With the continued rapid growth of online retail and consumer expectation of next day delivery, the demand for distribution centres has never been higher. The retail logistics industry is experiencing a time of rapid transformation, so we interviewed director at Hyphen, Eva Diego, to find out more…
Q: How has retail design changed in recent years and what impact is this having on the retail logistics industry?
A: One of the most significant changes is that stockrooms have gone from taking up 20% lettable space, to less than 9%. This is great news for logistics developers, as merchandise is being moved to warehouses and distribution centres, so that retailers can dedicate more space to the salesfloor and focus their attention on customer experience. Although this is nothing new, I expect that it won’t be too long before stockrooms disappear altogether from the high street.
Retailers are also increasing their omnichannel offering and introducing innovations such as digital screens, click & collect parcel vending machines and smart mirrors in stores. Customers now have access to ‘endless aisles’ (where they can virtually browse a much wider range of products) and have items delivered directly to their homes, often by the next day. Alternatively, people can collect their packages at various pick-up points – whether that be in-store, at the post office or any other disclosed location. As a result, retailers need more sophisticated stock management within the supply-chain and demand for Smart distribution centres has never been higher.
Q: To what extent will the logistics sector need to evolve to keep up with demand?
A: When a product is endorsed by a celebrity or influencer, it can pick up traction on social media very quickly. However, as sales soar, these ‘must have’ items go out of fashion almost as abruptly as they came in. Quick turnaround and responsiveness to evolving trends are key, as fashion is now a fast-moving consumer good.
People have been conditioned to expect products ‘now’ and ‘last-mile’ delivery has become a top priority. Technology is already changing the way that retailers logistically manage and deliver products to their customers and the introduction of automated vehicles, drones and robots would have a significant impact on the supply-chain.
Although distribution centres have traditionally been out of town, there’s no reason why these couldn’t be supported by logistic hubs closer to physical stores in the high street. This could provide another sales opportunity as once you know a customer’s behaviour, you can then offer maybe two or three additional products that you think will be relevant to them, at their chosen collection point. These collection centres could also be part of the solution to our dwindling High Streets, so I hope to see more of this in the future!