CHICAGO—Retailers across the US have been putting together plans over the last several years to restructure how they deliver their products, and between now and 2017, many will begin to implement those plans, according to Jones Lang LaSalle's Fall 2013 Cross-Sector Outlook. Partly in response to the increasing importance of the millennial generation, the next few years will see a lot of development activity as retailers create “omni-channel retailing, the seamless integration of traditional retailing with the efficiencies of industrial supply chain management,” JLL researchers believe.

“I share the optimism because I've seen, behind the curtain, the type of strategic planning” retailers have done, said Kris Bjorson, JLL's international director for industrial properties. He is also responsible for development and management of the firm's Retail Distribution Service business. Seven out of ten retailers are “analyzing and defining their omni-channel strategy for 2015 to 2017 implementation,” according to the new JLL study.

The increased pace of development will have less to do with the modest economic recovery than changes millennials have helped force on the retail world, Bjorson added. “We're still seeing relatively flat growth but [retailers] know consumers' buying habits are changing.”

Most millennials still prefer to shop in stores, so the traditional retail outlet should remain a key component of most operations. But what sets millennials apart is their more frequent use of technology to research products online before making purchases, and a desire to make and receive those purchases quickly. “It won't be acceptable [for retailers] to say in 2014 that we aren't responsive” to those desires, Bjorson said.

However, he also said that even though retailers have made plans, their models will probably evolve over the years as they see how consumers react to the changes. “A lot of it is educated guesses.” Most retailers will have to reformat store space, since with a significant amount of product going directly to consumers who order online, they now have 10% to 30% more space than they need.

But new industrial distribution and fulfillment centers will be critical. “An estimated 30% of US industrial big-box demand has a correlation to e-commerce,” according to the report, “and this will not abate anytime soon. Major retailers continue to open new fulfillment centers that offer access to the nation's key population centers and infrastructure, and are opening smaller centers to enhance coverage in secondary markets.”

And to ensure maximum flexibility, many retailers will partition their new warehouses to handle several different operations. JLL points to Carters.com, for example, which now occupies a 1-million-square-foot facility in Braselton, GA. The company divided it into thirds to simultaneously handle wholesale operations, which ships goods to a big-box retailer, inventory replenishment, which ships to brand name stores, and fulfillment operations.

Many companies, however, won't have the funds to build the new-style facilities pioneered by Amazon.com and others that have 40' clear ceilings, and employ triple the number of people traditionally used. Others will refurbish existing facilities to give them greater flexibility, and for some 3PL firms will start to play a bigger role in their business.

Whichever way retailers choose to go in the next few years, the changes are here to stay. Currently, “59% of the country's population shops online; millennials, a generation raised on technology, comprise the majority,” JLL researchers say. “By 2020, they will account for 30% of retail sales.”

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.