The idea of a retail warehouse stems from the gradual decline of available warehouse space in the United States. According to the Wall Street Journal, retailers across the country are experiencing a shortage of available warehouse capacity. Effects of decreased capacity range from an inability to meet e-commerce demand to delays in order fulfillment. However, a new trend is occurring as developers across the country are making retail-to-warehouse conversions, and supply chain leaders need to understand what a retail warehouse is and how it can impact profitability and productivity.

Little to No Warehouse Vacancies Present Major Problems for Growing Companies

The fundamental problem associated with retail-to-warehouse conversions, also known as retail warehouses, stems from the recent growth of retail and reduced growth of warehousing. Although malls across the country are starting to feel the effects of the e-commerce evolution, shuttering thousands of stores, explains Lauren Thomas of CNBC, the problem remains. Retail centers are now vacancy eyesores that corporate real estate providers are struggling to know how to market. Also, retailers are being forced to rethink their current use space and consider how a retail warehouse could translate into an opportunity to meet the growing demands of their consumers and augment their existing supply chain network.

Retail Warehouses Are Converted CRE Space to Meet E-Commerce Demand

According to David Sparkman of Material Handling & Logistics, a retail warehouse offers an advantage to companies looking for more warehousing space to meet e-commerce demand. Retail spaces naturally possess the power of being available, and most of the conversion projects currently underway are located in markets where the vacancy rate for existing warehouse space are 5% or less. In addition, many centers are facing stiff demand from corporate real estate providers to recoup a profit. As a result, traditional retail centers that have sat abandoned for years or months may be available at rates lower than conventional industrial lease rate.

Benefits of a Retail Warehouse for E-Commerce Fulfillment

According to Matt Leonard via Supply Chain Dive, the retail warehouse is an excellent opportunity for companies looking to embrace the e-commerce revolution and expanded supply chain. Some of the top benefits associated with these conversions and increasing prevalence of retail warehouses in urban areas include the following:

• Existing facilities are a blank canvas.
• Augment local and regional store distribution centers.
• Freestanding facilities offer dock doors, clear heights compatible with industrial use and ample parking.
• Better competitive advantage for omnichannel needs in niche markets.
• Redevelopment of struggling urban areas, such as those where Walmart left town.

Tap Into the Potential of Retail Warehouses With Scalable Warehouse Platforms

Retail warehouses are the next way companies will expand warehouse space and drive delivery windows down for consumers. The industry will feel the effects as more companies look for warehousing space and turn to former retail spaces for utilization. Of course, taking advantage of retail warehouses will require the expansion of current management platforms, as well as the integration of existing platforms, to empower scalability and prevent data silos from arising. Find out what your organization needs to do to take advantage of these trends towards converting retail spaces to warehouses using modern supply chain systems by reaching out to the experts at Veridian.