Predictive ordering, 3D printing, personal outsourcing, ‘your home as a store retail' and cherry picking are going to revolutionise the UK retail supply chain, as the Internet of Things bites deep into consumer behaviour.
But the international property consultancy behind the report downplay the role of drones. With e-commerce expected to comprise 20% of all retail sales in the next three years, CBRE's Retail Logistics viewpoint highlights that 12.8 billion consumer devices will be able to connect to the Internet of things by 2020.
CBRE predicts the increase in ability of 3D printing and reduction in cost will result in household penetration of circa 25% in the next decade, making it another key innovation for the retail logistics sector. It will result in an increase in the distribution of raw materials but could mean a significant reduction in the number of deliveries to consumers. As the number of deliveries reduces, the role and form of the logistics companies will continue to evolve.
The ‘your home as a store' approach is the developing solution to the growing rate of online returns, which has drastically affected profitability for a number of retailers in the last decade. The shopping concept encourages returns. The retailer sends out a selection of items and allows the consumer to select what they want and send the remainder back. This means that consumers have even fewer requirements to visit a physical shop. This will initially impact the logistics market with an increase in the volume of deliveries, however, after a few orders the retailer will have a better understanding of consumer taste and fewer but larger parcels of tailored products will be delivered to the home.
Personal outsourcing be it to people, or artificial intelligence (AI) and robotics as opposed to companies to undertake deliveries of groceries, clothing, gifts etc. is another trend to watch. Deliveries will become more efficient as people will liaise with other people or AI to agree on accurate times and locations for delivery. This has the potential to improve the efficiency of logistics providers and further reduce the volume of returns.
Andrew Phipps, Head of UK & EMEA Retail Research, CBRE, said: "These initiatives will drastically shape the way both retailers and consumers act in the coming years. There may actually be fewer requirements for traditional deliveries but the positive aspect for property is that there will still be a requirement for physical infrastructure. However, there will be changes in scale, location and the way facilities operate.
Shoppers are unlikely to want slower, more expensive and less efficient deliveries so it is incumbent on the retail logistics industry to continue to adapt in order to meet this demand."