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The effects of stockpiling on warehouse space

John Perry, MD at SCALA, explores how warehouse space will be impacted by stockpiling – particularly in light of the pressures brought on by multichannel retail, Brexit and coronavirus. Now is the time for logistics to optimise the space they already have.

The rise of multichannel retail over the past two decades, allowing consumers to shop anytime, anywhere, has meant that retailers have, in turn, had to expand their distribution networks in order to better accommodate fluctuating demand. This has contributed to a substantial spike in demand for warehouse space across the country, meaning that storage space is more limited by the day.

However the recent coronavirus pandemic is now too having an impact as it’s causing some businesses to begin stockpiling goods. This was also the case in 2018-19 due to ongoing Brexit uncertainty, but stockpiling has arisen again due to businesses’ fears around shortages of components from China through their supply chains, as well as increased consumer demand for goods such as hand sanitiser.  

These goods, which naturally need to be stored somewhere, are highly likely to exacerbate the already-serious warehousing ‘crisis’ and shrinking storage space issue, which may lead to substantial problems for businesses further down the line.  

So, how can businesses get ahead and address warehousing space shortages?  

Start on the floor

Buying up additional warehouse space is of course an obvious longer-term solution. However, many businesses – particularly SMEs – will not have the capacity or working capital available to invest in this, particularly as space scarcity drives up prices. Therefore it’s important for companies to explore ways to make the best possible use of the space they have.   

Particularly as floor space fills, spaces located higher up – such as those above dispatch areas, loading docks and picking areas – can all be used if necessary. This can help make incremental gains right the way through to creating half again as much space as before, according to certain studies.  

Businesses should also look to see if there are any ways in which the layout of their warehousing space can be adjusted to create additional space. Increasing storage density, reducing aisle widths and varying beam heights are all simple, easily-actionable examples of this.  

Current solutions 

One arguable positive of the coronavirus outbreak is that it may incentivise businesses to once again look at their available warehousing space and realise it is not enough, particularly for businesses that have ambitions to grow. As such, we would hope that developers will in turn see the opportunity to provide more warehouse space for those businesses in a position to take it, which is likely to pay dividends for those making the investment further down the line.  

While we’ve seen a number of innovative space-creating solutions mooted over the years – Amazon’s patent filing for underwater aquatic warehouses being a particularly notable example – this will not be plausible for the vast majority of businesses that do not have the capital to spare on unproven solutions.  

However, an interesting – and, more importantly, realistic – solution revealed itself at the beginning of this year. Ravenside Retail Park in North London made headlines when, rather than closing its doors, as has too-often been the case with retail spaces in recent years, was sold to warehousing company Prologis in a £51.4 million deal.  

Rather than closing, the 128,000 square-foot space will continue to operate as a retail park for the foreseeable future and then - environmental and community interests allowing – be converted into warehouses to better enable retailers and other businesses to fulfil online orders.  

While this is the first time a move such as this has seen widespread media pickup, the signs would suggest that forward-thinking decision-makers in the retail sector have been working towards this end for quite some time. Indeed, a recent survey from Savills found that the majority of retail landlords are considering ‘repurposing’ their retail property portfolio to better cope with the ongoing volatility being experienced by the sector.  

Subsequently, we are likely to see more and more businesses, particularly those that cannot afford to invest in building entirely new warehousing facilities, looking to adapt existing properties into storage space. This will allow companies to fulfil orders more effectively and provide a higher level of service – a crucial point of competitive difference as customer expectations around deliveries and fulfilment continue to develop.   

The future

Going back to our previous point on how businesses can make the most of their available space, it is also worth considering how emerging technologies, such as automation, can be utilised to further improve warehouse space utilisation, layout and flow. Indeed, while roughly 4,000 warehouses were automated as recently as 2018, research suggests that, in just five short years, this number will have increased twelve-fold.  

Automated systems can accurately and efficiently fulfil complex orders, allowing businesses to meet tight delivery windows – which are commonly the norm amidst consumers increasing appetite for online shopping and swift deliveries – without stockpiling goods and taking up space unnecessarily.  

Overall, the ongoing coronavirus pandemic should act as a telling reminder that unforeseen circumstances can arise at any time, meaning preparation ahead of time is key. Particularly as warehouse space continues to shink, the businesses best able to deal with potential shortages and stockpiling will be those that look to the future and begin planning ahead meaning that, no matter what the future may hold, businesses will be able to accommodate fluctuating demand, grow at scale and continue to meet evolving customer expectations. 

John Perry reports.

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