Retail Shift Requires Supply Chain Strategy Shake-up

6th November 2019

Logistics BusinessRetail Shift Requires Supply Chain Strategy Shake-up

Omni-channel shift is driving growth of next-generation logistics and supply chain, presenting important opportunities and challenges for retailers, real estate developers and investors, according to JLL’s new Redefining Retail Logistics report. JLL’s research illustrates that effective supply chain and logistics management will become crucial differentiators to enable retailers to have a competitive advantage and thrive in today’s world. For retailers:

• Consumers will be the continued and uncompromising drivers of change in retail in the next 10 years, requiring seamless in-store and online experiences.
• Adopting an end-to-end supply chain approach will ensure responsiveness and agility, enabling retailers to fulfil in-store and online purchases in the most efficient and profitable way.
• Physical stores will be key for omni-channel fulfilment – the right space in the right location will continue to attract consumers and generate returns for retailers and investors.
• Click-and-collect (and click-and-returns) will play a crucial role in retailers’ profitable fulfilment strategies.
• Sustainable and transparent supplychains will continue to grow in importance owing to the climate emergency and growing interest in economic and social sustainability.

Jon Sleeman, Head of EMEA Industrial and Logistics Research and co-author of the report, commented: “We are at an inflection point where it is clear that profitable retail can now only be achieved through efficient supply chain and logistics management and the resulting consumer experience. Omni-channel is adding new layers of complexity to retail logistics and retailers have to rethink their strategies to optimise their real estate portfolios and engage customers across digital and physical channels. The digitalisation of retail and logistics is a huge challenge but investors who understand the longer-term impact of change and think creatively to future-proof their assets can create new opportunities for their customers and deliver strong returns.”

Real estate investors will also need to think flexibly and develop a broader understanding of supply chains in order to successfully stay ahead of the curve. They will need to:

• Understand and cater for changing retailer requirements – buildings or locations that fail to meet retailers’ and consumers’ requirements will become obsolete.
• Embrace the increasing importance of asset management to become real estate operators, not just owners. Investors who better understand their customers and their people can offer appropriate asset management services to preserve or enhance real estate value.
• Identify resilient retail and logistics real estate to better understand the characteristics that underpin outperformance and minimise risk.
• Change the way they value retail real estate – it’s not just on sales volumes but also what retailers bring to the brand and customer experience.
• Think clearly and act appropriately because environmental considerations will become paramount as regulatory and reporting frameworks become more rigorous.