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Retail Supply Chain Managers Anticipate New Trend in Warehousing

By Patrick Burnson, Executive Editor
May 27, 2014

Retail Supply Chain Managers Anticipate New Trend in Warehousing

A new report from JLL posits the idea that retail supply chain managers will become increasingly reliant on the conversion of brick-and-mortar stores to fulfilment centers providing package pick-up and ship-from-store services.

“E-commerce is more than changing the way consumers buy—it’s also changing the way stores operate,” said Kris Bjorson, Head Retail-commerce Distribution at JLL. “Customers expect a seamless shopping experience where they can choose the most convenient way to order, receive and return their purchases, and retailers are responding with a ship-from-store option. More stores will be used as mini-distribution centers where they can fulfil online orders in-store.”

He adds that this new model will reshape the distribution strategy for many retailers as they meld physical stores and e-commerce delivery to compete in the race for e-commerce market share.

Depending on specific regional needs, a retailer may use any number of types of fulfillment facilities, says JLL.

Analysts maintain that while some retailers in some regions will ship only from distribution centers, in other regions they will use only stores. Other regions may add a new type of facility, urban fulfillment centers. New fulfillment centers (FCs)—an added layer than can bridge online sales with existing stores—are emerging in close proximity to a retailer’s existing distribution center (DC).

In this scenario, inventory-replenishment trucks, en-route to brick-and-mortar’s stores from a DC, can stop by a FC to pick up customers’ online orders. An FC in near-proximity to the retailer’s existing network cuts transportation costs and gives a retailer access to more than twice the inventory.

“There is no one-size-fits all ship-from-store supply chain strategy.  The retailer’s existing supply chain network, its customers, and the nature of its products all shape where and how goods are stored and shipped,” Bjorson told SCMR.

“As retailers’ Ship from Store strategy evolves, we expect an increasing demand for warehouse space. To ensure inventory is available when needed, the one million-square-foot e-commerce fulfillment center will become commonplace.  Further, that inventory will be supplemented by goods in the stores themselves, which will use up to 15 percent of their space for storing goods for customer pick-up.”


About the Author

image
Patrick Burnson
Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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