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The Hub and Spoke Solution: Brick and Click

Very often, the devil is in the details. Conceptualizing a system that customers use to shop online and pick-up from the store ("click and collect") looks great, at least on paper. This shining innovation of mobile commerce, resolves last mile problems by handing the responsibility over to the customers themselves.

As some U.K. retailers have found out, this comes with some challenges. A recent Insight Report by L2, entitled Retail Innovations: Omnichannel, shows that nearly twice as many European department stores offer this pick-up feature than in the U.S. The major chain John Lewis states that it fulfills 54 percent of its online orders this way, something it has been doing since 2008. However, with these numbers come some complaints. These include “unavailability of ordered items, long waits due to understaffing, staff inability to locate items and lack of a dedicated in-store area.”

But, where there is a problem, there can be a solution. Some multi-location retailers are experimenting with a “hub and spoke” model, in which the larger of their stores pull double duty as brick and mortar locations and hub warehouses. These then feed a half-dozen “spoke” stores where people can go to pick-up their products.

The hub and spoke model also helps deal with another nagging problem in the brick-and-mortar retail industry: locations that are doomed to close due to slow business. They stand to be born anew as satellite spots for fulfillment in a new mobile commerce-led economy.

Will this work? It is hard to say. Certainly, there are many stores and malls whose empty stores would be perfectly suited for this type of customer pick-up system. Just like anchor tenants, there would be great potential for other stores to leverage the revitalized customer traffic.

This all leads to another hub and spoke venture, a start-up courier company called Federal Express that operated out of a national hub in Memphis, Tennessee. Every package traveled through its single sorting center, regardless of its destination. This was a new model in the 1970s, an era where the postal service still dominated. FedEx went on to become a major player and innovator in the delivery and logistics industries. 

It is possible, that the hub and spoke magic can work yet again, becoming an essential missing link between brick and click.

This blog is the fifth of a multi-part series focusing on retail innovations and omnichannel commerce solutions. To read the L2 Report, click here>>

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Editor, The Mobile Retail Blog

Editor-in-Chief of The Mobile Retail Blog with NewStore.

Topics: brick and click

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