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With the competition for land in and around cities fierce, it is becoming harder and harder for online retailers to find last-mile logistics facilities.
One solution that is often posited is online retailers taking over struggling retail properties that are being vacated by retailers hit by the growth in online sales. Retail warehouses are often proposed as an ideal solution: they are large, simple boxes, and usually have good road links and delivery areas that could be repurposed for delivery vans.
The prediction has been around for some time, but there have been few or even no examples of such conversions in real life. Until now.
Amazon has emerged as a bidder for a tranche of stores across the U.K. that struggling DIY retailer Homebase is looking to shed as part of a restructuring process, the Sunday Telegraph reports.
The Telegraph said Amazon was an “aggressive” bidder for some or all of the 42 stores that Homebase is trying to exit through a company voluntary arrangement. It has 242 stores in total.
It will not be easy for Amazon, or indeed any online retailer, to convert retail warehouses to distribution hubs. The Times points out that local councils will not necessarily be keen to grant the planning permission required to convert retail assets to logistics. And the rental equation does not necessarily square yet — rents on retail warehousing are around £30/SF whereas those for last-mile logistics are £15 to £20/SF.
Australian firm Westfarmers bought Homebase for £340M in 2016 but sold it for £1 to Hilco earlier this year, taking a £584M write down.
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