'Next day delivery, superior logistics and urban warehousing' - the future face of retailing, says new report
From bigger warehouses to investment in speedy logistics, retailers are upping their game to respond to changing consumer habits, the rise of online shopping and digital disruption. In this special feature, TLT, the legal firm that specialises in the retail sector, breaks down its findings from its new report “Full Speed Ahead”.
There is no doubt that the retail sector in the UK has faced pressure from a fast-changing environment driven by digital evolution and consumer shopping trends. For many it’s a worry, for others it’s a challenge as TLT, a firm with six offices in the UK including Belfast, has discovered.
The company, which advises retailers on their transformation programmes to accommodate new changes, released its Full Speed Ahead report which illustrates how your competitors are responding.
“Retailers are under increasing pressure to become more agile, whether it’s responding to disruption or seizing upon new consumer trends and opportunities,” begins the report.
It said that the sector is a dramatically different version of what it was even just a few years back, adding: “In the last six months alone, we’ve seen online shopping continue to grow its share of UK retail sales.”
And developments from e-commerce giants like Amazon, which has secured retail space in London for its first cashier-less grocery store in the UK and launched the world’s first robot delivery service in Milton Keynes, is testament that even in the online retail arena revolutionary developments among the giants are rife.
“What’s clear is that having the right networks, technology and resources will be critical to keeping pace with changing consumer demands and staying relevant to today’s consumer. Retailers are finding increasingly innovative ways to meet these demands, but cost pressures are mounting and change needs to start happening a lot more quickly,” said TLT.
According to the research, one of the biggest pressures facing retailers is the impact on logistics from online shopping and demand for fast, free and flexible delivery. Based on interviews with the UK’s top 100 retailers, the report said the top two drivers of investment in warehousing and logistics are the rise of online shopping (86%) and consumer demand for rapid delivery (74%).
And 83% of retailers questioned say they plan to offer next day delivery or faster in the future, compared to the current 62% that already offer the service. This will “erode competitive advantage” and although it will come at a cost the report adds, “retailers are aware that consumers can be price sensitive when it comes to deliveries”.
Even though “free delivery is becoming increasingly difficult to offer” due to an increase in returns reads the report, it is still the third biggest driver of investment in warehousing logistics.
According to these statistics, the average volume of returns now sits at 27% rising to 58% for some and as low as 2% for others. Some of those firms greatly impacted by returns have successfully integrated tech to address the root causes.
The average level of investment in fulfilment and logistics is expected to rise from 9% of annual revenue to 12% over the next five years. This is compounded by the fact that three quarters (73%) of retailers say more businesses will have to offer free delivery in the future in order to compete.
Around 21% of retailers questioned are investing in warehouse management systems and robotics to address the logistics challenge, while a further 44% prepare to invest in this in the future. Demand for warehouse space is also expected to grow – by an average 15% over the next five years and as much as 42% for some.
“According to our research, two-thirds of retailers believe urban warehousing and urban lockers will become a genuine trend rather than something that is used by the few,” said TLT.
It added: “Adapting to these trends will require significant changes to infrastructure and technology and brand new ways of thinking, not least a willingness to embrace partnerships with other businesses to deliver rapid gains in efficiency.”
If you would like advice on how to move your retail business forward contact Judith Allen, partner at TLT at: firstname.lastname@example.org or telephone: 0333 006 1591.
For the full report visit: tltsolicitors.com/insights-and-events/publications/retail-logistics-report-2019/