Politics can also have a strong impact on the retail and warehousing industry. The build up to Brexit is a clear example of this. Warehouses and retailers have been stockpiling a large quantity of supplies for about a year now due to concerns over Brexit.
UK Warehouses are Stockpiling Goods
British companies started stockpiling products in the beginning of 2019 due to reports that there could be a border gridlock caused by a no-deal Brexit. Hoarding peaked in March just before the April deadline.
Some reports suggested that the UK based companies were stockpiling raw materials and components at the fastest rate compared to any other industrialised nation.
Three months ago, business experts started warning about the coming problems of Christmas peak warehousing in December. Sources claimed that many warehouses that stockpiled goods in the run-up to October deadline were no longer available. They had already been booked for storing large quantities of stock that would be needed for Christmas.
Brexit Impact on Warehousing Industry
Industry sources have reported that the cost of warehouse space has risen by as high as a quarter in the past few months. The October deadline caused massive buying to meet expected rising demand from online retailers in December.
It is believed that pharmaceutical products storage, handled by five specialist licensed operators in the UK, is operating at full capacity. The chilled and frozen food warehouses that store everything from half cooked supermarket bread to prepared meals and cold-store vegetables are fully booked until February 2020.
The Food Storage and Distribution Federation (FSDF), which has more than 350 warehouse operators as its members, reported that its members were turning retailers away because they just didn’t have space anymore.
Tesco, one of the biggest retail chain operators in the country, has rented frozen food containers and parked them outside its largest stores for the next six months. These containers are generally used during Christmas seasons but never required for the rest of the year.
Despite the apparent surge in storage demand, no major logistics initiatives have been prepared so far. There is a reason why that is the case.
The main driver behind the demand for storage space during the last few years has been e-commerce. Online stores and retailers started using huge warehouses. This led to a trend of very large warehouse structure storing massive quantities of goods.
The current demand for stockpiling decisions is still largely guided by the uncertainty surrounding Brexit. Retailers are not willing to commit to any long-term solution because they do not know how the demand will shift if and when Brexit deal takes place.
There may be a huge increase in demand for goods, but the situation can also go the other way with consumers trying to cut down spending. A temporary on-demand warehouse storage space is seen as a less risky option.
This is where on-demand warehouses can be a good solution. With an on-demand warehouse, retailers only need to book the amount of space they want and when they want it. They can adjust the volume of inventory quickly, getting more supplies on stock when the demand goes high; or reduce their storage space if the demand falls.
Smart Warehousing On-Demand
Are you looking to use a smart warehousing partner for your retail business? LogistCompare is a platform where you can find, compare and hire from dozens of on-demand warehouses all over the UK to fulfil your storage and delivery needs. If you need help,please get in touch and we will guide you through the process!