Weekly Newsletter Feb 08, 2021

8 Feb 2021

10 Trends for 2021

#6 Hiperlocal
 

One immediate impact of COVID-19 lockdowns was an unprecedented spike in online shopping.  The emergence of new generations of retailers and consumers has put pressure on all aspects of the supply chain.  It has also reignited debates around ‘Last Mile’ delivery and the implications of e-commerce for physical retail.
As we have seen in many other facets of life, the current pandemic has intensified existing trends in the retail and logistics sector.  E-commerce was already expanding in most markets but is estimated to have expanded by more than a third during 2020. Particularly noteworthy is not just the rate of growth, but the expansion of demand into areas that were previously dominated by in-store shopping.  Many consumers have been forced to shop online for essential goods, particularly food and groceries – often for the first time, forcing many supermarkets to ramp up their delivery capabilities.
Retailers of all kinds, including local independents with little or no experience in online sales, have scrambled to adapt.   Consumers continue to demand speed of delivery and convenience. They want ease of ordering, rapid order fulfilment and free or cheap delivery.  The traditional model of regional distribution centers isn’t available to many retailers, and even major players have struggled to keep up with the increased demand and speed requirements of the current consumer., The result is a growing requirement for localized stocking and order fulfilment closer to the consumer, that is playing out in several ways:

“Dark” format stores are expanding, with kitchens, and retail units used for back end order fulfilment designed for curbside pickup or delivery, with no traditional “front of house” consumer-facing aspect.
Existing retail space, which was either redundant or surplus to requirements, is being repurposed to facilitate “click and collect” models.  Retailers are adjusting the “front end” consumer-facing component of the store for showroom or experiential space to complement traditional browse-and-buy activity.   In-store staff, coupled with technology investments are being channelled into order picking and back of house fulfilment activities.  This is in addition to sales and stocking.,  
Retailers who had limited previous online capability typically lack the infrastructure to fulfil internet orders and are having to piggyback on existing last-mile solutions.  They are partnering with local delivery specialists such as Deliveroo, with Uber trialling its Uber Direct model, to provide localised delivery services for retailers. In the U.K., grocery retailers made use of the Uber Eats service to help meet the surge in demand at the height of the pandemic.
Especially for essential items, micro-fulfilment centers are being established to provide rapid stock replenishment to groups of stores, particularly in urban environments where multiple outlets exist but in-store space for stock is limited.
While some of this activity may fade away as the impact of the pandemic recedes, many of the changes we have seen in consumer behaviour are likely to endure.  What seems certain is that the explosion of experimentation with hyperlocal delivery methods will impact future thinking on local supply chains.  Retailers looking to compete with major online players such as Amazon will need to remain focussed on constantly driving down costs and reducing fulfilment times.  This will become a process of continual trial and error, with frequent testing of new concepts and partnerships to quickly gain scale or pivot to a new strategy.   Last-mile and urban logistics will be a key battleground.

This has significant implications for “brick and mortar” retail, not all of which are negative.  Physical retail is far from dead, but we are clearly seeing a continued rationalization of space by retailers who were already overexposed in terms of physical footprint, as well as business failures where retailers have failed to adapt.  Both processes have been accelerated by COVID-19, but they were already well established.  More positively, the pandemic has also stimulated the transformation of many retail businesses, within which physical stores still play a crucial role and have a demonstrable “halo effect” as part of an omnichannel strategy.  
Traditional stores were always a combination of the retail and logistics functions; recent trends suggest a renewed recognition of this dual role.  As surplus retail space becomes cheaper and more available, innovations around hyperlocal delivery will be a key part of reimagining the future of retail.

Avison Young creates real economic, social and environmental value, powered by people.

Israeli commercial real estate deals

  • MEDI POWER (OVERSEAS) PUBLIC CO. LTD to buy 5 commercial centers in Philadelphia (721,182FT2) for $115 million.
  • RONSON DEVELOPMENT SER to buy 100,000 Sq. M building rights in Warsaw for €33 million.
  • More News

Commercial Real Estate Opportunities

  • For sale  2,200M2 commercial building in Petah Tikva, in the center of Israel.
  • For sale two floors (2,300M2) out of five, in a commercial building in the center of Tel Aviv.
  • For Sale in Tel Aviv 600M2 floor, (one out of 4) + 13 parking spaces.

  • For lease, in Holon, 1,500M2 office space ready to occupy 
  • For lease, in Alon Tower Tel Aviv 156M2 office space, high floor 5 rooms.
  • For lease, in  Or Yehuda, 600M2 office space ready to occupy.
  • For lease, in  in Petah Tikva 1,700M2 office space ready to occupy.
  • For lease, in Kadima, commercial units in a new neighborhood commercial center.
  • More News