if there is an absence of appropriate customers, as Picot-Coupey et al. (2009) highlighted in their study. The creation of value is so far analyzed from the viewpoint of the retailers. However, recent research shows that there are huge differences between retailer's sense giving and consumers’ sense making (Schultz et al., 2016). So, previous researches made evidence that an important element for consumers in their decision to visit or not a retailer remains spatial closeness (Bergadaa and Del Bucchia 2009, Schultz et al., 2016). Especially, regarding grocery pickup, spatial closeness appears to be the first criteria choice for customers (Mevel and Morvan, 2015; Vyt et al., 2017). Hence, the second part of this research focuses on this specific aspect of the functional benefits and wonders if the introduction of grocery pickups may increase territory coverage to satisfy this functional need.
that “many consumers said they would like easier-to-use, more intuitive navigation” (p. 854). The design and the ergonomics of the website have to have a high level of quality to play a key role in the grocery pickup's success. In this way, we can imagine that it would begin by taking orders from the Internet, through exciting navigation and redefined e-merchandising, and would continue up to the point where the goods are replaced (by new additional services). In the case of grocery pickups, the presence of tablets generates an additional service that makes the delivery immediate: “Some stations are equipped with a tablet at the reception. It's possible to order some last minute products. …The future objective is to improve the experience lived on the station by adding music, interactive terminals, for instance. We are thinking of enriching the physical collect point by exposing non-food products to create a specific atmosphere; making pancakes and tastings to animate more for instance; we are thinking also of extending services on the collect point by providing a deli, bakery, steakhouse… Adding new services” (from an in-depth interview with a pickup point manager). In addition, retailers work on the aesthetic dimension of physical collection points. This topic largely concerns managers today, as stated by a network manager: “The appearance is not terrible. We're in a warehouse. Sometimes it's creepy. There is nothing around. We have to work on the experiential. Our efforts will have to be concentrated on this variable; it is clearly our future priority” (from an in-depth interview with a grocery pick-up manager). This comment joins the qualitative results of Colla and Lapoule (2012) concerning the importance of the geographical area as a key factor of the grocery pickup's success. More than experiential benefits, relational benefits lead to sustainable relationships between customers and retailers. They emerge from the retailer side, specifically a higher consumer confidence.
4. The spatial strategy as a determinant of grocery value By developing the grocery pickup on the whole territory, retailers multiply the points of contact with their customers. They now have the choice in the same area between a traditional store and a pickup point. The location of these grocery pickups therefore represents a definite competitive advantage in terms of choice made by the consumer. Since the new network can become a determining lever in the optimization strategy of the territorial network, the second part of this research consists in measuring if grocery pickups improve global territory coverage of French retail chains. This seems to be the sine qua non to develop functional benefits from the consumer points of view.
3.3. Relational benefits All research focuses on the relationship marketing confirmation that confidence is a mediating concept of the relationship between the consumer and the brand (Frisou, 2000; Gurviez and Korchia, 2002; Sirieix and Dubois, 1999). The concept of trust in the relational paradigm, gives the brand a central role (or the retailer), since the consumer relies on it to reduce uncertainty and make decisions. Gurviez and Korchia (2002) provide a clear and concise reading of the concept. Brand confidence can be defined as a “psychological variable that reflects a set of accumulated presumptions about the credibility, integrity and goodwill that the consumer attributes to the brand”. “In grocery pickup, consumers are connected to the brand and the product and their opinion of the brand can be expressed in many ways”, as explained by a network manager: “On the website, consumers can request a product they want to see in the assortment. In addition, there are suggestion boxes to rate the reception of the stations. Finally, it is possible to write directly to the stations; we answer all emails”. Note that the measure of this concept is difficult because consumers use their past experiences to infer beliefs and future behaviors (Gurviez and Korchia, 2002). In other words, trust is both a cause and a consequence of the created value. Based on this brand confidence work, we propose defining retailer confidence as a psychological variable that reflects a set of accumulated presumptions about the credibility, integrity and goodwill that the consumer assigns to the retailer. The firm works trust through reassurance to develop a more human image of the station. “We need to permanently animate collection points. We need a deliveryman, especially during rush hours, to represent the quality of the group…. It is not developed enough. That's to say reinsurance during the waiting time. …The relation with customers and their confidence towards us are more intense than in hypermarkets. We try to personalize the relation with a customer by taking into account his personal requirements – for instance, one of our customers’ demands green bananas; another wants [their products] to be delivered in a box (instead of bags). We save these specific needs to satisfy customers all the time. In the case of problems, we take time to personally call the customer
4.1. Territory coverage as a retail spatial strategy Spatial strategies suffer from a dearth of research in marketing and retailing literature if we except useful but old and rather descriptive studies (Laulajainen, 1987) or methodological approaches (Ghosh and Craig, 1991; Ghosh and McLafferty, 1987). When a territory is more or less saturated or when opening new stores is impeded by law, as is the case in many European countries like France, the temptation is strong to develop a new format and to use it to increase presence in the market and, hence, territory coverage. Grocery pickups benefit from network image as well as logistics and massive purchases (Cliquet, 1998; Cliquet and Guillo, 2013; Colla, 2003). As studied before, several spatial development strategies of networks do exist. In order to benefit from positive synergies with the store network, new grocery pickups are located close to one another, that is to say, close to a traditional store under the same banner following then the former location strategy of the retail network which entails a real disparity in the location of grocery pickups in France as shown in Fig. 2. Therefore, a first hypothesis is proposed: H1. Grocery pickups improve global territory coverage of French retail chains Fig. 2 shows that grocery pickups are mainly located in the western part of France. Thus, the density of grocery pickups per capita highlights this disparity. In the East of France grocery pickups density is very low: Alsace has one grocery pickup for 35,604 inhabitants and 148
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Fig. 2. Food Drives in France. Source: Authors, made with data from LSA expert, 2016.
Fig. 3. Drives-out Leclerc. Source: Made by authors with data from LSA Expert
explains it (1929), competing networks are structured in relation to one another. The relationship with competitors in twofold: either by avoiding or confronting one another. Fig. 3 shows that Leclerc grocery pickups are also widely distributed in northern France, the historic stronghold of competitor Auchan. This is a direct confrontation strategy with competitors. In a symmetric way, the Auchan uses drive out grocery pickup to conquer new territories. For example, since the Group was not allowed by competition authorities to open stores in Brittany, it opened four “drive out” grocery pickups under the banner Chronodrive.
Lorraine one for 31,364 inhabitants whereas in the West of France, Brittany is the densest region with a grocery pickup for 12,252 inhabitants. As shown in Fig. 3, the Leclerc has initially concentrated deployment of its grocery pickups in the Britany, where its commercial density in terms of hypermarkets is the strongest. Indeed, in this region, the historic center of the group, Leclerc owns more than 29% of the hypermarkets and 85% of Brittany grocery pickups are under the Leclerc banner. What about location strategies vis-à-vis competition? As Hotelling 149
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Auchan group territorial network is therefore judicious since it combines several spatial strategies enabling it to establish a position of leader in its territory of origin which is the North of France while conquering new ones, the West in particular. This is a very local example. Hence, hypothesis two states:
Table 2 French retailers grocery pickup database.
H2. Grocery pickups improve territory coverage of French retail chains in specific regions It is worth noting the great disparity in the development of grocery pickups throughout the French territory. At a whole country level, is this strategy sustainable? Can grocery pickups improve territorial coverage of a hypermarket chain?
Name of hypermarkets chains
Number of drive-in
Territory coverage of drive-in
Number of drive-out
Territory coverage of drive-out
Carrefour Leclerc Hyper U Cora Auchan Géant/casino Intermarché Total
221 225 307 58 62 98 68 1039
0.91 0.898 0831 0719 0733 0856 0799
14 342 3 0 61 12 2 434
0.53 0.9246 0241 0 0688 0546 0152
4.2. Methodology and data network and weighs only 3.68% of the channel. These retail companies have various organizational forms: public companies (Carrefour, Casino, Cora), family company (Auchan), cooperatives or retailers’ association (Intermarché, Leclerc, Système U). All retailers do not have the same strategy regarding the development of the grocery pickup. Thus, Cora does not develop the drives-out, while each of its hypermarkets provides the infrastructure to have a drive-in. In the same vein, the company Intermarché outfits nearly 75% of its hypermarkets with a drive-in so that there are only two drive-outs. Carrefour and System U companies are also part of this trend and focus on the drives-in. Conversely, Leclerc has more drives-out than drives-in.
4.2.1. Relative entropy measurement A method of territorial coverage measurement based on relative entropy evaluates the gain in spatial value whenever a retail network intends to acquire another chain (Cliquet, 1998). It also explains longitudinally (over time and depending on the network life cycle phase) how the spatial strategies of the network change (Cliquet, 2000). The relative entropy measures the spatial dispersion as follows.
k E = − ∑ fi. Log (fi) i=1 Where E = entropy; k = number of geographical areas; ni = number of stores in the i area; fi = store frequency in an area (fi = ni/N); N = number of stores. We can then measure relative entropy as follows:
5. Results: Territory coverage measurement of grocery pickups in France 5.1. Grocery pickups development and global territory coverage
Relative entropy = = E / Log k ,
Table 2 provides the number of grocery pickups, drives-in and drives-out, in 2016 and their territorial coverage, measured by relative entropy. The entropy enables to measure the spatial dispersion of a population, here of the French retail networks. The more spatially dispersed a population is, the greater the entropy is. The French “département” will be the geographical reference area. More specifically, we used the 94 “départements” in Metropolitan France (excluding Corsica). The network of 342 drive-outs of the Leclerc is located in 84 departments of metropolitan France out of a total of 94 departments. In the department of Meuse, there is one Leclerc drive-out, hence a frequency fi of 0.0029 and a fi log fi value of −0.0074. In the department of the Finistère, there are 14 Leclerc drives-out, hence a frequency fi of 0.0409 and a value for fi log fi of −0.0568. We have done all these calculations for each department and obtained an entropy value of 1.8244 and a relative entropy value of RE = 0.9246. Then we did this for each group, for drives-in and drives-out. Table 2 shows that even with less drives-in units Géant Casino has a greater territorial coverage than the System U. If we focus only on drive-outs, Leclerc has the highest entropy with a value of 0.9246. Cora chose not to develop drive-outs which explains an entropy equal to zero for this channel. Table 3 quantifies the exact contribution of drive-outs to the territorial
The use of the relative system allows a measure calculated in the interval [0, 1] and allows simpler comparisons with competing networks (Cliquet, 1998). The closer it is to 1, the better the territorial coverage is. 4.2.2. Data on French grocery pickups The study focuses on French grocery pickups and studies if this Internet grocery shopping model is an effective tool for enabling hypermarket networks to optimize their territorial coverage. Can grocery pickups be useful to conquer yet uncovered areas? The propositions are tested in a hypermarket setting. According to INSEE (French National Institute for Statistics), in France, the official definition of a hypermarket is the following: a self-service retail store deriving less than three-quarter of its sales from food and having a sales floor area of 25,000 square feet or more. This article uses real data as shown in Table 1. The sample consists of 1576 hypermarkets; all belonging to the seven largest retail network in the French territory. Although Carrefour is the leading retailer in Europe, it has 309 hypermarkets in France, compared with 530 for the Leclerc. Cora hypermarkets represent a small Table 1 French Hypermarkets Database.
Table 3 French retailer coverage.
Name of hypermarkets chains
Number of hypermarkets
% of cluster
Carrefour Leclerc Hyper U Cora Auchan Géant/Casino Intermarché Total
309 530 345 58 135 108 91 1576
19.60 33.63 21.89 3.68 8.56 6.85 5.77 100
Carrefour Leclerc Hyper U Cora Auchan Géant/casino Intermarché
150
Terrirory coverage: hypermarkets
Territory coverage: hypermarkets + drive-out
0.923 0.950 0,846 0,719 0,840 0,869 0,815
0.920 0.949 0,847 0,719 0,843 0,874 0,818
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as a tool for conquering new territories, in particular the North, territory of origin of its competitor Auchan. In the same vein when removing the drives out of the Auchan in the "New Auquitaine" region, the relative entropy decreased from 0.843 to 8.03. This simulation reflects a significant deterioration in its territorial coverage. Moreover, the results show a significant deterioration in the territorial coverage of certain networks if the drives-out are withdrawn of their region of origin. Thus, the relative entropy of the Leclerc passes from 0.949 to 0.924 if one removes the drives out of Brittany (territory of origin of the retailer). In the same vein, the relative entropy of the Auchan decreases from 0.843 to 0.814 if one removes the drives-out located in the region “Hauts de France”. In this context, retailers are in a defensive logic (Colla and Lapoule, 2011), with no real motivation to conquer territories. They aim to maintain their dominant position over a given geographical region. The territorial networks of the Auchan and Leclerc are therefore judicious since they combine several spatial strategies enabling it to establish a leading position in their respective territory of origin while conquering new ones. The individual territory coverage of the retailers can change in specific cases, when solitary stations are withdrawn of specific regions. The individual relative entropies are partially consistent with hypothesis 2. In other words, grocery pickups partially improve territory coverage of French retail chains in specific regions.
coverage of networks. Two measures are analyzed simultaneously: the territorial coverage of hypermarkets and then that of the hypermarket and drive-out networks. The objective here is to evaluate the contribution of drives-out in the group coverage. We can see that most hypermarket networks show a very good coverage of the French territory. Thus, the 225 Leclerc hypermarkets cover homogeneously the country, which explains its relative entropy of 0.950. Only Cora has a lower entropy of 0.719 due to the high concentration of hypermarkets in eastern France. It means that this retail network is absent from several departments and that its territorial network has several "holes". In a purpose of territory coverage optimization, grocery pickups allow Auchan (Auchan drive, the drive-ins, and Chronodrive, the drive-outs of the group) to increase its relative entropy. The single presence of hypermarkets confers relative entropy of 0.840 whereas this measure reaches 0.843 when drives-out are added. Regarding Leclerc, the French retailer with the largest number of grocery pickups, the relative entropy slightly decreases regarding the location of the drives-out and hypermarkets. It means that drives-out are located in the same “départements” as traditional hypermarkets and increase concentration. Carrefour faces the same situation. This shows evidence that retailers develop grocery pickups in areas where they are traditionally present in order to strengthen local positions. Finally, no significant change occurs between relative entropy when considering only hypermarkets and relative entropy when hypermarkets and drive-outs are included. For all retailers, contrary to the prediction of H1, solitary grocery pickup stations openings have not significantly improved territory coverage in the French territory. H 1 is not supported.
6. Discussion 6.1. Theoretical implications Based on a literature review and in-depth interviews, conditions for a successful grocery pickup that benefit consumers are identified. More precisely, customers’ experiential benefits are key factors. Retailers have to innovate when it comes to customers’ sensory pleasure and cognitive stimulation to provide customers with an exciting and easy shopping experience, leading to a unique positioning of their pickup stations. Websites and all features in physical areas are concerned with providing customer satisfaction. Retailers have to maintain relational efforts to ensure customers’ sustainable confidence towards them, including, at a local level, intensive human contact between the staff and customers and corporate brand communication at a strategic level. The corporate dimension plays a significant role in value co-creation activities, as measured by Shamim et al. (2016). Based on an exploratory approach with experts, this research provides the necessary theoretical background to conduct later exploratory and confirmatory analyses in order to measure customers’ perceptions and to finally identify precisely key components of the value creation.
5.2. Grocery pickups development and territory coverage in specific regions Since it is made evidence that grocery pickups are not deployed in strategic locations to improve retail chain global territory coverage, what about a more micro-level analysis at the regional level? In other words, can grocery pickups be used as a tool to conquer specific regions? To verify H2 we still use relative entropy. Table 4 show relative entropy of the global network: stores and solitary stations (drives-out). It simulates territorial coverage without drives-out in each of the twelves French regions. This means to making simulations with a hypothetical value of zero concerning the number of drive-out, region by region basis. For example, Intermarché Group has no solitary stations in Britany and Normandy, so it has the same relative entropy as the network as a whole. In the same vein, there is no Carrefour drive-out in the "center" region or in the "Grand Est" region, which explains why the relative entropy without drive is identical. The relative entropy of the Leclerc network as a whole (hypermarkets + drives-out) is 0.949. This retailer has 34 drives-out in the "Hauts de France" region (i.e. northern France). Hence big entropy change when we simulate no drive-out in the specific region. Indeed, relative entropy falls to 0.921. This shows that retailers use drives-out
6.2. Managerial implications This paper shows that retailers are too often using grocery pickups as tactical tools to hinder local contenders’ activity. More positively, it
Table 4 Territory coverage of French retail chains without specific regions. Name of the chain
Carrefour Leclerc Système U Auchan Géant Casino Intermarché
Relative entropy of the network (HM+ solitary station) 0.920 0.949 0.847 0.843 0.874 0.818
Relative entropy without specific regions Bretagne
Normandie
Center Val de Loire
Auvergne Rhône Alpes
Bourgogne Franche Comté
Ile de France
0.918 0.924 0.846 0.827 0.870 0.818
0.920 0.917 0.847 0.829 0.874 0.818
0.920 0.930 0.847 0.836 0.874 0.818
0.915 0,919 0,845 0.830 0.863 0.818
0.920 0.935 0.847 0.843 0.874 0.818
0.911 0.925 0.847 0.816 0.850 0.807
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Hauts de France
0.919 0.921 0.847 0.814 0.874 0.813
PACA
0.918 0.935 0.844 0.821 0.865 0.818
Occitanie
Nouvelle aquitaine
0.920 0.948 0.847 0.833
0.918 0.918 0.847 0.803 0.865 0.818
0.818
Grand Est
0.920 0.923 0.847 0.837 0.874 0.818
Pays de la Loire
0.920 0.931 0.847 0.840 0.874 0.818
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service (highest service to customers) compared to the grocery pickup service; 2) the increase of fresh products available from the grocery pickup range. And Amazon bought recently Whole Foods, a US grocery retail chain specialized in organic product.
enables to understand how retailers could improve the value creation of their new formula. Based on the customer literature review and experts’ interviews, this research provides future potential positioning axes to develop a unique image leading to create a sustainable relationship with customers. It provides a theoretical framework to consider the value creation of this new channel and it sets conditions for a successful grocery pick-up. Given the asymmetry between consumer and retailers points of view, we focused on a particular aspect of functional benefit: store closeness that appears to be an important criteria choice for consumer in the pickup grocery context. The main objective is to verify that this sine qua non successful condition is met by retailers. We still know little about the effects of grocery pickup development on chain territory coverage. Territory coverage is measured by means of entropy and it is showed that this new channel is not devoted to conquer yet undeveloped areas. Indeed, grocery pickups are not deployed in understored locations to improve retail chain global territory coverage. In other words, grocery pickups compete against other traditional points of sales to take away a portion of consumers’ expenditures. As showed previously, if the potential market size is stagnating, the addition of a new channel leads to additional costs for the retailer and therefore a decline in profitability (Van Baal and Dach, 2005). Worse, some denounce the possible cannibalization between channels (Colla and Lapoule, 2015; Rosenbloom, 2007; Seck, 2010). We can conclude that retailers have to develop new competitive advantages to find new internal growth. New services also have to be added to grocery pickups to differentiate each retailer from its competitors. This is all the more true as grocery pickups have a logic of direct confrontation with their competitors, as shown above for Leclerc and Auchan. But as this service is free to customers, to make this new activity profitable, retailers need to attract as many consumers as possible. The major issue for retailers is to create value for their customers since the only locations of grocery pickups are not a competitive advantage. Retail networks pool the e-shopping and the grocery pickups (Picot-Coupey et al., 2009) to increase the value creation to the customer (Oh and Teo, 2010; Hunt et al., 2012).
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Ghosh, A., McLafferty, S.L., 1987. Locations Strategies for Retail and Services Firms. Lexington Books, M.A. Goethals, F., Leclercq-Vandelannoitte, A., Tütüncü, Y., 2012. French consumers' perceptions of the unattended delivery model for e-grocery retailing. J. Retail. Consum. Serv. 19 (1), 113–133. Gurviez, P., Korchia, M., 2002. Proposition d’une échelle de mesure multidimensionnelle de la confiance dans la marque. Rech. Et. Appl. En. Mark. 17 (3), 41–59. Holbrook, M.B., Hirschman, E.C., 1982. The experiential aspects of consumption: consumer fantasies, feelings, and fun. J. Consum. Res. 9, 132–140. Hübner, A., Kühn, H., Wollenburg, J., 2016. Last mile fulfilment and distribution in omnichannel grocery retailing: a strategic planning framework? Int. J. Retail Distrib. Manag. 44 (3), 228–247. Hunt, D.M., Guiger-Oneto, S., Varca, P.E., 2012. Satisfaction in the context of customer co-production: a behavioural involvement perspective. J. Consum. Behav. 11, 347–356. Kalyanam, K., Tsay, A.A., 2013. Free riding and conflict in hybrid shopping environments: implications for retailers, manufacturers, and regulators. Antitrust Bull. 58 (1), 19–68. Keller, K.L., 1993. Conceptualizing, measuring, and managing customer-based brand equity. J. Mark. 57 (1), 1–22. Kent, A., Gear, A., 2017. Web platform, channel development and integration for multi, cross, omni and new sensory channel retailing. In: Proceedings of the 19th European Association of Education and Research in Commercial Distribution (EAERCD), Dublin, Ireland. Kollmann, T., Kuckertz, A., Kayser, I., 2012. Cannibalization or synergy? Consumers' channel selection in online-offline multichannel systems". J. Retail. Consum. Serv. 19 (2), 186–194. Marouseau, G., 2013. Le click and collect: La logistique participative du client dans les drive. Logistique Manag. 21 (3), 31–39. Mevel, O., Morvan, T., 2015. Drive, entropie et logistique urbaine: Qu'attendre de la nouvelle relation de service initiée par les GMS avec les consommateurs? Logistique Manag. 23 (2), 21–30. Oh, L.B., Teo, H.H., 2010. Consumer value co-creation in a hybrid commerce service delivery system. Int. J. Electron. Commer. 14 (3), 35–62. Picot-Coupey, K., Huré, E., Cliquet, G., Petr, C., 2009. Grocery shopping and Internet: exploring French consumers' perceptions of the “hypermarket” and “cybermarket” formats. Int. Rev. Retail, Distrib. Consum. Res. 19 (4), 437–455.
6.3. Limitations and future research In this research, closeness in retailing, that is to say one aspect of the functional benefit highly sought after by customers, is apprehended by network territory coverage. Territory is measured by means of entropy and does not consider the distance between grocery pickups. Ghosh and McLafferty (1987) developed an index of retail saturation to ascertain the attractiveness of a potential market. This index compares the level of expenditure captured by the retailer in the concerned catchment area. It therefore involves delimiting upstream the trade area of each grocery pickup and quantifying it. The grocery pickups, by definition, capture a mobile population. Although Douard et al. (2015) demonstrates that the trade area of a drive-in pickup is closer to the point-ofsale area, this index cannot be used quite accurately. Measures considering the distance between grocery pickups are very promising future research. Furthermore, this study is limited to the specific French context: labor costs, regulations, networks’ territorial coverage and the lack of willingness to pay for home delivery has contributed significantly to the development of grocery pickups and should be conducted in other countries, especially in the US with the development of Walmart grocery pickup. However, it is clear that home delivery is experiencing a resurgence of interest. Several months ago, Amazon launched a grocery service in France. For a few months, in London, Fresh Amazon allows consumers to be delivered seven days a week, from 7 a.m. until 11 p.m. The website proposes a range of 130,000 products. This new service, and potentially its success, offers a fast delivery (one hour following the order) for a delivery fee (from 20 euros). This innovation could lead retailers to focus our future attention on: 1) the value of home delivery 152
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Rosenbloom, B., 2007. Multi-channel strategy in business to business market: prospects and problem. Ind. Mark. Manag. 36, 4–9. Schultz, M., Chaney, D., Debenedetti, A., 2016. An integrative perspective of closeness in retailing: from retailer's sense-giving to consumers' sense making. J. Retail. Consum. Serv. 32, 218–226. Seck, A.M., 2010. L’impact de l’émergence du multicanal sur la gestion de la distribution des services. Econ. Et. Sociétés 44 (2), 231–250. Shamim, A., Ghazali, Z., Albisson, P.A., 2016. An integrated model of corporate brand experience and customer value co-creation behaviour. Int. J. Retail Distrib. Manag. 44 (2), 139–158. Sirieix, L., Dubois, P.-L., 1999. Vers un modèle qualité-satisfaction intégrant la confiance? Rech. Appl. Mark. 14 (3), 1–22. Van Baal, S., Dach, C., 2005. Free riding and customer retention across retailers' channels.
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Contents lists available at ScienceDirect
Journal of Retailing and Consumer Services journal homepage: www.elsevier.com/locate/jretconser
Grocery pickup creation of value: Customers’ benefits vs. spatial dimension a,⁎
b
Dany Vyt , Magali Jara , Gérard Cliquet a b
MARK
a
IGR-IAE, Graduate School of Management, University of Rennes 1, Rennes Cedex, France IUT of Saint-Nazaire, University of Nantes, Nantes, France
A R T I C L E I N F O
A B S T R A C T
Keywords: Click and collect Customer value Grocery pickups Retailing Spatial dimension
This article examines an Internet grocery shopping model very frequent in the UK and in France: the grocery pickup system. It strives to answer this research questions: does this system create value for consumers? The methodology relies on in-depth interviews with retailers and data from French retail grocery industries. The exploratory approach through experts’ interviews concerning the content of retailers’ selling propositions for consumers reinforces the theoretical framework related to customers’ value and grocery pickup. It appears that long term value could exist through the satisfaction of functional, experiential and relational benefits responsible for the uniqueness of the retailer's positioning. Given the asymmetry between retailers approach and consumer's one, the second part is focused on a particular aspect of the functional benefit: closeness in retailing. Then, an entropy measurement in a French context from two large samples of 1576 hypermarkets and 1473 grocery pickups are conducted. Results show that grocery pickup locations fulfill this sine qua non successful condition. Nevertheless, it is made evidence that this new channel is most of the time developed in overstored areas.
1. Introduction Retailing expansion throughout the world is probably one of the main economic features of the second part of the 20th century and today retailers are among the largest companies in the world, overtaking former huge manufacturers. Founded in 1962, Walmart has more than 11,000 stores in 30 countries around the world and reached a turnover of more than US$ 482 billion during the fiscal year 2015. The networking, or reticulation, of these retail companies has shifted retail management from very local concerns to true regional, national, and even international issues, and network spatial management is now a big stake for these companies (Cliquet, 1998). Internet is now upsetting retailers’ strategies even in the grocery sector forcing them to propose this new channel and to respond to pure players like Amazon settling physical stores or buying brick and mortar retail chain (Whole Foods). Hypermarkets display a retail system designed to let consumers buying whatever product in a minimum of time through an in-store selfservice organization in a “big boxes”. The development of Internet sales has enforced retailers to envisage specific systems to mix both in-store sales and Internet sales. French hypermarkets companies, following UK examples like Tesco, decided to open grocery pickups as it is called in the U.S. These grocery pickups allow their customers to order and pay on Internet and then to drive to a specific station located either close to an existing store or to a contender's one to collect their products. In
⁎
1
Corresponding author. E-mail address: [email protected] (D. Vyt). Source: Springer J. (2016, April). Walmart expanding grocery pickup, Supermarket news.
http://dx.doi.org/10.1016/j.jretconser.2017.08.004 Received 2 April 2017; Received in revised form 17 July 2017; Accepted 2 August 2017 0969-6989/ © 2017 Elsevier Ltd. All rights reserved.
France, Auchan Group started with a dedicated subsidiary called Chronodrive in 2004 and Centres distributeurs E. Leclerc (called Leclerc below) followed in 2007 by adding grocery pickups to their hypermarkets opening then a new marketing channel. Today, more than ten years after the first opening, France registers more than 3632 grocery pickups, which means nearly twice as many as hypermarkets. This grocery pickup system, called “drive” by French retailers, corresponds to a retail format evolution based on Internet burst in retail sectors and the development of multi-channel distribution networks. With this Internet grocery shopping model, consumers can shop whenever and wherever they want. In France, this new system can account for 30% of the growth of a retailer: it appears as a real internal growth potential for networks. In the US, Walmart develops this new channel and expands grocery pickups to 23 markets1 and new locations are planned. However, brick and mortar retailers have to fulfill certain conditions to successfully become multichannel retailers (Agnihotri, 2015). Grocery pickup is a way, on the one hand, to response to consumers’ new buying modes (Beck and Rygl, 2015), and on the other hand, to compete with pure player retailers and now with Amazon one-hour deliveries (and even half an hour in Paris and London according to Amazon's website). For instance in the US, Walmart grocery pickup system represents a way to conquer new territories such as mid-size markets where home delivery is more challenging and neglected by
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retailing wheel (McNair, 1958), but simply an evolution of the store itself by completing its range of services to consumers.
pure players. In this multichannel shopping context, retailers may question the location of their grocery pickups, and more generally speaking, the spatial consistency of their network. This research investigates, on the one hand, customers’ attraction in order to see whether grocery pickups bring any real value, and on the other hand, the importance of the spatial dimension in retail networks management by focusing on grocery pick-ups and wonders whether they are effective tools to fulfill closeness in retailing and to optimize their territorial coverage. This article is structured as follows. The first section presents some theoretical background to better understand how a grocery pickup stands in the retailing evolution. Then, it deals with consumers’ benefits (functional, experiential and relational) and the future of grocery pickups for retailers through interviews with experts. Given the asymmetry between retailers approach and consumer's one (Schultz et al., 2016), the second part is focuses on a particular aspect of the functional benefit: closeness in retailing. Indeed recent research in the grocery pickup filed made evidence that geographical closeness is the first selection criteria for customers. The question is: can the spatial development of grocery pickup increase retailer's territory coverage? So, the second section questions retail spatial strategies by mobilizing the relative entropy measurement. Results of the third section show evidence that the grocery pickups do not represent any competitive advantage for retail network spatial strategies. Finally, the discussion of the findings is presented, including implications, limitations and research perspectives.
2.2. Grocery pickup in a multichannel strategy The grocery pickup system stems from the idea by ROBO (Research Online Buying Offline) or ROPO (Research Online Purchase Offline) (Kalyanam and Tsay, 2013). Despite some high-quality syntheses of the literature on multichannel (Doherty and Ellis-Chadwick, 2010; Kent and Gear, 2017), interrelationships between channels are still questionable. Are grocery pickups a utilitarian channel, or is it a perfect substitute for traditional brick and mortar store? Online and offline channels are undeniably very connected whether is loyalty or satisfaction to a retailer (Wallace et al., 2004; Byoungho et al., 2010). For example, using brand extension theory in a Chinese bank context, Yang et al. (2013) demonstrated that online channel adoption is linked to offline channel service quality. A multichannel strategy encounters many disadvantages and the multiplication of channels does not necessarily imply an increase in the number of customers (Rosenbloom, 2007). If the size of the potential market stagnates, the addition of a new channel entails additional costs for the brand and therefore a decline in profitability (Van Baal and Dach, 2005). Worse, researches have denounced a possible cannibalization between channels (Rosenbloom, 2007; Seck, 2010; Colla and Lapoule, 2012, 2015). Another stream of research shows that multichannel strategies create opportunities for synergies across channels (Verhoef et al., 2007; Zhang et al., 2010). Wallace et al. (2004) demonstrate that channel complementarity increases the satisfaction of the shopper, thus leading him to be more loyal to the store chain. It seems that the relationships between the channels also depend on the life cycle of each sale mode. Indeed, Fornari et al. (2016) studied the impact of stores opening for an initial pure retailer and made evidence that initial cannibalization ultimately turns into positive synergies between the channels. Kollmann et al. (2012) analyzed the multichannel system from the consumers’ point of view and concluded that cannibalization and synergetic effects between channels depend on customers and their channel switching propensity. Recent research in the field of grocery pickup shows that the purpose of this grocery pickup is to consolidate the service relationship established by the company with the customer (Douard et al., 2015; Vyt et al., 2017). This channel is perceived as a complementary service and tends to make the customers more loyal. Regarding multichannel retail mix harmonization, grocery pickups do not respect the usual practices of multi-channel retailers in terms of assortment. While most multichannel retailers use online shopping to complement the offline offer of brick and mortar stores (Zhang et al., 2010), grocery pickups offer a narrower and shallower assortment than traditional hypermarkets or supermarkets. That is to say that grocery pickups propose few goods categories and a limited assortment in each category. The assortment of a grocery pickup is three times less than that of a supermarket and nearly six times that of a hypermarket.3 Fig. 1 shows that the business model is barely fifteen years old and has already 3325 units that cover the French territory. Despite its recency, this Internet grocery shopping model has every year more and more consumers: more than 6 million households used grocery pickups in France in 2016. This development model now captures around 5.5%4 market share of consumer products, with an average basket of around 68 euros to be compared with 43 euros in hypermarkets and 31 in supermarkets.5 Concerning data, interrelationships between channels are complex.
2. Grocery pickups value: customers’ benefits in question 2.1. Grocery pickup implementation Argos, a UK retailer and a subsidiary of Home Retail Group, with 809 shops in 571 towns in the UK and in Ireland,2 was the first to open a grocery pickup in early 2000. In the food retail sector, Tesco was the pioneer and the first to be really successful (Colla and Lapoule, 2012). Then the French Groupe Auchan launched Chronodrive in 2004. This system is composed of a two-step process: 1) the consumer visits a retail website to browse, buy and pay for selected products; 2) the consumer drives to the store or to any place where products can be picked up, unlike cybermarkets which are based on a home delivery system. The consumer delegates to the retailer the task of preparing his order: grocery retailing has switched from self-service to free service. A pickup point can be either located close to a store or isolated from any store in the same chain. In the first case, customers using the Internet order their products and pay for them and drive to the store where the service is available to pick them up at least two hours after they’ve ordered. This is called a drive-in system. Order picking operates from stores that have the products at hand. In the second case, called drive-out, there is no physical store, but only warehouses serving as collecting points. This expansion strategy is mainly used in an offensive conquest of a territory (Marouseau, 2013). The drive-in consists of locating a near point of sale, a bonded warehouse and order picking. In this context, the retailer implements here a defensive stance (Colla and Lapoule, 2012) without any real motivation to conquer territories; it rather seeks to maintain its position in a given geographic area. Grocery pickup prices are either similar to stores or sometimes even lower in order to attract new customers. This free service corresponds to the current consumption patterns of consumers who show little willingness to pay for grocery deliveries (Goethals et al., 2012; Hübner et al., 2016). And Tesco decided in 2016 to cancel the surcharge on "click & collect" orders for sales under 35 euros via the Tesco Direct website. The grocery pickup is probably not a true evolution of the
3
Source: Nielsen Scantrack, 4 juillet 2017. Source: Kantar WordlPanel, Distribook, Février 2017. 5 Source: Nielsen homescan & scantrack, 4 juillet 2017. 4
2
http://www.timeo.co.uk/argos-opening-times/ and www.argos.co.uk/webapp/wcs/ stores/servlet/ArgosStoreLocatorMainMobile?langId=110&storeId=10151.
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According to Keller (1993), “Functional benefits are the more intrinsic advantages of service consumption and usually correspond to the tangibles attributes. These benefits are often linked to fairly basic motivations” (p. 4). This need is expressed concretely through the purchase of low involvement products, especially grocery items such as water, milk, laundry soap, canned products. Thus, in 2016, the grocery pickups represent 8.8% of poultry meat sales, and 7% reading plain water.6 Mevel and Morvan (2015) add that functional benefits play a more important role than other benefits when the grocery pickups is new (customers do not have a long experience with the channel). The satisfaction of functional benefits is neither perceived nor conscious to the consumer, leading to "basic requirements," being easily imitable. However, based on our in-depth interviews, retailers have to remain vigilant in two aspects: the choice and stock-outs of their grocery pickup stations. Grocery pickups’ assortments are extensive. They provide a huge quantity of products (not only food items but also non-food products) in a huge quantity of categories in order to satisfy the functional needs of consumers. For instance, in France, Cora has the most important assortment with 31,961 SKUs7 on average for its drive-in system, and in the US, Walmart grocery pick-up has 30,000 SKUs.8 In this case, traditional stores provide the infrastructure to accommodate this shopping mode. However, retailers are aware that it is possible to have a more limited choice, particularly in terms of solitary stations (7000–8000 SKUs on average) even if they aim at satisfying daily needs: “The choice is ok. It is less than in hypermarket, but it meets all the necessary units” confirms a network manager. Thus, all retailers increased their on-line assortment: + 21% for the drives-out of Casino and even + 21% for the solitary stations of the Carrefour. Even though it does not create any value, stock-outs can damage the click and collect in the same way as traditional outlets where the repeated lack of a branded product will cause dissatisfaction, leading to a store change (Campo et al., 2000; Connan-Ghesquière, 2011). “We don’t have all the products at the same time due to stock-outs. The stock-out rate is not explosive, but when there are stock-outs it is more apparent than in hypermarkets” (from an in-depth interview with a grocery pickup manager). Grocery pick-ups must therefore ensure that they offer a complete assortment to satisfy functional benefits and to ensure repeat purchases (Fernie et al., 2010). More than functional benefits, consumers can find experiential and relational benefits. By satisfying these benefits, retailers ensure a differentiated and unique image (Keller, 1993), difficult for competitors to imitate, therefore creating significant value.
Fig. 1. Number of Grocery Pick-Up Stations in France. Source: Drive Insights, 2016.
Indeed, Carrefour which is not very present on the grocery pickup channel, is still the number one food retailer in France in 2016, but encounters a decline of 0.5 points whereas Leclerc, the number one on the grocery pick up channel in terms of stations and penetration rate, increases its global market share (online and offline) buy 0.4 point. Even if the territorial development of the grocery pickups seems to influence the performance of the networks, it is difficult to establish a causal link whether there is a cannibalization process or a real complementarity. 3. Grocery pickups and consumers’ benefits A literature review about customers’ benefits reveals sources of the value creation. This framework is reinforced by an exploratory research revealing current managerial practices towards grocery pickups customers. Hence, improvements emerge to maximize this value creation. Our exploratory study was based on in-depth interviews with grocery pickup managers and network managers. Experts’ interviews are recommended in this research because of the absence of theory specifically dedicated to this phenomenon and to reveal its critical aspects. The interview guide was structured around the three theoretical consumer benefits: functional, experiential and symbolic (Keller, 1993). Once a retail format reaches maturity, benefits from functional expectations to the consumer are insufficient. They become basic requirements, not ones creating value. Thus, a study of all expected consumer benefits, functional, experiential and symbolic or relational (more adapted to a specific service perspective) is interesting. 3.1. Functional benefits Functional benefits have already emerged from the grocery pickup, as it relieves consumer purchasing constraints like time pressure, for instance (Colla and Lapoule, 2012). Retailers are well aware of the issues of the grocery pickup's practicality as an explanation for the growth of this new channel. According to a grocery pickup network manager, “grocery pickup is ideal in terms of convenience for time-saving and shopping convenience. No longer carries four times the products". Indeed, usually the consumer manipulates products between the point of sale and his home. He takes the products in shelves, places them in his basket and then releases them during the checkout control. Then he puts them back in his basket before finally putting them in the trunk of his car. Retailers’ efforts to reduce time of preparation and removal illustrate the response to this functional need. In most cases, delivery time is reduced from two hours to thirty minutes. Retailers can go even further when competitive issues are at stake. This is a way to counteract a competitor by reducing delivery times to zero, especially a when a brick and mortar seller develops a grocery pickup service: “Delivery time is reduced to zero in some grocery pick-ups especially in the offensive ones. This is our competitive advantage over picking drive-ins. That's how you kill a Carrefour drive” (from a grocery pickup manager in-depth interview).
3.2. Experiential benefits According to Keller (1993), experiential benefits provide a sensory pleasure or cognitive stimulation and are part of the hedonic consumption of the customer. Holbrook and Hirschman (1982) state that “this experiential perspective is phenomenological in spirit and regards consumption as a primarily subjective state of consciousness with a variety of symbolic meanings, hedonic responses, and aesthetic criteria” (p. 132). Filser (2002) and Dupuis and Le Jean (2004) add to the knowledge of generating experience. Filser, in 2002, offered a synthesis of various past contributions dedicated to experiential marketing. These two major contributions (Dupuis and Le Jean, 2004; Filser, 2002) show that marketing oriented to an experiential dimension generates creative solutions, original and additional opportunities untested by retailers. Based on their qualitative research, Colla and Lapoule (2012) reveal 6
Source: Iri, Distribook, February 2017. Source: Drive Insight, Distribook, February 2017. 8 Source: http://grocery.walmart.com. 7
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to listen to him; to explain and to find a positive solution” (from an in-depth interview with a grocery pickup manager). To conclude, the corporate dimension can create the highest value for customers, because personality and trust towards the retailer cannot be imitated by others; however, retailers cannot increase customer value without satisfying functional expectations first. This approach is in line with the findings of Shamim et al. (2016) – the corporate brand experience plays an important role in positive customer behaviors. One way of dealing with these problems of productivity and profitability could be to wait for some closings. In retail groups like Leclerc, Intermarché or Système U, which are retail cooperatives, members could decide one day to end the grocery pickup experience if there is an absence of appropriate customers, as Picot-Coupey et al. (2009) highlighted in their study. The creation of value is so far analyzed from the viewpoint of the retailers. However, recent research shows that there are huge differences between retailer's sense giving and consumers’ sense making (Schultz et al., 2016). So, previous researches made evidence that an important element for consumers in their decision to visit or not a retailer remains spatial closeness (Bergadaa and Del Bucchia 2009, Schultz et al., 2016). Especially, regarding grocery pickup, spatial closeness appears to be the first criteria choice for customers (Mevel and Morvan, 2015; Vyt et al., 2017). Hence, the second part of this research focuses on this specific aspect of the functional benefits and wonders if the introduction of grocery pickups may increase territory coverage to satisfy this functional need.
that “many consumers said they would like easier-to-use, more intuitive navigation” (p. 854). The design and the ergonomics of the website have to have a high level of quality to play a key role in the grocery pickup's success. In this way, we can imagine that it would begin by taking orders from the Internet, through exciting navigation and redefined e-merchandising, and would continue up to the point where the goods are replaced (by new additional services). In the case of grocery pickups, the presence of tablets generates an additional service that makes the delivery immediate: “Some stations are equipped with a tablet at the reception. It's possible to order some last minute products. …The future objective is to improve the experience lived on the station by adding music, interactive terminals, for instance. We are thinking of enriching the physical collect point by exposing non-food products to create a specific atmosphere; making pancakes and tastings to animate more for instance; we are thinking also of extending services on the collect point by providing a deli, bakery, steakhouse… Adding new services” (from an in-depth interview with a pickup point manager). In addition, retailers work on the aesthetic dimension of physical collection points. This topic largely concerns managers today, as stated by a network manager: “The appearance is not terrible. We're in a warehouse. Sometimes it's creepy. There is nothing around. We have to work on the experiential. Our efforts will have to be concentrated on this variable; it is clearly our future priority” (from an in-depth interview with a grocery pick-up manager). This comment joins the qualitative results of Colla and Lapoule (2012) concerning the importance of the geographical area as a key factor of the grocery pickup's success. More than experiential benefits, relational benefits lead to sustainable relationships between customers and retailers. They emerge from the retailer side, specifically a higher consumer confidence.
4. The spatial strategy as a determinant of grocery value By developing the grocery pickup on the whole territory, retailers multiply the points of contact with their customers. They now have the choice in the same area between a traditional store and a pickup point. The location of these grocery pickups therefore represents a definite competitive advantage in terms of choice made by the consumer. Since the new network can become a determining lever in the optimization strategy of the territorial network, the second part of this research consists in measuring if grocery pickups improve global territory coverage of French retail chains. This seems to be the sine qua non to develop functional benefits from the consumer points of view.
3.3. Relational benefits All research focuses on the relationship marketing confirmation that confidence is a mediating concept of the relationship between the consumer and the brand (Frisou, 2000; Gurviez and Korchia, 2002; Sirieix and Dubois, 1999). The concept of trust in the relational paradigm, gives the brand a central role (or the retailer), since the consumer relies on it to reduce uncertainty and make decisions. Gurviez and Korchia (2002) provide a clear and concise reading of the concept. Brand confidence can be defined as a “psychological variable that reflects a set of accumulated presumptions about the credibility, integrity and goodwill that the consumer attributes to the brand”. “In grocery pickup, consumers are connected to the brand and the product and their opinion of the brand can be expressed in many ways”, as explained by a network manager: “On the website, consumers can request a product they want to see in the assortment. In addition, there are suggestion boxes to rate the reception of the stations. Finally, it is possible to write directly to the stations; we answer all emails”. Note that the measure of this concept is difficult because consumers use their past experiences to infer beliefs and future behaviors (Gurviez and Korchia, 2002). In other words, trust is both a cause and a consequence of the created value. Based on this brand confidence work, we propose defining retailer confidence as a psychological variable that reflects a set of accumulated presumptions about the credibility, integrity and goodwill that the consumer assigns to the retailer. The firm works trust through reassurance to develop a more human image of the station. “We need to permanently animate collection points. We need a deliveryman, especially during rush hours, to represent the quality of the group…. It is not developed enough. That's to say reinsurance during the waiting time. …The relation with customers and their confidence towards us are more intense than in hypermarkets. We try to personalize the relation with a customer by taking into account his personal requirements – for instance, one of our customers’ demands green bananas; another wants [their products] to be delivered in a box (instead of bags). We save these specific needs to satisfy customers all the time. In the case of problems, we take time to personally call the customer
4.1. Territory coverage as a retail spatial strategy Spatial strategies suffer from a dearth of research in marketing and retailing literature if we except useful but old and rather descriptive studies (Laulajainen, 1987) or methodological approaches (Ghosh and Craig, 1991; Ghosh and McLafferty, 1987). When a territory is more or less saturated or when opening new stores is impeded by law, as is the case in many European countries like France, the temptation is strong to develop a new format and to use it to increase presence in the market and, hence, territory coverage. Grocery pickups benefit from network image as well as logistics and massive purchases (Cliquet, 1998; Cliquet and Guillo, 2013; Colla, 2003). As studied before, several spatial development strategies of networks do exist. In order to benefit from positive synergies with the store network, new grocery pickups are located close to one another, that is to say, close to a traditional store under the same banner following then the former location strategy of the retail network which entails a real disparity in the location of grocery pickups in France as shown in Fig. 2. Therefore, a first hypothesis is proposed: H1. Grocery pickups improve global territory coverage of French retail chains Fig. 2 shows that grocery pickups are mainly located in the western part of France. Thus, the density of grocery pickups per capita highlights this disparity. In the East of France grocery pickups density is very low: Alsace has one grocery pickup for 35,604 inhabitants and 148
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Fig. 2. Food Drives in France. Source: Authors, made with data from LSA expert, 2016.
Fig. 3. Drives-out Leclerc. Source: Made by authors with data from LSA Expert
explains it (1929), competing networks are structured in relation to one another. The relationship with competitors in twofold: either by avoiding or confronting one another. Fig. 3 shows that Leclerc grocery pickups are also widely distributed in northern France, the historic stronghold of competitor Auchan. This is a direct confrontation strategy with competitors. In a symmetric way, the Auchan uses drive out grocery pickup to conquer new territories. For example, since the Group was not allowed by competition authorities to open stores in Brittany, it opened four “drive out” grocery pickups under the banner Chronodrive.
Lorraine one for 31,364 inhabitants whereas in the West of France, Brittany is the densest region with a grocery pickup for 12,252 inhabitants. As shown in Fig. 3, the Leclerc has initially concentrated deployment of its grocery pickups in the Britany, where its commercial density in terms of hypermarkets is the strongest. Indeed, in this region, the historic center of the group, Leclerc owns more than 29% of the hypermarkets and 85% of Brittany grocery pickups are under the Leclerc banner. What about location strategies vis-à-vis competition? As Hotelling 149
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Auchan group territorial network is therefore judicious since it combines several spatial strategies enabling it to establish a position of leader in its territory of origin which is the North of France while conquering new ones, the West in particular. This is a very local example. Hence, hypothesis two states:
Table 2 French retailers grocery pickup database.
H2. Grocery pickups improve territory coverage of French retail chains in specific regions It is worth noting the great disparity in the development of grocery pickups throughout the French territory. At a whole country level, is this strategy sustainable? Can grocery pickups improve territorial coverage of a hypermarket chain?
Name of hypermarkets chains
Number of drive-in
Territory coverage of drive-in
Number of drive-out
Territory coverage of drive-out
Carrefour Leclerc Hyper U Cora Auchan Géant/casino Intermarché Total
221 225 307 58 62 98 68 1039
0.91 0.898 0831 0719 0733 0856 0799
14 342 3 0 61 12 2 434
0.53 0.9246 0241 0 0688 0546 0152
4.2. Methodology and data network and weighs only 3.68% of the channel. These retail companies have various organizational forms: public companies (Carrefour, Casino, Cora), family company (Auchan), cooperatives or retailers’ association (Intermarché, Leclerc, Système U). All retailers do not have the same strategy regarding the development of the grocery pickup. Thus, Cora does not develop the drives-out, while each of its hypermarkets provides the infrastructure to have a drive-in. In the same vein, the company Intermarché outfits nearly 75% of its hypermarkets with a drive-in so that there are only two drive-outs. Carrefour and System U companies are also part of this trend and focus on the drives-in. Conversely, Leclerc has more drives-out than drives-in.
4.2.1. Relative entropy measurement A method of territorial coverage measurement based on relative entropy evaluates the gain in spatial value whenever a retail network intends to acquire another chain (Cliquet, 1998). It also explains longitudinally (over time and depending on the network life cycle phase) how the spatial strategies of the network change (Cliquet, 2000). The relative entropy measures the spatial dispersion as follows.
k E = − ∑ fi. Log (fi) i=1 Where E = entropy; k = number of geographical areas; ni = number of stores in the i area; fi = store frequency in an area (fi = ni/N); N = number of stores. We can then measure relative entropy as follows:
5. Results: Territory coverage measurement of grocery pickups in France 5.1. Grocery pickups development and global territory coverage
Relative entropy = = E / Log k ,
Table 2 provides the number of grocery pickups, drives-in and drives-out, in 2016 and their territorial coverage, measured by relative entropy. The entropy enables to measure the spatial dispersion of a population, here of the French retail networks. The more spatially dispersed a population is, the greater the entropy is. The French “département” will be the geographical reference area. More specifically, we used the 94 “départements” in Metropolitan France (excluding Corsica). The network of 342 drive-outs of the Leclerc is located in 84 departments of metropolitan France out of a total of 94 departments. In the department of Meuse, there is one Leclerc drive-out, hence a frequency fi of 0.0029 and a fi log fi value of −0.0074. In the department of the Finistère, there are 14 Leclerc drives-out, hence a frequency fi of 0.0409 and a value for fi log fi of −0.0568. We have done all these calculations for each department and obtained an entropy value of 1.8244 and a relative entropy value of RE = 0.9246. Then we did this for each group, for drives-in and drives-out. Table 2 shows that even with less drives-in units Géant Casino has a greater territorial coverage than the System U. If we focus only on drive-outs, Leclerc has the highest entropy with a value of 0.9246. Cora chose not to develop drive-outs which explains an entropy equal to zero for this channel. Table 3 quantifies the exact contribution of drive-outs to the territorial
The use of the relative system allows a measure calculated in the interval [0, 1] and allows simpler comparisons with competing networks (Cliquet, 1998). The closer it is to 1, the better the territorial coverage is. 4.2.2. Data on French grocery pickups The study focuses on French grocery pickups and studies if this Internet grocery shopping model is an effective tool for enabling hypermarket networks to optimize their territorial coverage. Can grocery pickups be useful to conquer yet uncovered areas? The propositions are tested in a hypermarket setting. According to INSEE (French National Institute for Statistics), in France, the official definition of a hypermarket is the following: a self-service retail store deriving less than three-quarter of its sales from food and having a sales floor area of 25,000 square feet or more. This article uses real data as shown in Table 1. The sample consists of 1576 hypermarkets; all belonging to the seven largest retail network in the French territory. Although Carrefour is the leading retailer in Europe, it has 309 hypermarkets in France, compared with 530 for the Leclerc. Cora hypermarkets represent a small Table 1 French Hypermarkets Database.
Table 3 French retailer coverage.
Name of hypermarkets chains
Number of hypermarkets
% of cluster
Carrefour Leclerc Hyper U Cora Auchan Géant/Casino Intermarché Total
309 530 345 58 135 108 91 1576
19.60 33.63 21.89 3.68 8.56 6.85 5.77 100
Carrefour Leclerc Hyper U Cora Auchan Géant/casino Intermarché
150
Terrirory coverage: hypermarkets
Territory coverage: hypermarkets + drive-out
0.923 0.950 0,846 0,719 0,840 0,869 0,815
0.920 0.949 0,847 0,719 0,843 0,874 0,818
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as a tool for conquering new territories, in particular the North, territory of origin of its competitor Auchan. In the same vein when removing the drives out of the Auchan in the "New Auquitaine" region, the relative entropy decreased from 0.843 to 8.03. This simulation reflects a significant deterioration in its territorial coverage. Moreover, the results show a significant deterioration in the territorial coverage of certain networks if the drives-out are withdrawn of their region of origin. Thus, the relative entropy of the Leclerc passes from 0.949 to 0.924 if one removes the drives out of Brittany (territory of origin of the retailer). In the same vein, the relative entropy of the Auchan decreases from 0.843 to 0.814 if one removes the drives-out located in the region “Hauts de France”. In this context, retailers are in a defensive logic (Colla and Lapoule, 2011), with no real motivation to conquer territories. They aim to maintain their dominant position over a given geographical region. The territorial networks of the Auchan and Leclerc are therefore judicious since they combine several spatial strategies enabling it to establish a leading position in their respective territory of origin while conquering new ones. The individual territory coverage of the retailers can change in specific cases, when solitary stations are withdrawn of specific regions. The individual relative entropies are partially consistent with hypothesis 2. In other words, grocery pickups partially improve territory coverage of French retail chains in specific regions.
coverage of networks. Two measures are analyzed simultaneously: the territorial coverage of hypermarkets and then that of the hypermarket and drive-out networks. The objective here is to evaluate the contribution of drives-out in the group coverage. We can see that most hypermarket networks show a very good coverage of the French territory. Thus, the 225 Leclerc hypermarkets cover homogeneously the country, which explains its relative entropy of 0.950. Only Cora has a lower entropy of 0.719 due to the high concentration of hypermarkets in eastern France. It means that this retail network is absent from several departments and that its territorial network has several "holes". In a purpose of territory coverage optimization, grocery pickups allow Auchan (Auchan drive, the drive-ins, and Chronodrive, the drive-outs of the group) to increase its relative entropy. The single presence of hypermarkets confers relative entropy of 0.840 whereas this measure reaches 0.843 when drives-out are added. Regarding Leclerc, the French retailer with the largest number of grocery pickups, the relative entropy slightly decreases regarding the location of the drives-out and hypermarkets. It means that drives-out are located in the same “départements” as traditional hypermarkets and increase concentration. Carrefour faces the same situation. This shows evidence that retailers develop grocery pickups in areas where they are traditionally present in order to strengthen local positions. Finally, no significant change occurs between relative entropy when considering only hypermarkets and relative entropy when hypermarkets and drive-outs are included. For all retailers, contrary to the prediction of H1, solitary grocery pickup stations openings have not significantly improved territory coverage in the French territory. H 1 is not supported.
6. Discussion 6.1. Theoretical implications Based on a literature review and in-depth interviews, conditions for a successful grocery pickup that benefit consumers are identified. More precisely, customers’ experiential benefits are key factors. Retailers have to innovate when it comes to customers’ sensory pleasure and cognitive stimulation to provide customers with an exciting and easy shopping experience, leading to a unique positioning of their pickup stations. Websites and all features in physical areas are concerned with providing customer satisfaction. Retailers have to maintain relational efforts to ensure customers’ sustainable confidence towards them, including, at a local level, intensive human contact between the staff and customers and corporate brand communication at a strategic level. The corporate dimension plays a significant role in value co-creation activities, as measured by Shamim et al. (2016). Based on an exploratory approach with experts, this research provides the necessary theoretical background to conduct later exploratory and confirmatory analyses in order to measure customers’ perceptions and to finally identify precisely key components of the value creation.
5.2. Grocery pickups development and territory coverage in specific regions Since it is made evidence that grocery pickups are not deployed in strategic locations to improve retail chain global territory coverage, what about a more micro-level analysis at the regional level? In other words, can grocery pickups be used as a tool to conquer specific regions? To verify H2 we still use relative entropy. Table 4 show relative entropy of the global network: stores and solitary stations (drives-out). It simulates territorial coverage without drives-out in each of the twelves French regions. This means to making simulations with a hypothetical value of zero concerning the number of drive-out, region by region basis. For example, Intermarché Group has no solitary stations in Britany and Normandy, so it has the same relative entropy as the network as a whole. In the same vein, there is no Carrefour drive-out in the "center" region or in the "Grand Est" region, which explains why the relative entropy without drive is identical. The relative entropy of the Leclerc network as a whole (hypermarkets + drives-out) is 0.949. This retailer has 34 drives-out in the "Hauts de France" region (i.e. northern France). Hence big entropy change when we simulate no drive-out in the specific region. Indeed, relative entropy falls to 0.921. This shows that retailers use drives-out
6.2. Managerial implications This paper shows that retailers are too often using grocery pickups as tactical tools to hinder local contenders’ activity. More positively, it
Table 4 Territory coverage of French retail chains without specific regions. Name of the chain
Carrefour Leclerc Système U Auchan Géant Casino Intermarché
Relative entropy of the network (HM+ solitary station) 0.920 0.949 0.847 0.843 0.874 0.818
Relative entropy without specific regions Bretagne
Normandie
Center Val de Loire
Auvergne Rhône Alpes
Bourgogne Franche Comté
Ile de France
0.918 0.924 0.846 0.827 0.870 0.818
0.920 0.917 0.847 0.829 0.874 0.818
0.920 0.930 0.847 0.836 0.874 0.818
0.915 0,919 0,845 0.830 0.863 0.818
0.920 0.935 0.847 0.843 0.874 0.818
0.911 0.925 0.847 0.816 0.850 0.807
151
Hauts de France
0.919 0.921 0.847 0.814 0.874 0.813
PACA
0.918 0.935 0.844 0.821 0.865 0.818
Occitanie
Nouvelle aquitaine
0.920 0.948 0.847 0.833
0.918 0.918 0.847 0.803 0.865 0.818
0.818
Grand Est
0.920 0.923 0.847 0.837 0.874 0.818
Pays de la Loire
0.920 0.931 0.847 0.840 0.874 0.818
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service (highest service to customers) compared to the grocery pickup service; 2) the increase of fresh products available from the grocery pickup range. And Amazon bought recently Whole Foods, a US grocery retail chain specialized in organic product.
enables to understand how retailers could improve the value creation of their new formula. Based on the customer literature review and experts’ interviews, this research provides future potential positioning axes to develop a unique image leading to create a sustainable relationship with customers. It provides a theoretical framework to consider the value creation of this new channel and it sets conditions for a successful grocery pick-up. Given the asymmetry between consumer and retailers points of view, we focused on a particular aspect of functional benefit: store closeness that appears to be an important criteria choice for consumer in the pickup grocery context. The main objective is to verify that this sine qua non successful condition is met by retailers. We still know little about the effects of grocery pickup development on chain territory coverage. Territory coverage is measured by means of entropy and it is showed that this new channel is not devoted to conquer yet undeveloped areas. Indeed, grocery pickups are not deployed in understored locations to improve retail chain global territory coverage. In other words, grocery pickups compete against other traditional points of sales to take away a portion of consumers’ expenditures. As showed previously, if the potential market size is stagnating, the addition of a new channel leads to additional costs for the retailer and therefore a decline in profitability (Van Baal and Dach, 2005). Worse, some denounce the possible cannibalization between channels (Colla and Lapoule, 2015; Rosenbloom, 2007; Seck, 2010). We can conclude that retailers have to develop new competitive advantages to find new internal growth. New services also have to be added to grocery pickups to differentiate each retailer from its competitors. This is all the more true as grocery pickups have a logic of direct confrontation with their competitors, as shown above for Leclerc and Auchan. But as this service is free to customers, to make this new activity profitable, retailers need to attract as many consumers as possible. The major issue for retailers is to create value for their customers since the only locations of grocery pickups are not a competitive advantage. Retail networks pool the e-shopping and the grocery pickups (Picot-Coupey et al., 2009) to increase the value creation to the customer (Oh and Teo, 2010; Hunt et al., 2012).
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6.3. Limitations and future research In this research, closeness in retailing, that is to say one aspect of the functional benefit highly sought after by customers, is apprehended by network territory coverage. Territory is measured by means of entropy and does not consider the distance between grocery pickups. Ghosh and McLafferty (1987) developed an index of retail saturation to ascertain the attractiveness of a potential market. This index compares the level of expenditure captured by the retailer in the concerned catchment area. It therefore involves delimiting upstream the trade area of each grocery pickup and quantifying it. The grocery pickups, by definition, capture a mobile population. Although Douard et al. (2015) demonstrates that the trade area of a drive-in pickup is closer to the point-ofsale area, this index cannot be used quite accurately. Measures considering the distance between grocery pickups are very promising future research. Furthermore, this study is limited to the specific French context: labor costs, regulations, networks’ territorial coverage and the lack of willingness to pay for home delivery has contributed significantly to the development of grocery pickups and should be conducted in other countries, especially in the US with the development of Walmart grocery pickup. However, it is clear that home delivery is experiencing a resurgence of interest. Several months ago, Amazon launched a grocery service in France. For a few months, in London, Fresh Amazon allows consumers to be delivered seven days a week, from 7 a.m. until 11 p.m. The website proposes a range of 130,000 products. This new service, and potentially its success, offers a fast delivery (one hour following the order) for a delivery fee (from 20 euros). This innovation could lead retailers to focus our future attention on: 1) the value of home delivery 152
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