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News release

LAS VEGAS, NV

Warehouses Are Coming to a Store Near You

Ship-from-store shopping is driving faster delivery and increased retail revenues


EMBARGOED: ICSC, LAS VEGAS, May 20, 2014 – Is your local high street set to house some of the most prized warehouse space? The answer is yes, but you won’t see it. A store’s back room will grow in scale and importance as retailers use their brick-and-mortar stores as fulfilment centers and provide package pick-up and ship-from-store services. This new model will reshape the distribution strategy for many retailers as they meld physical stores and e-commerce delivery to compete in the race for e-commerce market share.

“E-commerce is more than changing the way consumers buy—it's also changing the way stores operate,” said Kris Bjorson, Head of Retail/e-commerce Distribution at JLL. “Customers expect a seamless shopping experience where they can choose the most convenient way to order, receive and return their purchases, and retailers are responding with a ship-from-store option. More stores will be used as mini-distribution centers where they can fulfil online orders in-store.”

According to JLL, 45 percent of Internet customers for brick-and-mortar retailers utilize in-store fulfilment, making the role of the store essential to a retailer’s distribution strategy. Using ship from store will give the customer more flexibility, faster delivery times and lower shipping costs. And for retailers that already have prime real estate in the form of brick-and-mortar stores, a huge competitive advantage against e-tailers that are without a physical presence on our nation’s main shopping streets. Retailers will also experience lower transportation costs and increased inventory turnover, which could in turn enable them to bypass markdowns.

“The ship-from-store model not only increases delivery speed but also creates a store pick-up option that often brings the e-commerce shopper back into the store, creating a new sales opportunity that didn’t previously exist,” said Lew Kornberg, Head of Retail Tenant Representation at JLL. “This revenue opportunity is the beauty of omni-channel; it unifies the brand’s physical and virtual/online storefronts and marketplaces, and creates new customer opportunities.”

Ship from store adds to a retailer’s distribution network
Retailers’ omni-channel strategies are not only driving reconfigurations at the store level, but throughout the entire supply chain. Depending on specific regional needs and the right IT investment for inventory visibility, a retailer may use a number of industrial and retail facilities. While all brick-and-mortar retailers replenish their store inventories from distribution centers (DCs), some will also invest in, or tap into their e-fulfilment centers (ECs). Other retailers will use existing store inventories to ship directly to shoppers (in addition to their ECs), while some may add a new type of facility such as an urban logistics center or cross-dock.

Click here for a ship-from-store model.

“There isn’t a one-size-fits-all strategy,” said Bjorson. “But we expect stores to become an important part of the customer fulfilment strategy supporting larger DC and EC networks. Among JLL’s brick-and-mortar clients with ship-from-store capabilities, 10–15 percent are using this option, and there is strong interest in growing the channel.”

“As more retailers evolve their ship-from-store strategy, we anticipate growing demand for both industrial and retail space in the form of ECs with a broader inventory offering and up to 15 percent of fulfilment space inside traditional retail locations.”

For more info, please click here.

JLL’s Retail Group serves as the industry’s leader in retail real estate services. The firm’s more than 850 dedicated retail experts in the Americas partner with investors and occupiers around the globe to support and shape investment and site selection strategies. Its retail specialists provide independent and expert advice to clients, backed by industry-leading research that delivers maximum value throughout the entire lifecycle of an asset or lease. The firm has more than 80 retail brokerage experts spanning 20 major markets, representing more than 100 retail clients. As the largest third-party retail property manager in the United States, JLL’s retail portfolio has 305 centers, totaling 65.7 million square feet under management in regional malls, lifestyle centers, grocery-anchored centers, power centers, central business districts, transportation facilities and mixed-use projects.

For more news, videos and research from JLL’s Retail Group, please visit: www.jllretail.com

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. For further information, visit www.jll.com.