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Etailers face pressure from shrinking warehouse space

The logistics operations of UK retailers are likely to come under increasing pressure as the amount of available warehouse space dwindles, a report has found.

Warehouse worker

Warehouse worker

Warehouse worker

The total amount of industrial space in the UK fell to 200m sq ft in 2015, down from a peak of 360m sq ft in 2012, said the report by property consultancy Lambert Smith Hampton.

The firm said demand for industrial space will exceed supply by 25m sq ft by the end of the decade, even if current levels of construction continue. The effect on etailers and multichannel retailers could be severe, Lambert Smith Hampton warned.

Steve Williams, national head of industrial and logistics, said “a significant and unprecedented increase” in the building of warehouse space will be required to ensure etailers can continue to fulfil customer orders.

“Speaking to developers, land supply and availability is causing a major headache. There is fierce competition for land from residential and office buildings. The lack of land available for development is proving problematic.”

He added that the southeast of England was the worst affected because a growing number of retailers are introducing faster delivery times and need distribution centres close to London.

“The Midlands is a good area for reaching a lot of the country, but for retailers to be reactive and to offer these one-hour delivery slots or next-day delivery with a midnight cut-off, it is just not feasible. They have to be closer to London.”

“It is a structural change to the way we shop and the way retailers and logistics firms operate. It will continue to cause a headache if demand [from shoppers] continues as it is.

“More space needs to be dedicated to warehouse construction in the southeast in particular if it is to keep up with current rates of online retailing.” 

Amazon will open a new fulfilment centre in Manchester this autumn, creating 1,000 new permanent jobs over three years.

The site is in addition to the previously announced new fulfilment centre in Coalville, Leicestershire, which is also set to open in autumn and will create 500 permanent jobs over the next three years.

 

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