From big units to small spaces
E-commerce and the rise in B2C (Business to Consumer) logistics is not only driving demand for small scale urban logistics, it is also driving demand for very large distribution centres which form a central point of hub-and-spoke distribution models. This is exemplified by Amazon, which utilises some of the largest warehouses in the UK
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In 2018, retailers accounted for more than half of all big box take-up. Activities that used to take place in retail stores are now taking place online and in the warehouse and thus, retailers require more warehouse space. As multi-channel retailers expand the online element of their business, their warehouse and logistics requirements are growing and evolving.
Large retailers with high volumes of stock will need to locate these centralised fulfilment centres some distance from consumers due to the large site requirements and the high cost of land in urban areas. These big box facilities enable retailers or logistics operators to centralise inventory but they also require the support of strategically located urban logistics units in order to facilitate the last mile element of B2C order fulfilment.
Only the very largest retailers can afford to build their own, customised delivery network and logistics infrastructure. Some large retailers may choose to build or own their own fulfilment centres but typically outsource delivery due to the high costs involved.
Most retailers work with a distribution company and outsource last mile delivery in order to reach their customers via their logistics network. Distribution companies account for around 36% of take-up and this increased demand for space is in part, driven through more retailer partnerships and a rise in volume of retail sales goods being transported through their network.
Distribution companies are actively taking space within urban markets in order to expand and improve these last mile delivery networks.