Selling Warehouse Space in a Post-Covid World

We are in unprecedented times.  After the pressures of stockpiling for Brexit, the warehousing industry now faces a new challenge fuelled by the Covid-19 pandemic.  Never in our lifetimes have we experienced a global pandemic like Covid-19 and its impact will surely be felt for many years to come.  Over the past 3 months, we’ve seen a significant shift in our economy.  Businesses across every sector have had to rapidly adapt to the new environment to survive.  

Consumer buying habits have, according to Logistics Manager, changed as a result of the Covid-19 pandemic.  Over the past few months, the e-commerce market has continued to grow as high street stores are unexpectedly forced to close amidst the peak of the virus resulting in consumers heading online to make their purchases.  The pressure is on for the logistics industry to not only adapt to this change in purchasing but also to be able to meet the high demands of this market more than ever.  Home and next day deliveries are becoming ever more important in the quick pace of e-commerce as digitalisation becomes an essential factor not just in how consumers make their purchasing decisions, but in the supply chains to fulfil this growing market.   
Over the past few years, the British high street has already suffered a decline in retail footfall as a result of changing consumer buying decisions.  In 2019, the proportion of all retail shops that stood empty reached 10.3%, its highest level since January 2015, and 2018 saw the loss of huge retail chains such as Toys R Us, Maplin and Poundworld.  Covid-19 is now the catalyst for driving the decline of the high street even quicker.  So, what does this mean for the logistics industry and, in particular, for warehousing? 

The growth of e-fulfilment specialist warehousing facilities were already on the rise, with an estimated 20% of all retail sales in the UK during 2019 made online (according to Statista).  Furthermore, in March 2020, just over 1.5 billion British pounds were spent through internet retail sales.  Alongside this, in 2019, the UK experienced the highest value of industrial and logistic real estate investment in Europe.  Now, this demand is expected to rise even further.  This means huge increases in requirements for warehousing space, making the need for prime industrial and logistic warehousing across the UK prominent.  

Over 30% of warehousing enquiries in 2019 involved fulfilling an e-commerce demand.  With this market continuing to expand, selling warehouse space that can meet the needs of e-commerce is set to become of increasing importance.  This is alongside the need to digitalise operations as much as possible.  With expectations that there will be a rise in home working after Covid-19, allowing your customers to access information online will be essential for adapting to these new ways of working. Furthermore, according to Financial Express, the concept of consolidating goods at one warehousing facility or location is also being challenged.  With future contingency planning showing that it will be more effective to store goods at multiple locations if a particular area is locked down due to Covid-19 or any other event.  This is together with a move away from just-in-time (JIT) inventory management.  With supply chains across the world being impacted by different country shut downs, there has been a need to increase stock to mitigate delays.  This indicates that the importance of location when selling warehouse space will become a greater determinate, as businesses seek to overcome potential regional shutdowns whilst holding higher volumes of stock. 

However, one bid and tender element that is not likely to go away any time soon is the subject of price.  Your pricing is a significant factor in whether or not you win a contract.  When selling warehouse space, your price must represent value for money.  Under-pricing can be viewed as a lack of quality of the solution, whereas over-pricing is likely to make you one of the first to be eliminated from the procurement process.   

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