The pandemic-fuelled ecommerce boom has led to a 614% increase in warehouse occupancy by online retailers, as highlighted by a new report commissioned by the UK Warehousing Association (UKWA) and produced by Savills.
The research highlights how the growing appetite for buying online has had huge repercussions for the retail sector as a whole, in addition to the warehousing and logistics sector.
Kevin Mofid, head of industrial & logistics research at Savills, comments in a statement, “Whilst the shift to online has been talked about for years, these figures exemplify what a significant impact it has had on the make up of the UK warehouse market in a relatively short space of time.”
In 2015, high street retailers were the dominant occupiers of warehouse space. Although their warehouse capacity did increase by 5% (compared to a 32% overall increase in space), in 2021, the biggest occupants are providers of third party logistics (3PL).
These companies have increased their occupancy by 42% and now account for nearly 20% of the total UK warehousing space. The fastest growing sector is online retailers, those who only sell online, such as Asos or Ocado. These businesses have increased their square footage sevenfold over the past 6 years.
Much of the growth in 3PL occupancy can also be attributed to to the ecommerce boom. As seen with the success of platforms such as Shopify and Etsy, small businesses have been launching and growing online stores that have flourished during the pandemic.
With growth comes the need to outsource fulfilment to 3PL companies such as Fulfilmentcrowd, who work with over 400 online retailers in the SME space, including many start-up and early-stage growth businesses.
Lee Thompson, Managing Director of Fulfilmentcrowd says “Demand for our services has boomed over the past 18 months (it was already growing fast) with revenue more than doubling in that time.”
The warehousing sector has clearly been pushing to keep up with growing demand, with over 138 million square feet of capacity being added in the last 6 years, and average warehouse sizes shooting up by 57% to over 340 thousand square feet. Despite this enormous growth, the question remains if enough is being done to keep up with the increasing appetite for buying online.
The report quotes research from Forrester which states that by 2025 online retail will account for 35% of all retail. This prediction would require at least 64 million square feet of additional warehouse space for online retail alone.
“This updated report reveals the urgent requirement for more warehousing in the light of massively accelerated online retail” says Peter Ward, UKWA CEO in a statement.
“It is critical that as Government rolls out plans to build more new homes, warehousing should become part of infrastructure planning moving forward.”