The sudden increase in online sales of essential goods in 2020 has caused suppliers to scramble for warehouse space and think again about how their supply chains need to be modified to meet growing demand, the real estate services company JLL said in a recent report on the changing landscape of industrial real estate.
Online sales have been growing rapidly since COVID-19 forced lockdowns across the United States. And although providers of staple household goods, like grocery stores, remained open in most states, many consumers elected to do more and more ordering online. Online sales increased by 40 percent between the last week of February and the last week of May, JLL reports, citing data from the consumer services company Signifyd.
The main challenge for retailers is determining how to store their products in strategic locations closer to more consumers in order to speed up delivery times. Because groceries make up a significant portion of essential products being delivered to homes, cold storage is going to be an important piece of the puzzle in a modified supply chain, according to Julia Silva, JLL’s managing director of capital markets.
But what that will ultimately end up looking like is anyone’s guess.
Because grocery stores sell a combination of dry goods, frozen foods and refrigerated products, a new kind of distribution center for grocery delivery is likely going to needed. It may look like a stand-alone warehouse-style facility with a receiving dock, highly organized product layout and temperature-controlled rooms. It would likely need to facilitate quick order-picking and accurate high-volume inventory tracking, as well as easy ingress and egress for delivery drivers.
Will grocery companies choose to build their own types of mini-warehouses for logistics purposes, or will third-party supply chain facilities pop up to serve multiple grocery and essential goods companies? Or could delivery startups like Doordash and Instacart build their own hubs?
Until these questions find answers, traditional cold storage companies like Washington Cold Storage are doing their best to meet the increase in demand for storage to help keep the supply chain moving as smoothly as possible — and make their own changes and enhancements along the way.
Photo credit: Elvert Barnes
