Source: National Real Estate Investor
Acceleration of online shopping during the COVID-19 lockdown has made companies more risk-averse in their inventory management strategies. Concerns about running low on ordered merchandise is causing a shift from “just in time” to “just in case” logistics strategies. Now, firms are increasing stock at facilities near customers to ensure timely shipping in case customers order more than anticipated.
While this new logistics approach is still in its infancy, Greg Healy, senior vice president, supply chain solutions & workforce analytics, with real estate services firm Colliers International, says “It’s impact on industrial real estate is nothing but positive.”
The increase in online shopping was happening prior to the quarantine, but the pandemic accelerated it, Healy says., For example, in 2018, 29 percent of Nordstrom sales were online, he notes, which is equivalent to sales at 146 stores, and six percent of Target’s sales were online, which is equivalent to sales at 122 stores.
Omni-channel retailers are downsizing bricks-and-mortar space and increasing their focus on online sales, but because customers no longer come to them, their biggest challenge is reducing the high cost of transporting products. As a result, retailers’ highest demand will continue to be for space at infill distribution facilities, according to Healy. But the need for resilience is also increasing demand for regional warehouse space where large quantities of consumer goods are stored.