Driving around town is a much different scene these days, even from just 5 years ago. Downtowns have a whole new look. Something is happening in retail – a shift from traditional retail to e-commerce, and we are seeing the effects on our nostalgic downtowns, the shopping mall and all the people who are there – working to help us.
In some ways, this is a new world for retailers and, in other ways, a continuation of a cycle that began more than one hundred years ago with the advent of home delivery via catalog sales. Eventually malls and big box stores took over and dominated the retail landscape.
Shopping Mall tenants are seeing declining traffic while facing a mix of falling rents and rising costs, many mall operators may have no choice but to close. Credit Suisse predicted in June that 20-25% of U.S. malls could close during the next 5 years caused by a projected doubling of online sales of apparel. These large parcels with flat topographies could become capable of accommodating large Distribution Centers. Roadway infrastructure in these areas were developed to entice suburban shoppers to spend their money at the mall. This infrastructure could now support the shipping or trucking of goods and materials to and from this new distribution or fulfillment center – as long as there is no friction from the surrounding neighborhoods.1
Now, technology has brought in-home delivery back to the forefront in a big way. E-commerce companies are experiencing double-digit growth while traditional retailers are closing stores in record numbers. But it won’t remain that way for long. The one big difference between this evolution and the ones that preceded it is the speed at which things are changing, particularly consumer expectations. E-commerce companies have had the advantage of not being burdened by history. They have been able to develop fulfillment centers based exclusively on the requirements of e-commerce. Now, there is an opportunity for traditional retailers to leapfrog the current state of technology by re-configuring the existing retail network to support hyper-local distribution.
Is there a possibility that outdated malls and downtown retail shops could be effectively re-purposed in their current design and without being torn down; in such a way where brick-and-mortar and digital commerce co-exist? The more retailers enhance the customer experience, the more consumers expect – and the supply chain will have to keep up. Delivering this seamless, friction-less buying experience is not only a retail challenge; it is also a fulfillment challenge. Re-purposing existing or closed retail space as hybrid retail/distribution hubs not only supports faster delivery of orders but supports a hybrid delivery model which gives consumers the option of home delivery or in-store pickup. If supply chain changes go this way, warehousing and material handling will shift closer to end users and consumers. It seems reasonable to expect more jobs in this area. Further innovation in warehouse automation and robotics will accelerate rapidly to meet the demands of e-commerce. If the mall is transformed into a warehouse, has the warehouse become our new retail?
How will retailers incorporate both in-store pickup and home delivery? Where will they obtain the resources and expertise needed to compete in this changing environment? What kind of impact will all of this have on the commercial delivery business?
There are many opinions on what will become of both freestanding retail and the mall model. Some see restaurants and educational institutions filling real estate vacancies, saying food consumption is constant and education consumption is poised to rise. Others see medical offices and expanded entertainment venues such as massive movie theaters geared toward families.
Shaping the Future of Intralogistics for a New Era
Swisslog, member of the KUKA Group / whitepaper
September 11, 2017
The Malling of Logistics Mark B. Solomon, Executive Editor- NewsDC Velocity Magazine / www.dcvelocity.com
1. Text taken from interview with Aaron Ahlburn, Director of Industrial Research for JLL in DC Velocity Magazine, The Malling of Logistics