The nation’s storage and warehousing market has become a competitive nightmare for many retailers. Warehouse space has been slow to develop in recent years, and much of the existing stock was filled by retailers that moved to online ordering and beefed up inventory to meet pandemic demand. Now, retailers find it difficult to secure adequate warehouse space, and for those that do, it comes at a high price. Commerce + Communities Today contributing editor Ben Johnson spoke with McMurray Stern vice president of sales and marketing Pat Fitzpatrick about the competitive storage landscape and his company’s solution for retailers.
Why is the storage market so competitive today, with many smaller businesses not able to find adequate space for their needs?
This is a classic example of a supply-demand imbalance. America’s ports had a record year in 2021, and we are witnessing e-tailers like Amazon greatly increasing their warehouse footprint, especially in underserved markets and those with younger shoppers, such as Nashville, Salt Lake City, Las Vegas, Phoenix and Central Florida. This has driven industrial vacancy rates to historic lows, and asking rents have increased accordingly. While all businesses benefit from effective space use and management, there are many affordable improvements that can be implemented immediately in anticipation of warehouse completions coming online and leasing activity by larger entities cooling down.
What are the most common solutions for retailers?
In the warehouse, the solutions can range from mobile shelving solutions to fully automated, robotic storage and retrieval systems that target the in-store and consumer direct fulfillment. In addition, some of these solutions have moved to the retail sites. Back-of-store mobile shelving systems and automated storage and retrieval solutions have become popular with some retailers that are driving fulfillment on site. This microfulfillment enables retailers to get the most from their retail employees and store footprint. The benefit is greater distribution of their products that moves them closer to the customer locations, decreasing the delivery time to the customer while also increasing customer satisfaction.
Why is automation so important?
Automation is key for retailers especially when the economy is experiencing a red-hot labor market and competition for qualified individuals is stiff. We’re seeing that kind of robust job market today, with some markets registering very low unemployment rates. So automation can play a critical role by augmenting a company’s existing workforce and improving its performance. Another big factor automation can contribute is cost savings. Picking, packing, storage and other automation systems are becoming more affordable for a broader market.
What is the process for engaging with a retailer? How do you assess its needs?
We begin with a conversation and general assessment to get a feel for the client’s operations and their future goals. Are they planning to remain in their current space, or is a relocation also a consideration? If the client plans to remain in their current facility, we carefully examine their current storage capacities. We review details that include ceiling heights, floor plans and current warehousing and distribution processes. We then examine a customer’s requirements and expectations. We then work cooperatively with the client to draft a product management efficiency plan that will meet the current requirement and is adaptable for the future.
Give us some examples of how you’re working with retailers.
We are working with two luxury retailers with multiple locations, outfitting existing back-of-store space with mobile shelving to condense inventory. In one instance, the retailer is redesigning its storefront and expanding their inventory space to meet surging demand for inventory in the region. An omnichannel manufacturer and distributor of sporting goods equipment and apparel was challenged with growing consumer demand and expansion of additional product lines. The customer had facilities in Southern California and the East Coast. The Southern California facility had limited room for expansion, and the customer could not move the manufacturing facility from their current location for fear of losing skilled, long-term employees. McMurray Stern developed a concept to better utilize its vertical space with several solutions that maximized their raw materials, work in process and finished-goods storage. The customer was able to remain in their current facilities with the automation along with modified supply chain strategy that optimized their manufacturing and fulfillment approach.
We also were able to help an organization with multiple warehouse locations move into one location with a smaller footprint. The organization was able to increase storage density by over 25%. The software solution for the new automated facility streamlined its manual picking operations, creating a safer work environment by eliminating rolling ladders and carts. The customer has been able to enjoy higher productivity with a lower injury rate.