Chicago -- A new report by Jones Lang LaSalle found that with 92% of retailers selling online, 68% maintaining brick-and-mortar stores, and 64% utilizing catalogs, retailers are embracing a multichannel approach to meet buyer expectations and battle for market share.
The report, Retail 3.0: the evolution of multi-channel retail distribution, also found that nearly 80% of retailers sat that online sales have increased in the past five years with some reporting increases of 25% or more. This has forced retailers to change the traditional distribution network for their e-commerce models.
The influx of e-commerce and m-commerce (mobile) has revolutionized the retail sector, said JLL, as smart retailers are tapping multiple channels to sell their merchandise.
“With multichannel selling comes a major focus on retail distribution, and how to get from ship to shore to store or your door as quickly and as efficiently as possible,” said Kris Bjorson, head of Jones Lang LaSalle’s Retail/e-commerce Distribution Group. “Traditional retailers must support the delivery of merchandise and manage both in-store and online inventories and shipments at a frenetic pace against the backdrop of intense competition from pure e-commerce rivals.”
Retail chains are finding it more cost-effective to increase online logistics operations rather than open more traditional stores, found the report, which requires an entirely different kind of distribution model. Therefore, retailers are evolving their regional distribution networks with the addition of e-commerce distribution centers, which can cost three times as much and involve three times as many employees.
“Considering proximity to key customers, tax incentives, sales tax and the availability of local labor are vital to retailers when searching for the right location for their e-commerce distribution centers,” said Bjorson.
The global spread of technology into multi-channel retailing has also opened up new markets in both developed and developing countries. While online sales are growing in the United States and abroad, China and Hong Kong are leading the way. “China’s consumers are fast embracing e- and m-commerce and are spending the most money online,” said Bjorson. “Yet as fast as the technology is expanding commerce, the logistics infrastructure for retailers is still emerging.”
The inability of domestic logistics service providers to fulfill high volumes of customer parcel shipping at low costs and within a reasonable delivery timeframe dramatically impacts the direct-to-customer channel, said Bjorson. Retailers have had to establish their own distribution networks or rely on outsourced express shippers. There is an opportunistic gap in the market, according to the report findings, for third-party logistics companies and investment in industrial real estate infrastructure.