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Warehouses becoming more attractive

Supply chains are the hidden part of retail that shoppers have historically had no interest in whatsoever but this has changed during the Corona virus as shortages of items on supermarket shelves have put the supply chain on the front page.

Large numbers of people buying an increased number of specific items has had a massive impact on the retail industry’s finely balanced supply chains that have been shown to have very little tolerance for unexpected change. Maintaining availability across ranges has therefore been seriously problematic. When adding in the finite numbers of slots and vans available for home delivery then it is clear that the virus has highlighted some of the deficiencies in logistics and fulfilment.

Although these issues have predominantly related to the food sector, an increase in online shopping for any category will have implications for the supply chain – involving both outbound deliveries and returns. Recognising stress ahead for retailers, one of the canniest global investors, Blackstone, has been betting big on the need for more warehouses as e-commerce takes an ever greater hold on the retail landscape – accelerated by Coronavirus in recent weeks. 

The company recently purchased 22 more logistics sites across the UK at a cost of £120 million in a move that further bolsters its portfolio of units, which has recently been valued at a hefty Euros 8 billion. Within Europe many of these assets are defined as ‘last mile’ properties and are used by the likes of Amazon and Deliveroo for its dark kitchens.

Like a growing number of retailers these two companies recognise the value of having many smaller warehouses (often in city centres) that are located much closer to the end-customer rather than having a small number of traditional massive distribution centres positioned on motorways in the middle of the country.

If these warehouses fill up and do the job that Blackstone predicts then not only will the investment firm’s big bet pay off but the supply chain will avoid finding itself on the front pages again

Glynn Davis, Retail Insider



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