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E-tailers and their customers facing increasing costs because of sustainability and supply and demand issues

13 05 20 industrial

Research, undertaken by Colliers International, of over 240 occupiers, landlords and real estate professionals with an estimated real estate asset value under management in excess of $900 billion, has revealed that 76 per cent believe the COVID-19 pandemic has accelerated customers being affected by higher prices for their home deliveries in the future.


Changes will be driven by sustainability, supply and demand as well as logistic chain factors and experts warn consumers must be willing to share the added costs with retailers if both are to benefit. However, according to Colliers, this is not expected to occur in the near-term as retailers are currently in the midst of battling to defend their market share pre-COVID-19 with their prime focus on sales.

The poll was conducted live during this Industrial Q2 webinar

Len Rosso, Head of Industrial and Logistics at Colliers International commented: “There is currently a balancing act for retailers and logistics operators between increasing costs, meeting customer expectations and environmental issues which will become more pressurised as the number of people shopping online increases.

“There is no denying that COVID-19 has accelerated consumer preference for e-tailing, both from a convenience and safety perspective. By the end of May 2020, we had witnessed the strongest ever growth in ecommerce sales*, with almost a third of all purchases made online (32.8 per cent) as companies and consumers adapted to coping in this challenging social and economic environment.   As a result, the pandemic has emphasised the importance of logistics as the backbone of our economy and occupiers will have to further embrace consumers changing preferences.

“Yet, while the logistics sector has experienced increasing home delivery demands, the industry is not immune to the economic fallout stemming from the pandemic. This includes increasing shipping costs as a result of the UK Government’s pledge to become carbon neutral by 2050.This will translate into increasing costs related to the adoption of cleaner technologies. which could will be passed on to the customer.

“In addition, retailers are struggling with cashflow issues and strong competition from the largest online retailer, Amazon. How are others able to compete when one company has managed to reach extraordinary levels of efficiency throughout their global supply chain and can offer cheap next day deliveries all year round? In order to survive, some retailers will need to increase their delivery costs or find the cash to reach similar levels of efficiency.”

The survey also looked to establish whether there was enough warehouse and logistics development land to accommodate the future expected growth of last mile deliveries in the UK and the results revealed that 89 per cent of respondents did not believe that there was.

Andrea Ferranti, Head of Industrial and Logistics Research at Colliers International added: “Customers still do not have the same levels of confidence in visiting physical stores and with people working from home, they are less likely to venture out shopping in person, which is putting further pressures on last mile deliveries. While we expect some customers to gravitate back to their old habits and start visiting high street stores, once we are back to some sort of normality, we anticipate this step change will still keep the online share of total retail sales somewhere around 25 per cent in the near-term.

“Finding the right warehouse stock in the right location is one of the biggest challenges for occupiers, particularly nowadays as season peaks are becoming more unpredictable. This supply and demand issue, coupled with spiralling delivery costs and sustainability pressures will undoubtedly have a domino effect, increasing the cost of items for the end-user: the customer. The million dollar question that remains is whether the consumer be willing to pay extra for their home deliveries?”

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Len Rosso

Head of Industrial and Logistics

Industrial and Logistics

London - West End

Len has more than 30 years' experience in the commercial property sector. Having started out as a trainee surveyor in 1983 he moved on to set up Jansons in 1990, a niche agency specialising in industrial in North and West London. In 2004/5 the business was voted Industrial Agency of the Year, this being the first ever non West End national practice to have won this prestigious award. In that same year the business transacted in excess of 3.5 million sq ft which accounted for in excess of 50% of the total transactions for the North and West London market.


Since joining Colliers International, as the Head of the UK Logistics and Industrial Department, the objectives are the same as always, to outperform all competitors whilst providing the highest level of service to all our clients. In 2018, the Colliers International UK Industrial & Logistics team completed over 250 deals totalling over 15 million sq ft. 

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Andrea Ferranti

Director for Industrial Client Engagement

Research and Forecasting

London - West End

Head of Industrial & Logistics Research working closely with the Research & Forecasting team whilst supporting the Industrial and Logistics teams nationally in providing research and advises to clients. Andrea leads on the division’s key research papers which include, but not limited to, the Industrial & Logistics Barometer and the UK Speculative Development Map – both of which have become key benchmark publications highly valued by UK investors and developers alike.

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Hannah Zitren

Associate Director

Marketing & Communications

Manchester

I am responsible for media relations and generating coverage in top tier broadcast and print media. I work across a range of Colliers’ UK & Pan-EMEA business lines advising on their strategic and tactical PR needs.

My role includes:

·         Developing and executing PR plans for the various business lines to help promote their key messages across all aspects of the media - print, broadcast and social.

·          Media evaluation and reporting objectives, targets and successes across the business.

·         Reputation management and crisis management.

·         Media training.

·         Media engagement: setting up meetings with top tier media and various internal spokespeople to continuously expand and build a presence with property and vertical media network.

·         Consistently delivering service excellence, meeting with business heads of a regular basis and trying to influence the research as much as possible to ensure our content has a strong enough news hook.

·         Key campaigns that I work on include MIPIM; MAPIC; REVO; Midsummer Retail Report; IHIF; Cities of Influence in addition to a host of all alternative property sector research reports.

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