Who will seize the opportunity to turn stores into fulfillment centers?
Joanne Heyob, VP, Operations Strategy & Design, WD Partners
Through a special arrangement, what follows is an excerpt of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.
Once bustling retail hubs are now harboring thousands of square feet in unused space up for the taking. Who is vying for this real estate? Companies prioritizing (and expanding) e-commerce.
Amazon.com played a huge role in the collapse of shopping malls and is now acquiring the space to bring millions of dollars in inventory closer to both rural and urban consumers.
So, what can Amazon’s competitors do to keep up?
The easiest and possibly most obvious solution is to turn portions of their stores into mini-distribution centers. Buy online, pickup in-store is only the tip of the iceberg in terms of the opportunities retailers’ physical locations provide when it comes to getting products in the hands of consumers.
To put it bluntly, the back of the house in stores needs an extensive reorganization. These areas haven’t been truly updated since the nineties, and a change in supply chain is essential in the battle against the successful variety of online shipping methods and consumers’ demands for minimal or free shipping costs.
Becoming a partial distribution center can take your store from a place where customers solely come to pick up their products into a mass of inventory that can be used in ship-from-store efforts, streamlining the process and putting products in customers’ hands faster than ever to increase brand loyalty.
The inventory and consumer data is already available, the space is already there and the existing employees can be easily transitioned from associates to stockers.
The most halting reasons more haven’t implemented a mini fulfillment center strategy are concerns about whether it will work and how ROI will be measured.
Walmart and Kohl’s are among those embracing in-store fulfillment capabilities that allow shoppers true freedom when it comes to receiving and returning their items.
Target has also taken this leap and increasingly uses its stores to cater to all aspects of fulfillment, whether a store trip, drive-up order, in-store pickup order or traditional e-commerce purchase. Brian Cornell, CEO, describes the transformation as “placing our stores at the center of a modern network design to deliver an unmatched combination of convenient fulfillment options.”
- Stores as Fulfillment Centers – WayfinD
- How Many More Store Closures Are Expected in 2019? – National Real Estate Investor
- Retail real estate finds new life as warehouse space – Supply Chain Dive
- Apocalypse to Relevance – WD Partners
- Total number of Walmart stores in the United States from 2012 to 2019, by type – Statista
- Ship From Store: Retail’s Necessity For Survival – ProShip
- Target puts stores at the center of its fulfillment strategy – Supply Chain Dive
- As competition heats up, retailers focus on implementing ship-from-store capabilities – Digiday
DISCUSSION QUESTIONS: Do you see a significantly greater role for stores to be used as fulfillment centers? What’s holding back the conversion of space? Where are the major pain points in using stores for fulfillment?