10 November 2015 - News

Warehousing and logistics centre business growth at 24% as online shopping revolution gathers pace

Warehousing and logistics centre businesses have grown by 24% in just one year, with turnover hitting £11.8 billion, up from £9.5 billion last year as the online shopping revolution picks up pace, according to BNP Paribas Leasing Solutions. This is an increase of two-thirds (66%) compared to five years ago, when total turnover in the sector was £7.1 billion.

BNP Paribas Leasing Solutions says that the rapid growth of “fast fashion” as online retailers such as ASOS and Boohoo seek to provide customers with instant access to the latest celebrity looks and the hottest fashion trends is a key factor behind the rise.

With fashion retailers re-stocking constantly instead of designing for two seasons a year, supply chains need to be as quick in responding to orders as possible. This means that at any one time, there is less stock held in store than was traditionally the case, and more stock at different points of the supply chain.

BNP Paribas Leasing Solutions points out that the shift online is intensifying in the food sector too, with supermarket Aldi recently announcing the launch of its new online shopping service.

The faster turnover of warehouse stock means that warehousing businesses need to make more investment in equipment such as forklift trucks to handle the volume of goods entering and leaving. Innovative new technologies are also becoming an increasingly important competitive advantage for both retailers and warehousing and logistics companies. Some of the technologies being adopted include:

Driverless vehicles which rely on software and sensor-based guidance systems to move loads around warehouses and onto road transport.

Computers which can be mounted onto vehicles and hand-held or wearable mobile devices which enable real-time inventory updates and allow interaction with stock-picking or asset tracking systems.

The use of microchipped tags which transmit product information contactlessly through radio waves, rather than traditional barcodes which need to be manually scanned, improving goods handling and tracking.

Tristan Watkins, UK Country Manager for BNP Paribas Leasing Solutions says,

As e-commerce continues to expand exponentially, the warehousing sector is booming.”

“It is also becoming a more capital-intensive business. More, and more sophisticated, equipment is needed to help warehousing and logistics centre to manage rising demand as efficiently as possible.”

“Effective stock management and logistics are now seen as fundamental to good customer service. Consumers expect to be able to find out not just if an item is available, but also how long it will take to reach them, and be able to track it in real time.”

“Efficient warehousing solutions are also crucial to ensuring that the shift online really pays for retailers. Automation in warehousing helps them to improve productivity by keeping headcount and costs low.”

“Online shopping is now a vital channel for all retailers – even discount ones such as Aldi which traditionally relied on low prices to entice shoppers into store. If they want to retain that cost advantage, their warehousing capabilities need to be smooth and seamless.”

Adds Tristan Watkins,

Warehousing and logistics businesses will need to ensure that they stay at the forefront of technological innovation if they are to adapt to fast-changing market dynamics and remain competitive.”

“With many larger businesses tempted to adopt the in-house model of Amazon’s fulfilment centres, the specialist warehousing providers need to demonstrate they offer something more. Having the kind of equipment they need to differentiate themselves doesn’t come cheap, which is why many firms are turning to leasing as the solution, enabling them to ensure they have the most-up-to-date IT systems and machinery, but without significant upfront capital expenditure.”

“Not only does this allow them to upgrade vital essential kit, it also gives them greater scope to invest for the future and consider new innovations which could give them the competitive edge.”