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1. Introduction
As e-commerce and bricks-and-mortar are merged into omni-channel (OC) retailing, customers gain more opportunities to buy what, where, when and how they want. Empirical studies show the value of OC shopping for customers (e.g. Esper et al., 2003; Gallino and Moreno, 2014; Herhausen et al., 2015). Traditional bricks-and-mortar retailers have to learn how to use the new distribution channels to become attractive “bricks-and-clicks” retailers. Cross-channel optimization offers a number of opportunities for improving supply chain (SC) performance (Agrawal and Smith, 2015). This is especially relevant in the context of grocery.
Even with bricks-and-mortar concepts dominating the grocery market, online grocery is facing an upheaval in the twenty-first century. Online grocery already has a relevant market share (e.g. 4.4 per cent in the UK) and is growing rapidly (IGD, 2014). By 2018, grocery retailing will surpass consumer electronics in online sales to become the second largest category in Europe after apparel (Forrester, 2014). The biggest challenge in designing a successful business model with OC grocery retailing is the high cost and complexity of fulfilment for groceries bought online (Aspray et al., 2013). Six out of ten challenges relating to online shopping have their roots in last mile fulfilment (Fernie and McKinnon, 2009). In addition, a customer at a grocery store who picks, packs and delivers the goods himself saves the company 13 per cent in total cost of sales (Hays et al., 2005). Nevertheless, there is a limited willingness to pay for delivery services. Teller et al. (2006) show that the perceived inconvenience connected with shopping for groceries had no impact on respondents’ willingness to pay for home delivery services or their future intentions to use such services.
Innovative operational and logistical solutions have to be developed to make home delivery and click and collect (C & C) not only possible, but profitable. OC grocers therefore need to create efficient structures in order fulfilment and delivery. Effective SC planning is a basic requirement for coordinating warehouse and delivery in the retailing context (Kotzab and Schnedlitz, 1999). OC grocery retailers across Europe apply various fulfilment and delivery techniques. For example, attended home delivery is still the predominant model in the UK and the Netherlands, whereas unattended home delivery is well-established in...