How global warehousing trends could influence your business model

How global warehousing trends could influence your business model

Industrial – Workplace June 2017

Space Race

If your business model includes warehousing in some form, global trends suggest that warehouses will become even hotter property on the back of changing retail practices, and where that warehouse space is physically located will change as a result.

In the good old days a warehouse was a holding pen for stock, ready and waiting for a retailer to top up their bricks and mortar retail store when the shelves were looking empty.

In today’s sophisticated e-commerce world, it’s where a business distributes direct to its clients from so new thinking is required around where that warehouse is located – and how it is used.

Retail-aligned warehousing is a major focus of attention in the United States thanks to the undeniable impact of e-commerce giant, Amazon.

It is snapping up smaller commercial properties in urban locations closer to Amazon’s “last mile” delivery areas so that it can satisfy customers’ expectations for within-the-hour, same-day or overnight delivery targets. Gone are the days when warehouses were solely located on the very extreme boundaries of an urban area, often tucked in among light manufacturing businesses and food production premises.

Strategies are changing in international markets and warehouses are creeping closer to customers. The really smart retailers are changing where they store their stock according to where consumer demand is originating.

New thinking around logistics also has some store-front retailers converting part of their retail space into warehousing to suit those customers who order online, but want to collect in-store.

In the US, retailer Target is transforming some of its “back room” space into what they call “order fulfilment centres” – or effectively, mini warehouses. Online shopping is mixed with in-store collection – all from the one site, rather than waiting for stock to be forwarded from a remote warehouse to the store.

Target says in-store pick up accounts for around 15 percent of its total online business, so it’s looking at customer data closely and tailoring its warehousing model to suit.

Property requirements versus consumer demand – it can be a bit like nailing down jelly. Just when a business thinks it has its warehousing strategy sorted, e-commerce expectations change again. But it does make sense to make sure that every bit of space that a business leases is used to optimise stock control, inventory and customer satisfaction – and that includes its physical retail stores.

New Zealand businesses will also be looking to adopt this kind of thinking to remain relevant and competitive in a world where geographical distance is no hurdle to consumer spending. Where there’s a will, there’s a way…

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