Logistics gains whilst High Street suffers

Last month £5.4 billion was spent online in the UK, according to the latest figures published by Interactive Media in Retail Group (IMRG), 10% up on the same month of 2011.  Pure play (online-only) retailers performed well in February with year-on-year growth of 13%, whilst multi-channel/high street retailers recorded growth of 8%. This was the second month in a row that pure play retailers outperformed multi-channel/high street retailers.

Whilst inevitably there has been much discussion about the high street impact of online shopping, I have seen relatively little discussion in terms of impacts on the logistics market.  However, according to our latest research, UK Big Box Industrial & Logistics Markets, around a quarter of all Grade A distribution floorspace involving units of 100,000 sq ft and over taken up by retailers in 2011 was for internet fulfilment.

The Government has just announced in the Budget that it plans to invest £100 million to create super-fast broadband and wifi in the 10 largest cities in the UK and a further £50 million to improve internet access in smaller cities across the UK.  With better internet access and broadband speeds, mobile internet penetration will increase, encouraging further growth of online shopping.

Overall these changes will lead to increasing demand for distribution space either to fulfil orders, handle returns or to enable customers to collect purchased items.

So whilst the high street may be feeling the brunt of the current economic uncertainties, the growth of internet shopping is likely to have a positive impact on distribution property demand as retailers look for more floorspace to fulfil their e-tailing business.

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