Trends in Retail: Combined Fulfillment Spaces

With the growth of e-commerce, brick-and-mortar retailers must look for new ways to appeal to customers across the globe and to compete with giant online sellers. Following the wave of ship-to-store popularity, many retailers are now looking to ship from their stores, directly to consumers. This requires a re-assessment of retail spaces to make room for this new service. These combined fulfillment spaces, or “ship and shop” locations, are a growing trend in retail. Here’s why they’re trending and how to determine if they’re right for your business.

Why they’re popular:

Combined fulfillment spaces arose out of a need to compete with online shopping. Companies of all sizes with retail sites are pivoting to combined fulfillment spaces, for a number of reasons.

Across the globe, foot traffic in brick-and-mortar stores is waning. Small retail businesses today can rarely exist without online sales. They need to reach larger markets, and they need the infrastructure to ship their goods to consumers anywhere. This requires a different footprint of their retail space, with ample room for storage, packaging and shipping. Many are transitioning to “showroom” spaces where a small number of sample items are displayed, and customers purchase items to be shipped to them directly. Even some retail giants like Nordstrom and Urban Outfitters are experimenting with this idea.

For larger retailers, “ship and shop” locations can be equally effective. In a move to compete with two-day and same-day shipping of many online retailers, some brick-and-mortar retailers are utilizing their proximity to customers to offer similar services. Instead of having retail spaces and shipping warehouses function independently, some customer-facing stores are doubling as shipping locations, making it faster and cheaper to get goods directly to consumers living nearby.

Combined fulfillment and retail spaces are growing in popularity particularly in urban centers, where large warehouses are not cost-effective and one store can have ready access to a large cross-section of customers. On the other hand, small businesses that may otherwise be out-of-the-way are finding success by reaching a global market through online sales.

Is it right for you?

How do you know if a “ship and shop” space is right for your business? There are some real benefits to be gained from transitioning to a combined fulfillment space. Retailers that sell large & heavy items that are difficult to transport are a good candidate for this strategy. In fact, most furniture retailers already utilize many of the elements of combined fulfillment spaces. This idea is expanding and now rolling over into other markets including grocery and clothing.

Not only do time and the cost of shipping go down by utilizing locations near consumers, this strategy can also have a positive impact on customer experience. Brick-and-mortar retailers have one distinct advantage over online sellers—their stores! With a combined fulfillment space, they are able to leverage that to offer the same services as e-commerce retailers while still supplying the in-store experience. Even when customers start as online shoppers, a positive online experience can drive them into the stores for additional purchases—especially those they prefer to see, touch, or try on prior to purchase.

So is a combined fulfillment space right for you? Or is it just a passing fad? You tell us! We would love to hear what you think about “ship and shop” retail. And if you’re in the market for a retail space overhaul, the knowledgeable folks at The MDC Group are always ready to help.