Over the last year, retail has undoubtedly experienced some challenging times from an investment perspective. Changes to both external and internal market conditions, largely fueled by the pandemic, have resulted in fewer investors willing to invest in retail. In fact, a recent survey by INREV reveals that only 29 per cent of institutional investors have plans to invest in retail in 2021.
Logistics, on the other hand, has experienced great growth in the past year, thanks to the surge in online retail caused by the forced closure of non-essential retail stores and lockdown restrictions. As a result, this booming industry has become a highly sought after asset class for investors, with 84% of institutional investors planning to invest in logistics this year.
Despite these statistics, investors don’t necessarily have to choose between retail and logistics. These two assets can work in harmony to yield better outcomes for workers, consumers, and investors.
Read on to find out more.
Combining Retail and Logistics
Customer experience is at the heart of winning back retail investors. Offering customers in-store experiences that they cannot experience online is key for repeat in-store visits. Whilst online shopping is easier, it doesn’t provide customers with a unique experience that they can associate with that retailer or brand. This is why it’s vital for retailers to adapt their physical space to create a one-of-a-kind experience for their customers.
One way to do this is to add a mixed-use element to the asset so customers can experience different things all in one place. Some common mixed-use elements which have been added to retail assets include restaurants, cinemas, gyms and even spas/wellness centres.
So where does logistics fit? Logistics space could be another way to complement the retail experience. For example, shopping centres (typically a mixed-use retail space) could benefit from having small logistics units, whereby users could buy from physical retail stores and have their shopping delivered to their homes that same day. This saves shoppers having to carry bags, making it easier and more convenient to shop.
Solving The Environmental Issues Of Returns
Logistics could also offer an ideal solution to the environmental problems caused by returns. There has been a greater focus on the environmental impact of deliveries, returns and packaging in recent years from pressure groups and the government, this is only expected to continue. Therefore, retailers must find ways to lessen their impact.
Combining retail and logistics could be one solution. Putting fulfilment centres in retail locations where customers can collect, try on and return items could help lessen environmental impact. This would also result in more footfall, encouraging retailer success.
It’s no surprise that online retail has experienced great growth over the past 12 months. Rates of online shopping increased dramatically during 2020 (at one point, internet sales made up more than one-third of all retail sales), and they’re not showing any signs of slowing down. Therefore, it’s important that retailers don’t forget the importance of their online stores when trying to attract investors.
Retailers should ensure that their online shopping process is streamlined, offering a simple, time-saving experience. Customers need more than just a well-designed website and fast checkout, they also need to receive their orders in a timely, cost-efficient manner. Their purchased goods should be transported securely so they receive them in top condition.
How Online Retail And Logistics Can Work Together
This is where logistics comes in.
If and when businesses can partner with reliable logistics providers (including 3PL and 4PL providers), it’s much easier (and more cost-effective) for them to get products packaged, shipped, and delivered to their customers.
The easier it is for retailers to partner with logistics providers, the better off them and their customers will be. The logistics providers, of course, also benefit from more consistent work and clientele.
The Future of Logistics and Retail
To survive, the retail industry (as well as those working in it) must be willing to adapt and evolve.
Whilst retail may not be like it used to be, it will evolve into a more mixed use of retail where we will see more hybrid spaces. The more that retail and logistics can come together, the more likely both are to survive and thrive while also providing better customer experiences and lessening environmental impact.
If you’re looking to invest in retail space in London, get in touch with our commercial property team today on the contact details shown below. We will be happy to discuss available investment opportunities.