A Consumer Shift Accelerated By Circumstance
“Without change, there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.” -William Pollard
We wrote a piece of content almost exactly a year ago discussing the shift in consumer habits away from superfluous brick & mortar retail and towards multi-platform, predominantly digital shopping experiences. These models rely on supply-chain excellence and a robust network of industrial spaces to deliver customers precisely what they want as fast as possible. Let us be clear, we are not saying brick & mortar is dead by any stretch of the imagination, but if it’s not intentional, experiential, and creating memories for consumers, many are choosing to buy on-line or just go for the most convenient option.
We concluded this article by saying we can’t look into a crystal ball, but we did state that firms would have to innovate their approach to industrial spaces to address this shift and those companies that embraced the convergence would be rewarded.
Even if we did have a crystal ball a year ago, we wouldn’t have believed how rapidly this shift has manifested itself through the COVID-19 pandemic.
Trillion Worldwide Ecommerce Sales
Shoppers Who Prefer BOPIS (Buy Online, Pickup In-Store)
Shoppers Expecting Delivery Within 3 Days
Prior to the COVID-19 pandemic,
e-commerce penetration rates were rising by 100–150 bps annually.
However, with March through mid-April’s e-commerce growth rate of 30% +, this suggests that the penetration rate could rise by 300–400 bps in 2020 alone. The bump will likely create 400 MSF or more of total additional U.S. logistic real estate demand in the next two to three years as companies adjust to higher e-commerce volumes and higher inventory levels.
Industrial Spaces Can Portray Brands Too
The convergence between a lower superfluous brick & mortar fleet with the increase in e-commerce buying behavior coincides with another consumer behavior shift of equal importance – buying into a brand’s story. This trend has been on the rise for several years but more and more, studies prove that consumers care more than ever about the ethics of a brand, the background of a brand, and the style of a brand, and companies care more about that too. Not only is it a retention tool, but it also gives them a competitive advantage against their competitors when attracting consumers.
There lies the opportunity. For those commercial real estate firms who understand what users want and tenants who care about their total supply chain network and understanding how the end-user can interface with it through any four-wall experience, there will be a big opportunity that is easily obtainable.
In the same way that traditional retail centers feature a curated design that’s reflective of the community around them, and brands create in-store experiences designed to elicit particular emotions, industrial spaces must have relevance and character in 2020 and beyond.
Consumers care about how a business conducts itself, even when they aren’t visiting stores in person. They care about the welfare of those working in their fulfillment centers and hold brands internally accountable for the promises they make externally.
Businesses have the opportunity to leverage their industrial space and supply chain approach to improve and enhance their brand perception. But more than an opportunity, it’s clear that it’s becoming a requirement.
M2G Ventures creates places users want to be. Our mission is to inspire evolution through impact and innovation so we are uniquely qualified to seize this moment.
Branded Industrial In Practice
We believe our North Quarter 35 project is a shining example of the new standard for industrial development we’ve been discussing. In a strategically-chosen area dominated by master-planned parks filled with seas of the same tilt-wall design over and over, we’re developing the new standard in industrial development.
Located on the busy I-35 interstate, this project is breaking ground with a unique mindset. The interstate is akin to the Main Street and industrial campuses are replacing the need for a sea of superfluous shopping centers.
Instead of constructing dozens of cookie-cutter concrete barns, we’re building 640,000 square-feet of architecturally modern spaces that speak to the user and the end consumer.
Beautiful facades, enhanced landscaping, thoughtful signage, and a nod toward placemaking combined with the ease of access industrial tenants demand. This includes a combination of cross-dock, rear-, and front-load buildings. But more than anything else, it speaks to all aspects of the supply chain.
That’s how industrial space becomes an extension of a brand.