Analysis

Asda goes ToYou, but will you go to Asda?

Last week, Asda announced it was getting into the parcels game with the launch of ToYou, an end-to-end fulfilment service that will see Asda vehicles collecting orders from retailers and 3PLs across the country.

As reported in eDelivery’s sister title, InternetRetailing, Asda “is enabling third-party retailers to offer their customers the ability to collect or return their online orders through any of Asda’s 614 stores.”

Asda-Superstore_Cape_HillWhile there is nothing inherently new about developing an extended click-and-collect service through your stores, Asda is handling the entire delivery chain, end-to-end itself.

In some respects ToYou echoes something Carrefour has been doing for years.

Carrefour shoppers can order their groceries online, but have to pay for their shopping when they collect it in-store. Carrefour hypermarkets have on-site lockers for customers to have their non-Carrefour online shopping delivered to. And Carrefour hypermarkets typically have a couple of dozen concession stores on the perimeter of the site … selling everything from coffee, jewellery, sunglasses, footwear, and so on.

The philosophy underpinning this approach is a very simple one – give shoppers as many excuses as possible to come to Carrefour, and reap the rewards of as many impulse purchases as possible. [For more on Carrefour, you can read our March 2015 interview with Carrefour Italy’s supply chain director, Paolo Rangoni here.]

Asda has said it expects ToYou to generate an extra 40m visits to its stores each year, by 2019. Each visiting customer will be ascribed an notional economic value, which Asda will, no doubt, hope to unlock. But that’s a big bet, and will be built on an economic model that has yet to be tested elsewhere in the UK retail space.

“It’s a really interesting move from Asda and one we’ve been expecting; the jungle drums were beating about this over 12 months ago,” said Tim Robinson, CEO of Doddle.

Doddle King's Cross“Asda will have a view about the potential up sell value of each visit and will have factored that into their economic evaluation of the opportunity. They are clearly thinking about how best to modernise their offer to retain existing and attract new customers.

“The big surprise is that they have chosen to go to market with a full end-to-end offer. Whilst they must feel that they have latent capacity in their non-food fleet today (which could handle this volume) they will need this new ToYou volume to ramp up quickly if it’s not to become a costly burden on their existing logistics cost base. Every nightly visit to a retailer’s DC is an expensive pastime, even if located close to an Asda facility,” he continued.

While clearly addressing the same basic need, but targeting different audiences, the comparison between Asda ToYou and Doddle is an interesting one.

The latter is built around high population density areas – railway stations, predominantly – where people are on foot. ToYou, by comparison, because of Asda’s decision to refocus on how to maximise its existing network and store estate, may find its natural home out in the suburbs and provinces. Not only could it answer the question what are supermarkets going to do with those very large out-of-town stores, it could also be the starting point in a growing service differential between city/town centres on one hand and more suburban locations on the other.

connect_16The ToYou announcement comes not long after Asda took the decision to halt the expansion of a network of dedicated click-and-collect points. An Asda spokesperson told eDelivery: “We are putting the emphasis on our store estate.”

The service has been trialled since August, through Asda’s clothing brand George. It now has the fast-fashion retailer Missguided signed up as ToYou’s first retail partner. Missguided customers will now be able to select an Asda store as the delivery point for their purchases, and can return items via Asda too.

Stephen Langford, senior director of ecommerce for the George brand, said: “George serves more customers online than most fashion retailers, so for us this move was a big of a no brainer, a slicker service, with more in-depth data, which allows us to know what the optimum times of day are when we need to have colleagues ready to serve our customers.”

The trials of the new service have already halved the typical waiting time for a customer waiting for their order, which bodes well. Study after study in 2015 continues to point to choice and convenience as hugely important to shoppers.

Attempting to use dormant capacity within its network is a good example of Asda deploying the sharing economy way of thinking – find an asset you have yet to extract an economic value from and put it to work. Freeing up any asset comes with unavoidable costs of business; the big bet Asda is making is that the gains will eventually make it worthwhile. Currently, around 10% of Asda orders are routed for in-store click-and-collect, which would seem to indicate ToYou is aimed at bringing new customers into its stores. That’s uncharted territory for both the customer and Asda.