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Should More Retailers Offer Same-Day Delivery To Remain Relevant?
Kohl’s has joined forces with Instacart, bringing same-day delivery to nearly 109 million households across the U.S. From 1,172 Kohl’s stores nationwide, customers can now “enjoy same-day delivery in as fast as an hour,” covering a wide range of products, including accessories, skincare and beauty items, home essentials, and pet supplies.
As Kohl’s exclusive same-day delivery partner, Instacart customers can place orders for immediate or scheduled delivery, accessing the same in-store prices and still earning Kohl’s Rewards loyalty points. Blake Wallace, senior director of retail partnerships at Instacart, expressed pride in expanding the platform’s offerings beyond grocery, making everyday shopping more convenient for busy customers.
While Kohl’s has previously provided next-day delivery with carriers like UPS and USPS, this marks its first foray into same-day delivery since its partnership with the now-defunct platform Deliv in 2015. This move underscores Kohl’s commitment to enhancing its digital capabilities and meeting evolving customer expectations.
Meanwhile, Instacart, known primarily for its grocery and convenience offerings, continues to diversify its partnerships, extending its reach to include retailers such as Best Buy, Staples, and Big Lots.
Same-day delivery might start becoming a new offering that consumers expect from all retailers. But whether or not this is feasible remains up in the air. As previously discussed, retailers are grappling with who should cover the costs of same-day delivery, which can strain resources while boosting customer satisfaction and revenue.
Startup and operational expenses are significant, prompting suggestions to streamline distribution points. Consumers often prioritize reliability over speed, and many miss order cutoff times. Retailers like Target, Walmart, and Kroger are expanding same-day delivery offerings, while Amazon’s same-day network celebrated delivering its 1 billionth package last December.
In 2022, a survey from delivery and fulfillment cloud platform provider Bringg predicted that same-day delivery would be offered by nearly every retailer by 2025. At the time of the survey, only 35% of retailers were capable of providing such services. This highlighted the pressing need for enhancements in delivery network automation and hyperlocal fulfillment strategies. Outdated technology and limited real-time visibility into orders were identified as major obstacles.
Retailers also faced challenges with manual processes and coordination issues with multiple delivery partners. To address these concerns, many retailers diversified their carrier options and prioritized sustainability, incorporating electric and bike fleets. Although some retailers expressed confidence in adapting to changing consumer behaviors, the majority recognized the need for greater agility and innovation in delivery processes. The survey underscored the importance of automation, connectivity, and hyperlocal fulfillment in meeting evolving customer expectations.
Furthermore, at the end of 2023, the global managing firm McKinsey & Company explored how same-day delivery has evolved. In 2016, the anticipation for same-day delivery’s ascent was palpable, with forecasts predicting a substantial market share by 2025. However, by the close of 2023, the landscape had undergone a transformation due to COVID-19 disruptions and a deceleration in funding for new delivery models.
While speed continues to be a crucial factor in driving sales and fostering customer loyalty, the spotlight is increasingly shifting toward reliability. Customers now prioritize a spectrum of delivery options and impeccable service quality.
Despite its potential, same-day delivery remains a relatively minor player, constituting less than 5% of the courier, express, and parcel market in many nations. Notably, in countries like France and Germany, same-day offerings hover around a mere 1%, while in Japan, the United Kingdom, and the United States, it edges slightly higher at 2% to 3%. Meanwhile, in China, the share is estimated at no more than 4% overall, though intracity deliveries within major cities boast a higher range of 10% to 15%.
Discussion Questions
How might Kohl’s partnership with Instacart for same-day delivery reflect a broader trend in retail toward diversifying delivery options and platforms?
How can retailers effectively balance customer expectations for speed with the financial and operational realities of offering such services?
How can retailers navigate the shifting delivery landscape to ensure they remain competitive while meeting customer demands for both speed and reliability?
Poll
Loading …BrainTrust
Neil Saunders
Managing Director, GlobalData
Keith Anderson
Founder, Decarbonizing Commerce
Same day delivery is an incredibly weak driver of relevance; especially so as many retailers offer it and it isn’t all that important to most consumers. For Kohl’s, fast delivery simply does not address the core issues of a lack of investment in stores, mundane ranges, and poor pricing compared to retailers like Target. In other words, it will take more than fast delivery to revive Kohl’s relevance. Now, all that said, this doesn’t harm Kohl’s. Being on the Instacart platform gives it more visibility and might win it some new customers who want things in a hurry. But most things Kohl’s sells are discretionary and are not usually needed within hours. So I am filing this under “that’s nice, but not all that impactful”.
Couldn’t agree more. Kohl’s has other areas that need focus before standing up this capability.
“…an incredibly weak driver of relevance…” Neil, could you please tell us how you really feel about it? 🙂
Sometimes, it’s not just about relevance but about being a leader and setting the pace. As more shoppers expect to receive their purchases as quickly as they can get a coffee or a meal, retailers are stepping up to meet this demand. Kohl’s partnership with Instacart to deliver a wide range of items from lipstick to dog food on the same day is a clear indicator of where shopping is headed. Soon, waiting even a few days for an online order could seem as outdated as waiting a week for a letter in the mail. Retailers are now racing to make shopping as instant as streaming a movie. We’re likely to see more stores follow Kohl’s lead, making fast delivery the new normal rather than a special perk.
I agree that fast delivery will become more important. However, I think relevance – as in how a proposition connects with a customer – is the primary. Everything else, including fast delivery, is secondary. It is in this primary area that Kohl’s is currently lacking. And Kohl’s needs to differentiate in the primary proposition because, otherwise, once everyone has same-day delivery (and many players, including Amazon already do) why would anyone use Kohl’s over rivals?
I’m not sure that delivery has to get any faster, to be honest. And for me, it’s just another Kohl’s thrash.
Kohl’s seems to love doing everything but fixing the core issues with its own proposition!
100% agree
In fact there is only a basic question to it reply : what is the real “just-in-time” for consumers ?
The right solution can be found… in thinking “upside down”
Retail success requires constant awareness of trends and adaptability without straying from your business model and jeopardizing profitability. When you need to “make it work,” you have to learn how to do so.
In the consumer goods industry, same-day delivery has become very appealing to consumers. Without same day delivery, consumers might drive to real stores to buy it now, and the store they choose may be a competitor.
An Amazon marketing director presented and discussed consumer behavioral research for e-commerce in a group workshop in 2022. She told us then, 18 months ago, that 38.3% of Amazon consumers would pay $2.00 for same-day delivery if it was available, and (roughly) 75% of those consumers would choose same-day delivery if it was available. I think that is exactly what happened, and I have a strong feeling that the same research today would reveal a higher percentage of consumers who want same-day.
Same-day delivery can be made possible by some retailers who operate an in-house delivery service. The majority of retailers will need to contract out with a third party, but this is something that needs to be done in some way or another. A limitation might be how to serve rural areas, but consumers in non-metropolitan areas tend to accept that same-day delivery isn’t readily available. There may be exceptions, such as Walmart and Kroger. Rural towns usually have access to both retailers.
If same-day delivery is possible, try to do it sooner rather than later, and plan to make money doing so. There is a high probability that you will succeed. – Db
Same day delivery is so niche. It’s not going to save Kohls, even if they do sell a few pair of stockings for same day. Next day is sometimes interesting, but it also makes me feel lazy. Same day delivery is good for prescription drugs. CVS will already do that for a fee.
i can’t figure out why it’s so hard for retailers to understand that customers want delivery when they want it. Not at 4 am. Not the same day, necessarily. I might not be home when I place the order.
Give it to the customer when she wants it and if you, the retailer, have a preference, incent her to take the delivery then.
My Magic 8 Ball sees (one of) next month’s click-baiting topics “Can Anything Save Kohls?” Apply for that trademark now!
For Kohls, this is unlikely to be impactful. For other retailers, though, it depends on their product mix — some consumables and time sensitive goods are big wins for SDD if the retailer has their logistics down and runs off of an efficient unified commerce platform.
For most retailers, same-day delivery is a play at retaining their most affluent shoppers. As others note, it has its place for certain categories, consumer segments, and occasions, but it’s not a factor in most scenarios.
In fulfillment and logistics, we often forget what it’s like to compete asymmetrically. Many of the players setting expectations for same-day (or “get it now”) delivery have economic models that are viable when underpinned by diversified revenue streams or patient investors. A handful even offer their fulfillment and logistics capabilities as a rentable service. But for most everyday retailers, these expectations are hard to match without .
It is pretty interesting to watch the yin and yang of increasingly on-demand commerce in contrast to the slow food / slow goods trends. For the last few years, for example, Amazon has been nudging shoppers to consolidate orders or delay shipments. Sometimes they offer incentives like music/video credits, but others they’re simply denoting decisions that use less packaging or are lower-carbon.
There are clear economic costs to more frequent, smaller deliveries–especially on-demand versus on a predefined route. Some retailers can obscure these, but most will need to cover their costs with surcharges or other variable pricing, which will limit demand.
This is the key: “…it has its place for certain categories, consumer segments, and occasions, but it’s not a factor in most scenarios.” One size does not fit all and not all want the same size. (You may quote me…)
What could I possibly need from a Kohl’s store that would require I receive it within an hour? Or for that matter, even the same day? A toaster? Certainly not a blouse or pair of shoes. And If I did need one of those things ASAP I could visit the store.
The race for fast delivery is out of hand. Work on your in-store experience instead.
Right, I can’t think of anything either and if it was urgent I’d go to the store and get it. Different story if it involved medications or other types of items, but not a new polo shirt.
Amen, sister. It’s like the presumption that the “biggest problems in retail” are swipe fees and ORC. Nope. It’s boring products and lousy service.
Good grief, no. Retailers continue to dump huge buckets of money toward money losing efforts – essentially copying the tech idea that it must eventually make money.
Critically, services like this serve a small segment. There are those who dramatically need them and that is already available. Rushing to expand the service uptake is particularly unwise. The retailers advantage is in the store.
Same day delivery is now a condition of entry as more and more retailers are embracing this service. As customer expectations continue to rise, retailers need to keep pace. The cost of staying relevant, however, is great. I can see the industry implementing a reduced fee or free service for loyalty members/subscribers. It will become unsustainable, much like the original all returns policy if retailers don’t address the growth of use now.
Same day delivery suggests that there is some life problem that needs an immediate solution. And what life problem can be solved with same day delivery from Kohl’s…??? I’m thinking that’s a really short list of problems and therefore not remotely a needle mover for Kohl’s. What part of Kohl’s assortments does the Kohl’s team think rises to the level of same day delivery that they worked so hard to provide it? Another short list. It’s a customer “demand”. Really? What’s on the list of customer “demands” that are actually both important AND that the customer will pay for? Yet another short list, a really short list. Same day delivery is a nice-to-have that is great when it can be financially efficient for customer and retailer alike.
Thinking about relevance and impact to Kohl’s business, I don’t see it with same day delivery. Who needs something from Kohl’s in an hour? It’s not on the same level as medication, grocery or dining delivery, where there is a greater emphasis and expectation on speed. And then there is the financial implication of delivery. Kohl’s would be better served focusing on merchandising assortments, service and in-store operations.
I’m all in on retailers finding new ways to engage customers across platforms.
That said, they also need to evaluate the value prop for their customers. Same-day delivery on apparel? Barring having my luggage lost on a trip and needing a quick change of socks, I don’t see how this will drive revenue or loyalty for Kohl’s. This a great example of making sure to ask “should we” before we ask “could we.”
Whatever you think about Kohl’s content and store experience (and most panelists would apparently say, “Not much”), it needs to be in the “convenience” game just as much as when its strategy involved opening freestanding off-mall locations for years. Today, that means being in the same-day-delivery business especially when much of Kohl’s assortment is not available in-store anyway.
In this market (Milwaukee), DoorDash has partnered with Dick’s, Lowes, Meijer and Walgreens among others — and I’m sure it’s the same story across the country. Instacart offers Kohl’s a logistics partner with its own customer base and expertise at same-day delivery — without having to invest heavily in its own resources — because the real battle for “last mile” market share is currently dominated by Amazon, Target and Walmart.
Love retailers helping customers find more ways of getting products when they want it. But Kohls burning time/labor and marketing in “You need this same day” seems like a reach and for a fractional number of scenarios.
Kohls is better off investing effort back into a more compelling value proposition, store conditions, merchandising standards and customer service. Do well at these first and then go after shiny objects.
While Kohl’s partnership with Instacart for same-day delivery is a step toward meeting consumer demands, I think they should still focus more on other critical areas like enhancing the in-store experience, addressing inventory management issues, and refining the online platform’s user experience. By concentrating solely on delivery speed, retailers often risk neglecting the foundational aspects of retail excellence that leads to missed opportunities for long-term growth. Instead, an approach that balances delivery speed with overall customer satisfaction and operational efficiency is essential for Kohl’s and other retail brands for a sustainable success.