Same-day delivery from major e-commerce and multichannel retailers during the 2012 holiday season introduced e-commerce as a viable option, even for last-minute shoppers. This evolution in customer demand now ripples through the supply chain for all retailers, prompting executives to re-evaluate real estate strategies, according to a new report from Jones Lang LaSalle (JLL).
“Retailers are anxious to create effective multichannel strategies that cater to new customer expectations, such as same-day delivery as well as e-and m-commerce,” said Kris Bjorson, head of JLL’s Retail/E-commerce Distribution group. “This means revaluating their supply chain networks and distribution models down to one of the most important components, their distributions centers.”
JLL’s Big Box Outlook report chronicles the transformation of the warehouse and distribution facilities referred to as “big boxes,” (those exceeding 250,000 square feet) that form the backbone of the supply chain. Multichannel retailers demand changes to these facilities to better support order fulfilment, including more picking and packing tasks that mean more employees are needed at each site.
“Multichannel retailers must first articulate their service commitment; then align all their real estate decisions,” said Rich Thompson, head of the JLL’s Supply Chain and Logistics Solutions group. “Location of ‘big box” facilities can make or break a retailer or an e-commerce company’s abilities to deliver their service commitments—especially same-day, or other ambitious delivery schedules.”
“Retailers grapple with three alternatives, all with strategic real estate implications,” continues Bjorson. “Should they outsource individual order e-fulfillment operations to other companies? Should they build a dedicated e-commerce facility to fulfill such orders? Or, should they have a multichannel distribution center that fulfills both individual and store orders?”
As retailers ponder these questions, potential solutions could reshape distribution centers in multiple ways.