Perspectives on Retail and E-Commerce Distribution

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By Steve Schwegman
Senior Vice President
Jones Lang LaSalle

I recently had the opportunity to participate in a panel discussion of retail distribution trends at this year’s Jones Lang LaSalle national sales meeting. I was fortunate to be joined by several very knowledgeable colleagues from around the country: Kris Bjorson, Jordan Quinn, Bob Silverman and Steve Jones.  While we each look at the industry through a different “lens,” we all agreed on the following:

  • We are still in the infancy of omni-channel retail sales’ impact on supply chains. According to the Retail Industry Leaders Association, 9 out of 10 retailers still haven’t settled on their e-commerce fulfillment strategy.   There is plenty of opportunity for leaders within the industry (including consultants, third-party providers, MHE and systems integrators, etc.) to create innovative solutions and value for their clients and customers.
  • Free shipping is the new norm and same-day shipping is what retailers are now working towards.  Same-day shipping means it will become more important to locate inventory in closer proximity to massive populations.  This could mean more e-commerce fulfillment DCs in large, metro areas.  This could also mean less distribution by online-only retailers in states such as Virginia, Indiana, Nevada and Tennessee, which will begin enforcing collection of online sales tax over the next year.
  • The availability of big box distribution facilities is dwindling.  For example, Prologis (the largest industrial real estate owner in the world) enjoys 100% occupancy of their facilities larger than 500,000 square feet.  At the same time, retailers typically intend to implement changes to their DC network quickly so the timing often doesn’t lend itself to build-to-suit.  Therefore, the availability of quality facilities could potentially sway the site selection from one regional market to another.  This also proves why we’re likely to continue to see new spec development across the country.

The pace at which omni-channel retail is evolving must be matched by an equally-fast adaptation by the supply chain.  It will be critically important that retailers, their suppliers, vendors and consultants stay on top of the trend and aware of the strategies implemented by peers and competitors in the industry.

 

More more information, click the following links for the latest Jones Lang Lasalle research and analysis:

Retail 3.0: The evolution of multi-channel retail distribution

E-Commerce: Demystifying Distribution Site Selection

Q1 2013 Big Box Report

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