Is it a fulfilment centre or a store? The future will be all about a mixture of the two: hybrid shops. The Covid-19 pandemic has given stores a new purpose, notes real estate player CBRE.
40% cheaper than central
The demand for e-commerce warehouses is rising noticeably in Flanders, Belgium, whilst in other countries, they realise that mini-warehouses inside stores are often the cheapest and fastest way to reach the consumer. In the US, Target has turned parts of its many stores into fulfilment centres. Delivering from the stores turned out to be more cost-effective than from distribution centres, and it is also the ideal solution for unused square metres. Furthermore, it responds to the trend of buying more locally.
According to real estate player CBRE, these kinds of hybrid stores are the future. In a true omnichannel landscape, not just the online and offline sales channels are mixed, but real estate as well gets flexible roles. After all, a thorough omnichannel strategy does not rely exclusively on one fulfilment type but works with a logistics network where the consumer plays a central role. All types of real estate and partners can be used to achieve this: centralised online distribution centres, Click & Collect points, shipping by suppliers… And also, stores.
A shift caused by Covid-19
Typically, an online order costs the retailer 10 to 15 per cent more than a sale in a physical shop, CBRE calculated. However, the pressure on the system caused by Covid-19, which created higher online demand and higher costs, shows that the physical store has an important logistical role to play. Click & Collect and in-store pick-up are clearly here to stay. Besides, while retailers used to hinge towards having as little stock as possible, having a local stock is proving to be important again: the supply chain is not always as reliable in times of crisis, and immediate availability within the vicinity is a valuable asset for many customers.
What should such hybrid stores look like? In this 3D-model, you can experience it for yourself. Apart from the possible fulfilment centre behind the scenes, CBRE envisions a space at the front to collect orders, without burdening the rest of the store. Of course, consumers can also order or return in the store itself thanks to self-service lockers and kiosks, and, if desired, with the help of employees. How do you find your way around? Shoppers do so via digital signage and a mobile app.
Since the function of the physical stores in a hybrid model is more about the experience than the actual transaction, increasing importance is also put on service and reception areas, such as event spaces for demos, workshops or even individual consultations. Besides, CBRE expects to find media rooms and customisation studios in the outlets of tomorrow. Those spaces allow consumers can get creative with the product and the brand.
Like Amazon and Alibaba
Perhaps the best examples of such hybrid stores at present can be found at tech rivals Amazon and Alibaba. The latter pioneered in Chinese city centres with Freshippo, a store from which groceries get delivered within half an hour and where consumers can eat-in at automated restaurants. The American response is Amazon Fresh, Jeff Bezos’ new supermarket chain that conveniently integrates online and offline. Groceries can be delivered from the store within a day, while voice assistant Alexa can show the way around the store and make shopping lists.
Though, of course, there are challenges. Whether they are complete ‘dark stores’, no longer open to the public, or shared premises, hybrid stores require a new way of dealing with sites, staff and rent. What about the rental price of such premises, for example? And do you hire different employees for order picking than serving customers on the shop floor? Depending on needs, shop outlets might become more or less important. We could perhaps expect new, surprising locations: wouldn’t it be better to set up a store from which you can deliver by bike in a residential area, while a ‘dark store’ might be better off in a less desirable location in the city centre?
