Logistics: technology is redefining the retail supply chain


Logistics: technology is redefining the retail supply chain

Dutch Real Estate Predictions 2016

For retailers competing for online market share, a key differentiator is how quickly and efficiently they can get their products to customers. As the delivery promise becomes more important and, at the same time, increasingly complicated, real estate strategies are changing fast.

February 11, 2016

Increase in online shopping, international trade, and manufacturing activity continue to have a positive impact on industrial real estate fundamentals. The increased use of technology and online sales in particular is redefining the supply chain. As omni-channel retailers with e-commerce activity focus on speed of delivery to improve competitiveness – large retailers ships goods even before consumers bought it by predicting buying patterns -, location of the warehouse and distribution centers is likely to play a more critical role than before.

The right mix of infrastructure

This presents the retail supply chain with a significant challenge. Originally designed to provide stores with regular, bulk deliveries, many retailers’ logistics operations do not yet feature the right mix of infrastructure to compete effectively on delivery times or to deal efficiently with returns.

In recent year, many retailers have driven efficiencies by using fewer, but larger distribution centers. Indeed, the consolidation of multiple regional warehouses into a smaller number of national facilities is a trend that is still ongoing and evolving for some distributors. However, retailers with a small number of large national distribution centers will struggle to make rapid, cost-effective, deliveries across the country unless they combine these with smaller hubs located near to large conurbations.

Warehouse owners should collaborate and plug into the tenants’ supply chain and strategically determine the location for new developments. Further, industrial real estate owners need to be more flexible and responsive to the dynamic inventory levels and space requirements of their tenants, which implies a focus on size and design of warehouse and/or distribution centers. This will require extensive use of technology to build adaptable warehouses and distribution centers, specifically using advanced supply chain and automated warehouse management systems. This will push the supply of well-located stock of appropriate specification, but will still be far from sufficient. 2016 therefore promises to see rents on such property rising, yields being forced down and logistic real estate being seen as a prime asset for investors.

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Omni-channel: transforming the retail landscape

Dutch Real Estate Predictions 2016

  1. Big data in real estate: too big to ignore
  2. Omni-channel: transforming the retail landscape
  3. Asian investors raise their stakes in Dutch real estate
  4. Construction: significant rise of new residential project
  5. Logistics: technology is redefining the retail supply chain
  6. Changing legislation creates opportunities in healthcare
  7. Real estate steps up as a key tool in the battle for talent
  8. Blockchain: the next game changer in real estate?

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Want to know more about Deloitte Real Estate or the Dutch Real Estate Predictions 2016? Please visit our Real Estate website or contact Wilfrid Donkers via WDonkers@deloitte.nl or +31 (0)88 288 1890.

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