MIPIM UK 2016: Last-mile delivery has made the sheds sector an integral part of the shopping experience as demand for late-night shopping with the promise of next-day delivery grows.
“The role of e-commerce fulfillment is not to get something from A to B, but to facilitate the customer experience,” says Nick Bailey, managing consultant at Transport Intelligence. “When shoppers order online they get no physical touch point. As a result, the retail brand needs to be extended throughout the supply chain. As a last-mile provider, how do you get orders delivered throughout your network overnight?”
Bailey’s comments come in the face of a growing e-commerce industry. According to EGi Research, online shopping accounted for 4% of all retail sales in the UK in November 2007. In the same month last year the market share had increased to 16%.
As a result, the volume of industrial take-up by retailers has also increased, from 24.3% in 2011-2012, to 37.1% in the 2015-2016 period.
But it is not just online retailers that are benefiting from this evolution of shopping habits.
James Markby, managing director of Logistics Capital Partners, describes the “shift from pallets to parcels” as something akin to a “mini industrial revolution” that is already creating new employment opportunities.
Online retailer Amazon alone is set to employ around 95,000 people across
27 distribution centres over the three-month Christmas period.
“A new e-commerce fulfillment centre of around 800,000 sq ft will, at peak times, create around 2,500 jobs. Companies in this sector are major employers in the industry and the growth has only just started,” says Markby.
“The biggest constraint for occupiers is access to labour. One agent told me they are having difficulty leasing sheds in the Midlands because occupiers can’t get the staff they need to operate them.”
But Waheed Nazir, strategic director for economy at Birmingham City Council, insists that the bigger issue is a limited supply of land. And with jobs and homes being the chief priorities for local authorities, there is a danger that smaller logistics units will place a distant third.
“It’s definitely a challenge,” says Nazir. “We have got to look at the greatest economic impact.”
He says that when it comes to deciding between a land-hungry distribution scheme and a manufacturing development with plenty of job opportunities, the council will often go for the latter.
“The issue we have is about land availability rather than demand, which is why we have started to work with surrounding authorities to meet requirements,” says Nazir. “The positive side of e-commerce logistics facilities is they often recruit for entry level jobs that, with the right training and development, can become careers. But the land supply problem doesn’t go away.”
So could a move towards multi-storey warehouses be part of the solution?
According to Markby, some of the big e-fulfillment centres in the UK are already building multi-storey, but with mezzanines fitted alongside different levels of technology to support.
“The way a multi-storey facility is kitted out is very important,” says Bailey. “There are lots of types of technology that can help these types of operations. There is pick-to-light technology that lights up a product and saves someone the time they would otherwise spend looking for it. There is also augmented reality, which tells you what to pick. But switch to certain parts of the US and Asia, where land is cheaper and bigger centres can be built on one level, robots can be utilised to move around and pick the relevant stock-keeping unit. You can’t do that over levels.”
Listen to the debate in full at www.estatesgazette.podbean.com
The panel
Chair Damian Wild, editor, Estates Gazette
Presentation by Andrew Toy, research manager, EGi Research
Panellists: Nick Bailey, managing consultant, Transport Intelligence
Waheed Nazir, strategic director for economy, Birmingham City Council
James Markby, managing director, Logistics Capital Partners
• To send feedback, e-mail Janie.Stamford@estatesgazette.com or tweet @JanieStamford or @estatesgazette
