Shopping Centres as Fulfilment Locations

Jun 3, 2021

Shopping Centres as Fulfilment Locations

At the time of this writing, Placewise is two weeks away from a beta launch of what we believe is the world's first fully integrated digital marketplace for a shopping centre. It has live product feeds and inventory data from tenants, and consumers can buy across retailers in one consolidated payment and one consolidated delivery or pick up at the shopping centre.


This industry first project has already led to multiple next projects with the same scope, both in Europe and the US. One of them is a new development opening this Autumn. In the floor plan they have allocated floor space in the central area to marketplace fulfillment.


There are more and more examples of partnerships between e-commerce vendors and shopping centre owners related to fulfillment. In the most extreme examples, the projects include conversion of shopping centre property to become partially warehouses for
e-commerce fulfilment.


As we foresee that most shopping centres will also become digital marketplaces over the next 10 years, it is obvious that fulfillment offerings will be an important part of the overall scope. We also believe shopping centres have many competitive advantages related to fulfillment. Warehouses in general are somewhat of a commodity, so purely reallocating floor space for fulfillment purposes might not be to value adding in the longer term, it is in combination with actually having a digital offering from the shopping centre to its tenants the fulfillment part becomes really interesting.


Here are some examples of possible scope related to fulfillment at shopping centres:


1. Buy online and pick up in store

Individual retailers have been offering pick up in store for online purchases for many years, and during the pandemic it has been the only alternative for many retailers operating under restrictions. However, it has been a very popular way of shopping also before the pandemic. Some retailers reported already in 2019 that more than 50 % of all online purchases end up with pick up in store (e.g. sports chain XXL in the Nordics). In many ways that is the perfect set up for the retailer; inventory is often already available in the store, no extra delivery costs and return rate is very low compared to home delivery (which for some retailers is up to
50 % of all online purchases) as the product is validated in store and immediately exchanged if needed, also giving reduced breakage from returns.


This alternative is typically run without any involvement from the shopping centre today. With a shopping centre marketplace in store pick up and returns are an important part of the overall offering but should be done in combination with other alternatives.



2. Buy online and pick up at centralised pickup point at shopping centre


The added value for consumer on centralised pick up at shopping centre is convenience in terms of service and time. This would be a natural part of any digital marketplace offering from a shopping centre, either in the form of a serviced pick up point (or even better a nice pick up lounge) or by the use of collection boxes. Resources will need to be allocated to run the in-mall fulfillment activities between shopping centre team and the stores but is still more cost efficient than home delivery from a retailer perspective and it adds further value to the landlord vs tenant relationship. We now also see examples of individual tenants at shopping centres taking on the role of becoming the in-mall fulfillment partner to the benefit of all tenants (maybe as an alternative to down scaling their floor space).


3. Buy online from the shopping centre marketplace for home delivery


Home delivery organised by the shopping centre requires the same in-mall capabilities as in alternative two above, with the extension of partnering with a local/regional/national delivery company. The added value for consumer is getting a multi store purchase delivered in a single delivery. The added value for the retailers is shared cost on delivery if not all cost is passed on to the consumer.


This alternative also raises the question of why should shopping centres offer home delivery in the first place as it gives consumers less reasons to come to the mall? The obvious answer is that if the shopping centre doesn`t facilitate and gain also from home deliveries someone else will, either the retailers directly (as today), other online marketplaces (Amazon etc.) or it opens opportunity for market entry from new kinds of competition. Shopping centres have several competitive advantages to facilitate efficient and attractive last mile deliveries, hence it should be an integrated part of their offering.


4. Conversion of shopping centre space to e-commerce warehouses


Many expect that new shopping centre developments will include larger warehouse facilities to support e-commerce than what typically exists today. As to conversion of existing shopping centres to partially become warehouses it is more of an open question. Shopping centre buildings are typically higher standard properties than warehouses, and location is normally more prime. So financially other alternatives would typically seem more viable for most properties. However, future demand might very well drive this as a requirement from tenants, so maybe a combination of a dedicated remote warehouse connected to an individual shopping centre or a cluster of centres will be the solution?


Overall e-commerce fulfillment will and should be an important part of the future offering of a shopping centre. To what extent will depend on things like location and profile of the centre. In any case shopping centres have the opportunity to become apart of the e-commerce economy and that will deliver great benefits to both shoppers and tenants!




Download the pdf here:
Shopping Centres as Fulfilment Locations