Over the past decade supply chain optimisation and innovation have transformed retailers’ ability to respond to fluctuations in demand, pricing and customer expectations – except in one, key area: warehousing. While every other aspect of the logistics model is agile and responsive, retailers are, in the main, still constrained by five, ten, even 15 year warehouse leases.
The inflexibility of warehouse deals becomes ever more stark given the incredible flexibility achieved through every other part of an intelligently optimised supply chain. Retailers are able to respond incredibly quickly to changes in exchange rates, demand and market opportunity by shifting suppliers and adapting logistics routes – yet the warehouse operations are still fixed. The result can be huge swathes of expensive, empty space; or business opportunities that cannot be grasped due to a limitation of available space.
This inflexibility within warehousing is also in clear contrast to the flexible business models adopted across other areas of commercial and residential property. From short shop leases, including pop-ups, to ‘pay by the desk’ office space, or even Airbnb, the way organisations and individuals can utilise property has changed, radically. Surely it is time to apply similar thinking to the warehouse market.
Cue warehousing as a service. This innovative new solution is revolutionising the way in which retailers consider warehousing space. Essentially, the service matches a retailer’s demands to available spare space and, from size to location and duration, the entire process is totally flexible – a retailer can commit to as little as one month and payment is on demand, on a ‘pay as you go’ basis. In addition to storage, this on demand model also provides access to a raft of other warehousing services, including the movement of inventory, which can also be scaled up and down as required.
This whole approach transforms the speed with which a retailer can access new warehouse space. Rather than the tortuous year spent locating and negotiating a new lease, a retailer can actually locate, secure and move into a warehouse in just one week. By setting a minimum and maximum requirement, a retailer can then scale up and down the amount of space – and supporting logistics services – as required, in response to seasonality, customer demand or other factors such as Brexit. Not only is the business more agile, but costs are now directly proportional to sales in every area of operation.
And what about trialling new products or markets? Rather than long drawn out research projects, why not sign up for a small warehouse space in a new location for a month or so, and try the new product on the ground? The concept can be on the market within weeks, rather than months and the up-front investment is minimal. If it works, and product / market fit is achieved then retailers can start thinking about scaling up; if not, they can quickly try something else or move onto the next idea.
And let’s face it, in an Amazon dominated retail environment, the fluidity and dynamism of the logistics model is becoming one of the most critical aspects of success, underpinned by a raft of pay-as-you-go, ‘as a Service’ offerings and delivery times becoming shorter and shorter. Warehousing should be no different – especially given the incredible pace of change affecting retailers globally.