LIVE BLOG: Retail 3.0: The Evolution of Multi-Channel Retail Distribution

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Jones Lang LaSalles Steve Schwegman is moderating a panel discussion featuring UTI Worldwide’s Nathan Sanders, BrightPoint’s J.R. Saylor and Chris Scott, and Jones Lang LaSalle’s Kris Bjorson, Rich Thompson, and Chip Barnes.

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8:05 a.m. — Saylor: “Ten years ago you barely heard about green initiatives, and now you have national retailers very focused on it.”

8:06 a.m. — Thompson on macro-level demand in the retail world: “At a macro level, supply chain for retailers is still about cost and service and maintaining the most optimal balance. Increasingly, though, it’s also about risk mitigation … just think about the LA/Long Beach port strike, tsunamis in Japan, floods in Thailand).

8:10 a.m. — Barnes: “Locally, we’ve seen the growth in the commercial real esatate market here driven by distribution and, specifically, e-commerce. The use of these facilities has changed dramatically. We’re now seeing heavy employee counts, for instance, because of these changes.”

8:14 a.m. — Scott on the advent of e-commerce: “As retailers, we contemplate a purchase and as soon as we click send, the clock starts ticking. The bar has been raised significantly for service providers. Now, if we dont make next-day delivery, somebody’s going to be disappointed.”

8:15 a.m. — Bjorson on e-commerce’s impact on distribution networks: “If you look at the top 25 internet retailers, most of them have infrastructure throughout North America. All of our retailers are repurposing their facilities to get a variety of different products to clients in different ways.”

8:19 a.m. — Thompson: “Now what we’re seeing is traditional retailers trying to understand how to leverage the bricks and mortar to support their e-commerce.  We work with a lot of big retailers, and they haven’t got it quite figured out yet.”

8:22 a.m. — Bjorson: “We’re helping another national home goods retailer, now, with their fourth dedicated, regional e-commerce distribution facility.”

8:24 a.m. — Barnes: “Throughout Indiana, we’re seeing the full gamut in terms of size of facilities … up to 900,000-square-feet for the four Amazon facilities located here.”

8:26 a.m. — Sanders: “We’ve seen our DCs shrinking in the grand scheme of things because companies don’t want product sitting there for 30, 60 or 90 days. That’s why a disruption like a shipping strike or a tsunami is so crippling because they just dont have a lot of inventory sitting on the floor.”

8:32 a.m. — Thompson on the importance of considering automation: “From a total operating cost perspective, freight costs and inventory costs are big and labor is the other big cost bucket. Real estate is relatively minor in terms of cost.  We think freight costs are going to continue to escalate. With interest rates at basically zero, it hasn’t been about inventory, but as soon as the economy takes off and inflation climbs, theres going to be a lot more focus on inventory.  And obviously, labor costs are only going to continue to rise and the only way to offset that is through automation.”

8:38 a.m. — Sanders on the labor market in Central Indiana: “As a general rule, Indianapolis does really well compared to some of the other markets, but with the growth that’s been here (particularly Amazon), we’re on the cusp of oversauration.”

8:40 a.m. — Scott on the macro labor market: “We see a lot of problems, at peak season 1/4 of our employees were seasonal temps. It’s difficult to maintain a contingent workforce.”

8:48 a.m. — Saylor on two-sided loading versus single-sided: “I always demand to have a cross-dock facility, but I seldom use it as a cross-dock facility. But flexibility is key … there needs to be opportunity for growth. It costs $7 million to $13 million for us to move into a facility, so we can’t have it be obsolete in three years.”

8:50 a.m. — Thompson: “Right now, 85% of what moves around the country moves on a truck and trucking costs are going up … perhaps as much as 20% in the next two or three years. And when the economy turns and things begin to break out, theres going to be an issue around capicity in terms of trucking. What do you do about it? Intermodal is the fastest growing mode of transportation today. For a lot of retailers, its very applicable as an alternative to trucking.”

8:59 a.m. — Sanders: “The lack of intermodal in Central Indiana is going to limit our ability to grow. It”s one of our weak points in terms of transportation.”

9:01 a.m. — Saylor: “I’ve read where Amazon is going to have 100 million square feet of distribution space by 2016.”

9:07 a.m. — Bjorson: “All of our clients are asking us to analyze if their distribution facility should be an in-house space or a third-party controlled space.”

9:09 a.m. — Barnes: “In the near term, Central Indiana is positioned really well. Right now, Indy is in the process of building 3.2 million SF of speculative warehouse space, which is third in the country. Most people dont realize that. Were also #1 in the country for pass-though interstates. That’s key. And labor here is affordable. From all of those perspectives, we’re in really good shape.”

9:10 a.m. — Thompson: “I’ve always felt that Indianapolis comes up on the radar quite a lot when you’re looking at networks. But its all a math model.  It’s not emotional. Companies are very smart at looking at that.”

For more information on the evolution of multi-channel retail distribution, click here to read Jones Lang LaSalle’s new “Retail 3.0” white paper.

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