This E-Commerce Giant Thinks Supermarkets And Department Stores Are The Future Of Logistics Property

The world’s biggest e-commerce firms are not really thinking about big-box logistics any more. They are firmly focused on how to best get their goods as quickly as possible into big, dense, urban environments. And that leads their thoughts to taking over space that is now not needed by retailers.

That is according to Zalando Vice President of Corporate Real Estate Raimund Paetzmann. Berlin-based Zalando is one of the world’s largest fashion-focused e-commerce firms, with a market capitalisation of €11B and 2017 revenue of €4.4B. It sells products directly to consumers and also acts as an online platform for other retailers.

“A lot of people are talking about city logistics and the last mile, it is the elephant in the room,” he told Bisnow. “We are not talking about big warehouses any more, we are talking about multi-let space, units of about 2K SM (22K SF).”

Some e-commerce companies are refurbishing old supermarkets or department stores because they have delivery zones and were designed with access for vehicles in mind.

“People talk about logistics and deliveries and traffic, but the milk has always needed to get to the supermarket. Now there are just lots of vans and cars instead of large lorries.”

Paetzmann is also an advocate of future urban mixed-use developments incorporating space for last-mile deliveries. “It is something the real estate sector should think about, as well as shops and residential adding multi-let industrial. The growth in online retail is one of the biggest changes to happen to the real estate sector, and more mixed-use in city locations would help.”

The largest example of this trend to date comes from Asia, where Chinese e-commerce giant Alibaba has snapped up both department stores and supermarket chains and used them as part of its delivery network.

Paetzmann said the move toward smaller, multi-let sites is being driven by changes in technology and data that allow companies like Zalando to analyse customer behaviour better than ever before. The company employs more than 1,600 software engineers.

“Our supply chain is moving away from push factors towards pull factors, knowing what the customer wants and providing that,” he said. "We have much more data about our customers and algorithms that can analyse that. That affects our inventory and means we have a much higher churn rate for our products. The possibilities offered by this technology allow us to go from big warehouses to much smaller units.”

To hear from Paetzmann plus a host of other luminaries, join Bisnow at our London Industrial and E-Commerce Real Estate event at 7.30am on 18 April at the Royal Institution.