Abandoned retail stores, the places where we’ve stopped shopping, but used to love to, are now being converted into fulfillment warehouses.
The retail world was in a state of transition even before the global pandemic dealt out the latest blows. The trend began back in 2010 when storefronts began closing due to more and more E-commerce sales, and that my friends was the start of the fabled retail apocalypse.
Forbes quoted that more than 10,000 stores are set to close in 2020 including J. Crew, JCPenney, Pier 1 Imports and K-Mart due to bankruptcy. Many other retailers, across all sectors, are closing stores to slash debt increases including Party City, AT&T, CVS, Macy’s and Starbucks.
Industry analysts agree that clunky E-commerce experiences, decreased in-person shopping at brick and mortar stores, and excessive pre-pandemic debt are the differences now between retail coasting and crashing, even with consumers beginning to be more comfortable spending. Retail Dive reported that the U.S. Department of Commerce, Census Bureau estimated an 11% increase in retail sales for June 2020 over June 2019 and a 36% surge in E-commerce.
Those two current retail truths, more empty retail space and consumers turning to E-commerce more and more have been driving the trend of retailers converting shopping for shipping–meaning they will now fill their store sales floors with inventory to fill online orders.
A recent in-depth look at one such conversion of Sam’s Club in Lumberton, N.C. by the Wall Street Journal revealed that the switch helped the Walmart subsidiary better compete with E-commerce giant Amazon throughout the southeast and wound up creating more and better jobs than the retail store did. According to CBRE research in 2019, similar to Walmart/Sam’s Club conversions are happening in Chicago, Kansas City, Memphis, Milwaukee and Tampa.
The current in-person shopping climate of face-covering requirements being implemented and revoked seemingly weekly, coupled with the extended time period consumers have been stuck inside has fostered new spending habits that don’t seem to be changing, even after the all-clear from the government.
McKinsey surveyed US consumers for their sentiment during the coronavirus crisis. It revealed a shift to spending mostly on essentials purchased online, value-based choices and less brand loyalty, and the indication that consumers are settling in to continue these spending trends.
Retail giants certainly benefit from converting their superstores into warehouses as they’re strategically placed to begin with and therefore can offer fast delivery into the same neighborhoods they previously serviced as well as surrounding areas. All eyes are now on shipping logistics, from incoming inventory, to parcels heading out–and the reverse logistics of consumer returns. Consumers are expecting seamless returns as well.
As mid-size retailers join this trend to use their space in a new manner, and consumers continue to shop online, parcel shipping becomes even more critical. Shipping costs will shift and parcel logistics should be reevaluated. As parcel volume increases, so too exponentially do the parameters and variables in your Carrier contracts. Thus for many, as Q4 is only around the corner, now is an optimal time to negotiate your contract with the parcel Carriers.