Five Things That Will Change U.K. Retail Logistics — And Drones Aren’t One Of Them
Predictive ordering, 3D printing, personal outsourcing, "your home as a store retail" and cherry-picking are going to revolutionise the U.K. retail supply chain, as the Internet of Things bites deep into consumer behaviour.
But drones? Not so much. CBRE's Retail Logistics viewpoint downplays the role of drones, despite strong interest in airborne delivery from both Amazon and Google. CBRE rates them a low-impact medium-term prospect.
CBRE said the result of the five trends below could be fewer deliveries, and lower logistics property costs as pressure eases to locate warehousing on expensive close-to-urban sites.
Around 5.2 billion consumer devices will be connected to the Internet of Things by the end of this year, rising to 12.8 billion by 2020. The result will be a mass of data about what we need and when we need it. The washing machine knows when you need washing tablets, the fridge when you need milk and the toilet when you need toilet paper.
Knowing in advance who will need what when will make the supply chain more efficient, meaning more long-range planning and as a result less need for just-in-time warehouses close to consumers.
“We may see demand for logistics facilities in as yet underutilised and more remote areas that are less expensive than assets close to major cities,” CBRE said.
So far 3D printing has promised a lot but delivered not so much — but that is all going to change. Since 2016 it has been possible to print solid metallic objects, and in Russia they printed a house. The technology will become cheaper and we may be able to print lots more of our own purchases at home. CBRE estimates 25% of households will have a 3D printer in the next decade. This could mean fewer and smaller warehouses for the goods we print ourselves — but bigger bulkier home deliveries of the stuff we print on, like plastics, metals.
Your home as the store
The curse of the return floppy has troubled U.K. retail logistics for years. The return floppy — the non-cardboard clothing package returned to the retailer because what is inside did not fit — is a massive drain on profits because it is expensive and complicated to return items to stock. So how about devising a supply chain that actually expects returns? The retailer sends out a selection of items on a theme, for example 10 cocktail dresses, or 15 pairs of shoes, and expects nine dresses and 14 pairs of shoes to come back. Chapar, Spoke, Enclothed, StichFixed and Barkbox are already pioneering a system that probably means a short-term spike in deliveries but a long-term trend toward fewer — but larger — parcels.
Why not let somebody else do the shopping? You can already do it in London, thanks to gents outfitter Chapar, but CBRE predicts a tipping point at which it is cheaper for many people to employ someone to do it rather than shopping themselves. The results will be the growth of personalised concierge services that undertake deliveries of groceries, clothes and gifts. CBRE said this has the potential to reduce the requirement for deliveries via logistics providers and should reduce the volume of returns.
Copying and cherry-picking innovations
Drones, robots and clever AI require huge upfront capital spending that most supply-chain businesses cannot afford and do not have the skills sets for. That means a few well-resourced businesses will lead the way with a large pack of followers copying and cherry-picking innovation. The result will be a restructuring of the logistics business.