Another way that businesses are looking to recover from the ‘unravel’ is by exploring the potential of vacant storefronts and mall space as fulfilment centres. Macy’s, for example, has announced it will test this new model in two stores in Delaware and Colorado. As well as acting as online fulfilment centres, the sites will offer in-store and curbside pick-up, returns and bill pay.
Macy’s digital sales grew by more than 50% in Q2 2020 compared to the year before, with CEO Jeff Gennette stating: ‘30% of our digital transactions are being fulfilled out of stores. I see that increasing. And what we’re building out in terms of our omni-network and our fulfilment strategies, our opportunity to be able to satisfy customers however they want to shop. So, stores are going to remain important.’
Whole Foods Market has opened a new online fulfilment facility at the Industry City campus, New York. The site is unavailable to walk-in consumers but will fulfil grocery delivery orders in the Brooklyn area. It’s also been reported that Simon Property Group, mentioned above, has been in discussion with Amazon about how to turn its department stores into distribution hubs for the online giant.
This comes at a time when online sales are on the rise throughout the sector. According to IBM’S US Retail Index, e-commerce is projected to grow by nearly 20% this year, and brands including Walmart and Target have seen e-commerce sales jump a huge 97% and 273% respectively in the last quarter.
In the UK, John Lewis has voiced plans to become a digital-first brand, and will transform its empty stores into privately rented housing. ‘Retail profit margins are under pressure,’ Dame Sharon White, chairman of the John Lewis Partnership, shared in a letter to workers. ‘For the partnership to be sustainable over the long-term, we need to expand beyond retail.’ The brand also emphasises the affordability of the properties, so the unused retail space can be put ‘to good social use’.
US retailers are taking a similar approach, with developers turning a large portion of Alderwood Mall in Seattle into 300 apartments, complete with underground parking. There will still be retail opportunities within the complex, but the residential component will be the main draw.
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