It was not that long ago that the three-day delivery slots which Amazon offered was deemed as the norm for e-commerce. Then the online giant offered next day delivery slots, and now with Amazon Prime, goods can be delivered in the hour. Other retailers wanting to maintain their position in the world of e-commerce had to follow suit. So did their delivery options. Shorter delivery times means that retailers need to have their products as close to the customer as possible. Retail trends and consumer demands have begun to dictate logistics operations. So, what retail changes will happen next that will dictate further evolution from logistics, and how can the warehouse world prepare itself?
The rise in M-commerce
The mobile phone is becoming an increasingly popular purchase point for online shoppers, particularly during commuting times. This is set to increase, which will in turn put further pressure on delivery companies, especially in London.
In its Logistics in London report, JLL predicts that this could have major implications for an already congested and polluted capital, and retailers and logistics companies will need to think about how to prepare themselves for this surge in orders.
Leona Ahmed, partner and head of real estate, Addleshaw Goddard, says: “Demand for ever-quicker delivery times is not abating. The tolerable timeframe for a product to go from on-screen to in-hand is so short that retailers are having to find new ways to meet demand. Investors and developers are therefore looking at options which have not previously been on the table.
“Necessity is the mother of invention, and retailer responses may include anything from the conversion of under-performing retail parks into last-mile distribution hubs, through to multi-storey facilities with shared technology.”
No more deliveries to offices
Offices are already beginning to ban non-work related deliveries, meaning that shoppers looking to get their purchases delivered during regular working hours will need to have them sent somewhere else. This could lead to a surge in collection points around transport hubs and convenience stores used by commuters.
And, if they are going to be used more, then the logistics companies need to consider how frequently these collection points may need to be filled. In addition, the increase in number of vehicles to satisfy this demand will also need to be managed.
Colin Steele, partner, Rapleys, says: “There is the potential for greater intervention by local authorities or mayors in regulating the types of vehicles that can enter urban areas, and at what times, as operators seek to ensure they are meeting last-mile delivery needs.
“We may perhaps see greater focus on clean air, clean running vehicles, with more stringent emission standards which ban all but the cleanest electric vehicles from entering dense conurbations. Taking it a stage further would be requiring vehicles to be fully laden on entry rather than five vehicles to enter only partially full.
“There has always been a degree of this kind of control particularly of loading and unloading times, through planning conditions and also through highway loading restrictions. However, as densification and competition increases, coupled with disrupting elements such as automation, we may see this jumping up the agenda.”
Same-day food deliveries
The grocers looking to cash in on the growing demand for same-day delivery slots will have to modify their supply chains to accommodate this. They will need to think about the most cost-effective and efficient way to do this, and will have to focus on options for that crucial last mile.
Sally Duggleby, national head of logistics and occupier services at Savills, says: “‘The recent spate of same-day delivery offers or trials launched by Amazon Fresh, Tesco, Sainsbury’s and Marks and Spencer all point to the growing trend of immediacy of delivery and smaller basket sizes. As a result, we are going to start to see a real focus on last mile. Whether the product comes from the store direct, or from an external distribution facility, urban logistics is going to play a significant role as competition continues to heat up in the online marketplace.”
Wardrobe updates
Clothing sales and their returns mark one of the logistic sector’s main pressure points. Bricks-and-mortar retailers without an online presence will struggle to secure their future without an e-commerce option.
Amazon is launching a new concept called Prime Wardrobe which will deliver clothing, as well as offer customers the option to have items delivered to try on before purchase.
Kevin Mofid, head of industrial research at Savills, says: “How will other retailers react to this? One way of doing this will be to invest in more in-stock visibility, meaning retailers can serve store, online, and click-and-collect from one stock pool and therefore potentially reduce delivery costs, and as a result need less warehousing.”
Online leisure spending
Deliveroo has already made the move into the world of bricks and mortar by using former warehouse space to satisfy surplus kitchen capabilities for mass-online food orders, and it is likely that other operators will look to do similar.
In its Logistics in London report JLL points out that as they are only looking for smaller units of around 10,000 sq ft, this will result in further rental growth in light industrial assets of this size.
In addition, suppliers will be under even more pressure to get their goods into the city centre as consumers continue to increase their spend on leisure activities. Restaurants may have to consider using shared consolidation facilities to reduce congestion in and around London.
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