1.5 million square metres added to distribution warehouse centres in past year – as e-commerce booms
• 210 full size football pitches worth of retail warehouse space gained in last year
Large distribution warehouse centres saw an extra 1,500,000m²* in space added last year, the equivalent of 210 football pitches, according to RPC, the international law firm.
RPC says the continued expansion of the UK’s e-retail sector, accelerated by the pandemic, is fuelling the growing demand for space in large distribution warehouses.
The latest figures (2021) show total floorspace for large distribution warehouses in the UK is 36 million m2 , up from 34.6 million m2 in in 2020 (March 31st year end) – a 4% increase.
While large distribution warehouses, used by ecommerce companies and retailers, have increased their floorspace, other traditional retail outlets have shrunk slightly in size. Total retail sector floorspace fell last year to 105.6 million m2 , down from 105.9 m2 in the previous year (2021 vs 2020 March 31st year end).
This however excludes temporarily vacant floorspace. Approximately 14% of all retail space is currently vacant (source: BRC/LDC).
The value of online sales has soared in the UK in recent years. In 2007, annual e-commerce sales were worth £2bn**. Fuelled by Covid, this had ballooned to £28bn by 2021.
With online sales now an increasingly important element of the retail sector, businesses have been forced to adapt their processes to meet changing consumer demands, such as same or next-day delivery.
Companies across all sectors of retail are investing in larger and more advanced distribution centres. Technological innovations have helped streamline the logistics process across retail warehouse distribution centres – with an increasing number of companies deploying robots and AI to improve their operations.
Large distribution warehouses centres are increasingly becoming full of advanced technologies (such as robots which scan, process and transport packages) to speed up the delivery process and reduce costs.
More and more businesses are utilising these types of technology to streamline logistics and to fulfil orders at an increasingly rapid pace, says RPC.
Jeremy Drew, Co-Head of Retail and Partner at RPC, explains that return on investment in automated warehouses can now be very rapid with the CAPEX paying for itself within three to five years. Continued staff shortages are expected to encourage further automation.
Jeremy Drew says: “A growing proportion of retailers’ capital expenditure is now going towards logistics, as shown in the growth of large distribution warehouses.
“Consumers are now demanding more options for delivery of goods, whether it’s for delivery or click and collect. Retailers across all sectors are striving to cut the time from purchase to delivery.
“Just in time, technology can go hand-in-hand with other advancements in the sector, such as that of personalised curation.
"Consumers are now able to make a bespoke order and have it delivered to them in mere hours – a triumph of the modern supply chain.”
*Source: Valuation Office Agency. Year end March 31st. A large distribution warehouse is defined as a distribution centre with over 8,000 m2 of floor space.
**Source: ONS