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Warehouses are sort of the unappreciated middlemen of retail supply chain management, serving their part within immense, sometimes anonymous, structures. They provide a stopover between factory floors and store shelves—a role that has only become more important as retailers have expanded their e-commerce and delivery capabilities.
Indeed, the pressure to serve customers across channels has led to a boom in warehousing construction, which continues at a slower pace even as some retailers find themselves with an excess of space. For a quick look at how this space is evolving, here is a rundown of some of the biggest trends in warehousing:
The rise of robotics
The flashiest of these would arguably be the embrace of automation at logistics facilities. While a number of retailers are innovating—take a look at IKEA’s new warehouse drones—Amazon is leading the pack. The e-commerce giant recently opened a facility in Shreveport, Louisiana, that incorporates all its robotics investments, which the company claims reduces fulfillment processing time by up to 25%. In a call with analysts last month, CEO Andy Jassy said that it’s “still early days in how much automation we expect in our fulfillment network.”
Going big
Beyond investments in new technology, retailers aren’t skimping on size either. General retailers and wholesalers nabbed the title of most active occupier of big-box warehouse facilities, which are at least 200,000 square feet, per CBRE. In 2023, the group accounted for 36% of all lease transactions, just ahead of third-party logistics providers’ 35%. This increase in market share comes even as vacancy rates in 2023 doubled to 6.6% at year end.
Subleasing
Meanwhile, for those retailers that went too big, leasing out space has helped cut costs. The Home Depot in October announced that it is leasing out 1 million square feet across four massive warehouse buildings, as it seeks $500 million in cost savings this year. As Prologis noted in a recent report, there is an excess of US logistics space. The development firm’s measure for warehouse utilization in Q3 below normal level at 85%–86%, “reflecting spare capacity.”
Supply chain as a service
Another way to make use of excess warehouse space is to turn your supply chain into a service. That’s what Amazon is doing for third-party sellers. The company is packaging its supply chain services as an “fully-managed, end-to-end” solution that will allow sellers to utilize its logistics network to fulfill orders, whether they’re on Amazon or another platform, Dharmesh Mehta, VP of worldwide selling partner services, wrote in a blog post. “It’s as easy as pushing a button,” Mehta said.