Post #19: Better big boxes

Ever wondered how the box of cereal you buy at the supermarket gets there, or how the pair of trainers you order online is delivered to your house the next day?

Post #19: Better big boxes

Ever wondered how the box of cereal you buy at the supermarket gets there, or how the pair of trainers you order online is delivered to your house the next day? The answer lies in ‘big boxes.’ This is the industry term for the large warehouses that any driver along an important motorway corridor will be increasingly familiar with. These boxes are integral to the functioning of the modern economy (given the importance of efficiently functioning supply chains) and will only become more so. 

Earlier this week we were lucky to meet with a senior figure within the UK big box industry and hear his perspectives on market prospects. Three key take-aways stood out from our conversation –

1: Significant growth potential ahead: although the percentage of purchases made online is higher in the UK than in the rest of Europe, the growth outlook remains attractive. Some 20% of total UK retail sales now occur online, but consultants expect this figure to reach close to 30% in some categories within the next five years. Even if traditional apparel and footwear retailers are being disintermediated when online purchases occur (i.e. why buy through a branded retailer when you can buy directly from, say, Adidas or Nike?), all these goods still need to be stored in big boxes. Other mainland European countries should catch up to UK levels of online penetration over time, especially as consumer trust levels in making online purchases increases.

2: Big boxes are becoming better: given their increasing ubiquity, the owners of big boxes are becoming ever-more conscious about their design and their impact on local communities. We were told in our meeting that large industrial parks should be places where “people want to work” and so the incorporation of outdoor green space and other important amenities is developing to be more commonplace. Additionally, what goes on inside the boxes is improving too: modern iterations may now be kitted out with intelligent lighting and sensors, energy management systems and so on. Minimising carbon footprints is a growing concern.

3: What Brexit? Despite some of the more hysterical headlines in the UK press, it appears that there has been no slowdown in customer enquiries for, or site viewings of, big box space. As we have highlighted elsewhere, the secular trends (online retail growth/ better supply chains/ smarter cities) trump near-term political uncertainty. 


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