Multi-channel retailing drives ‘big shift’ in logistics

The further growth of ecommerce and multi-channel retailing will drive demand for new types of logistics spaces across Europe, according to Richard Holberton, director research EMEA at CBRE.

Citing a recent poll conducted by the advisory firm, Holberton noted that most retailers with a multi-channel strategy expect to need more regional distribution space and local warehousing in the coming years. ‘There will be a surge in demand for local warehouse space close to final destinations on the periphery of every large town and city across Europe,’ he predicted.

Speaking at the PropertyEU Logistics Investment Briefing held at CBRE’s London office last week, Holberton said that research indicated multi-channelling is taking off in quite a number of big European markets, including the UK, the Netherlands, Germany and Poland. ‘Multi-channelling may account for up to 40% or more of leasing activity in logistics markets with potential to grow further in the next few years.’

The logic of online retailing is ‘compelling’, Holberton added. ‘A lot has been written and spoken about the impact of ecommerce on retailing and retailers, but less on what it might mean for logistics markets. We know or expect online sales will continue to increase pretty strongly. A survey we’ve done shows that retailers across a very broad range of types are actively and aggressively pursuing multichannel strategies, to the point that almost two-thirds expect to regard themselves as fully-integrated multi-channel retailers within a two-year time frame. That’s a pretty big shift.’

The impact of online retailing on the configuration of supply chains has yet to be felt, he continued. ‘Many retailers are actively devoting serious thinking time to what it will mean for supply chains and logistics platforms.’ Instead of a single retail outlet, a host of end destination points will be needed and the constellations are still evolving, he added. ‘The proliferation of end destination points will lead to a reconfiguration of supply chains as it increases the need for the final mile. That’s a pretty strong reason for stronger leasing activity in logistics markets. ‘

Holberton also foresees that the further globalization and internationalization of the third-party logistics (3PL) sector will feed demand. ‘3PL is still a fairly fragmented sector. There’s scope for consolidation and network building.’

At the same time, demand conditions in the logistics sector will continue to reflect a generally slow economic recovery. ‘That is shortening business planning horizons and generally in Europe producing a greater need for lease flexibility,’ Holberton pointed out. ‘Beneath that, there’s a strong imperative for cost control, in some cases leading to an opportunity to look at efficiency, location, occupational terms and the ability to accommodate greater process complexity and greater mechanization. There are lots of things that occupiers are actively thinking about which will alter the pattern of their location and the types of space they target.’