LAS VEGAS—Who’d have thought a store’s backroom would become an important piece of real estate and a new weapon in the retail delivery wars? According to JLL, a store’s back room will grow in scale and importance as retailers use their brick-and-mortar stores as fulfilment centers.
This new model will reshape the distribution strategy for many retailers as they merge physical stores and e-commerce delivery to compete in the race for e-commerce market share.
Today’s shoppers expect a seamless shopping experience where they can choose the most convenient way to order, receive and return their purchases. Retailers are responding with a ship-from-store option. More stores will be used as mini-distribution centers to fulfil online orders.
“There isn’t a one size fits all strategy for retailers and they will have to invest in the right supporting technology,” said Kris Bjorson, head of JLL’s Retail/e-commerce Distribution group. “But we expect stores to become an important part of the fulfilment strategy supporting larger distribution center (DC) and e-fulfilment center (EC) networks.”
Among JLL’s brick-and-mortar clients with ship-from-store capabilities, 10–15 percent are already using this option, and there’s strong interest in growing the channel.
As more retailers develop their ship-from-store strategy, JLL anticipates growing demand for industrial space in the form of ECs to offer broader inventory options to satiate the discerning internet customer. As well as the need to add or increase around 15 percent of fulfilment space inside traditional store locations.
When integrated into a complex fulfillment system, stores can become companions to DCs and ECs in the heated competition for online customers.