The challenge of 'to the hour' internet deliveries
West Midlands retailers and logistics firms are facing a major shake-up if they are to make the most of the fast-growing market for online shopping.
New research into the impact of e-shopping from logistic and property consultants Atisreal shows that consumers' increasingly busy lifestyles are creating demand for home deliveries 'timed to the hour'.
The study reveals that almost two-thirds of Midlands consumers (63 per cent) buying goods on the internet would choose a supplier offering home deliveries specified to the hour over one that does not.
Tim Suffield, head of Atisreal's Birmingham office, believes implications of the studies go much deeper than online shopping: "These findings will send a shudder through the retail sector and have major implications for the logistics industry serving it. Logistics companies offering the services consumers want will inevitably take retailers' business from those that don't," he said.
Other major changes highlighted by the Atisreal research include a move to local centres where goods can be collected or returned at consumers' convenience.
Over half of consumers in the Midlands (56 per cent) said they would choose a supplier offering such a service for goods bought online over one that did not. This raises the possibility of dedicated 'collection and return' centres open 24/7 as well as local shops and petrol stations offering such a service.
Mr Suffield added: "This is likely to impact on property requirements.
"Two years ago the industry saw a flock to the market for national or large regional distribution centres.
"Given the results of the research we see this leading to a scenario where there will be a greater need for smaller units of 10-50,000 sq ft around major urban centres able to handle both articulated vehicles and smaller local delivery vans.
"For utmost efficiency these units will need to be cross-docked. Articulated delivery in one side - goods broken down and then going out the opposite side of the building in smaller volumes and smaller vans.
"These cross-dock buildings are not currently provided by the market and the challenge will be how to build these units and offer them at competitive rates.
"The reality is that they will be more expensive as providers seek to decapitalise the opportunity cost of developing the overage land when compared to a more standard density building.
"How this rental value is achieved in the first stages of this market is likely to be via some form of gearing mechanism allowing for comparison to more standard density units, but as the class grows and evidence of rents on similar buildings becomes more prevalent enabling owners to gain evidence more easily these gearing agreements are likely to fall away."
Despite the biggest issue in meeting these needs is cost, Mr Suffield believes that those who assess these findings early will do well.
"We have identified a few exceptions that are actively pursuing solutions and should do very well.
"For example, our client DHL Exel is currently working on a new strategy for servicing the increased demands stemming from the growth of home deliveries across their customer base. Companies that do nothing, however, may face a bleak future."
The research found Midlands consumers were the most likely in the UK to choose options that allowed them to combine deliveries from multiple retailers into one package.