Ecommerce stores warehouse

Evolution of Main Street Retail to Drive Warehouse Demand

Despite reports, the High Street is not dead. However, it is going through another one of its periodic transformations – one that can have a huge impact not just on the use of retail space, but on the requirements of the warehousing that supports the whole business. shopping experience.

Amid the angst over rows of empty shops and the disappearance of much-loved retail brands, it’s easy to forget that High Street has seen such fundamental, if not rapid, change many times before. For several decades, mom-and-pop stores have struggled to compete with the more successful supply chains of new national brands. The department stores threatened to suck commerce from the small towns into the big city. Self-service would deskill and depersonalize the retail experience, while out-of-town hypermarkets and malls would attract car-owning affluent middle classes, leaving inner-city shopkeepers the privilege of paying ever-increasing professional rates. high to serve a low attendance of low spenders.

However, the High Street has continually adapted and survived. Today, new challenges arise: the inexorable rise of online commerce, with goods ordered and delivered from the comfort of the customer’s home; and the drive to reduce carbon and other emissions and congestion in city centers, making it increasingly difficult for retailers to receive deliveries or for customers to shop from home.

Many city centers have paradoxically seen the proliferation of small independent, specialized or “artisanal” brands, but it is clear that the “flagship” or “flagship” department stores have been hard hit. But survivors are fighting back, developing new ways to become a “destination” and rewiring the retail “experience”.

In the process, you could say they’re reinventing the department store – indeed Next, which spans fashion to home and beauty across own and third-party brands, has actually taken over a former Debenhams store in Watford. On Oxford Street, Next creates a “shop-in-shop” for Gap as well as concessions ranging from Socksshop to 02, Lipsy and Paperchase. Some Next stores also offer garden products through Homebase concessions.

As well as merchandise, retailers are also extending the “experience” by hosting food and drink outlets – commonplace in traditional department stores like John Lewis, but now often involving external brands, such as Costa Coffee at Next and Pret a Manger at Tesco.

Inventory management is one of the myriad reasons why High Street retailers should seek to collaborate with storage and fulfillment partners within the retail ecosystem. (Photo by Yuki IWAMURA / AFP)

Retailers and landlord/occupiers take subtly different approaches, but a common theme is the desire to share the burden of rents, rates, utility costs, as well as logistics and inventory costs.

There are a few important points here. First, these are not gross subleases; they are partnerships or collaborations across the full range of retail and, more importantly, from our perspective, logistics businesses. This means, for example, that they will find and exploit synergies in the inbound deliveries of goods, which will also help to cope with the growing range of restrictions on goods traffic in city centres.

Many of these concessions will be integrated with their host’s systems both online and in-store, and the retail space is envisioned more like a showroom than a conventional store. Consumers can touch and feel the products, and perhaps, with digital and human assistance, order and pay for home delivery of products from a mix of dealers – in theory, purchases could arrive at home before delivery. ‘Buyer.

Stores as destinations for a range of activities, not all of which are directly related to the movement of goods, will increasingly become the norm. Relatively little stock will be carried into store, freeing up more space for displays and activities. The customer can visit the rest of the store or other stores on the main street, or take a bus home, without being cluttered with carrier bags, flat furniture and the like. In effect, it is a different type of e-commerce, except the customer orders using a device in the store rather than in the living room.

But the demands for inventory storage and space to facilitate execution on tight deadlines are equivalent, and we recall that every billion pounds of online sales requires between 750,000 and 1 million square feet of storage space. ‘warehouse. Obviously, for maximum efficiency, or in some regions to operate this model at all, the host retailer and its partners will need to collaborate on warehousing and fulfillment – not just consolidated deliveries in unbranded or co-branded vehicles, but in storage, inventory management, order picking and the rest.

In an ideal world, that could mean ten or a dozen partners sharing a facility on the outskirts of town powering their last-mile execution. In practice, such are the rental levels on warehouses around London and some other cities, this may not be economically feasible, and more complex consolidation arrangements and more distant hubs may have to be used.

On the other hand, there may be situations where there is sufficient free space on a large High Street retail site, even after an increase in display area, cafes, ancillary activities , to accommodate this type of activity – to some extent it depends on the size of the goods involved: perfumes are less problematic than furniture.

These are the early days and the details of viable long-term business models are still not entirely clear: there will be issues around gain-sharing, governance, accountability and the rest. Nevertheless, the High Street is reinventing itself, as always. In the process, it will raise the demand for warehousing and innovative approaches to space utilization to even higher levels. Bis Henderson, with its wealth of experience in this field, can help new business partners design effective and robust solutions to this challenge.

Article written by Steve Purvis, Managing Director of Espace Bis Henderson

Joe Devanesan