JONES LANG LASALLE

How are new shopping trends impacting your DC network?

Is your DC network omni-channel ready?

JONES LANG LASALLE

65% of U.S. shoppers research products on a PC before making a

purchase in store

JONES LANG LASALLE

Shopping habits are changing

40% of shoppers consult 3 or more channels before

purchase

89% of consumers think it’s important for retailers to make cross-channel shopping easy in store

Yet…7 of 10 retailers are still analyzing and

defining their omni-channel strategy for 2015 to 2017

implementation

JONES LANG LASALLE

Retailers are defining their omni-channel strategy… and omni-channel strategy is redefining retail real estate

E-Commerce sales are growing faster than sales at brick-and-mortar stores

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*includes retailers with $25+ billion in 2012 total U.S. sales that have physical and e-tailing presences

Sources: NRF Stores & Internet Retailer

E-commerce sales growth vs. comparable-store sales growth among major brick & mortar retailers*

JONES LANG LASALLE Source: Accenture

Customers are in the driving seat – they choose how they want to shop

BUY IN-STORE SHIP TO HOME

BUY ONLINE PICK UP IN-STORE

BUY IN-STORE CARRY HOME

BUY ONLINE HOME DELIVERY

50 -

40 -

30 -

20 -

10 -

% of respondents who are doing more of the following activities than a year ago

JONES LANG LASALLE

What does an “Omni-channel” DC network look like? ?

JONES LANG LASALLE

The omni-channel ready DC: Yesterday vs. Tomorrow

@

3PL

Traditional e-commerce model “Best of Class” omni-channel model

DCs close to air hubs for next day or 2-day service

Low cost workforce

DCs 500k – 900k SF

5-10 year real estate lease

Same day delivery capability

DCs close to ground sortation hubs

Business and economic incentives

Build-to-suit DC 1M+ SF

Own or 15-year+ ‘credit’ lease

JONES LANG LASALLE

Local delivery depot

Ground sort hub

Local collection depot

Retailer NDC/RDC

Customer

Shop

@ Retailer

e-fulfillment center

3PL

Supplier goods warehouse

Dock to Doorstep OR Ship to Store? The new DC approach

JONES LANG LASALLE Source: Jones Lang LaSalle

What does your DC need? Building a better mousetrap for today’s omni-channel users

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Baltimore

New Jersey

Philadelphia

St. Louis

NorCal

Phoenix

Dallas/Fort Worth

Memphis

Columbus Chicago

Indianapolis

Tampa

Seattle/Puget Sound

Cincinnati

Salt Lake City

Sacramento

San Joaquin

Inland Empire

U.S. e-commerce demand concentration

Houston

Atlanta

Los Angeles

Minneapolis

Transactions 2013 -

200K sf+

Charlotte

Richmond

Boston

2.1 to 3M sf

200 to 999K sf

1 to 2.0M sf

3.1M sf+

‘Clicks’ are translating to ‘bricks’

Demand

February 2014

JONES LANG LASALLE

This year, omni-channel retailers will turn to Urban Logistics models to win the delivery war, facilitated by six newly-defined facilities …

What’s next?

Urban Logistics

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E-commerce facility Main building attributes Main location attributions Mega e-fulfillment centers - Very large (50K sf to 1M sf+)

- High bay (15m) to accommodate mezzanine floors - Often cross-dock configuration - High level of employee parking to accommodate full-time

and seasonal staff

- Close to parcel hub - Close to labor supply - Does not need a traditional

“center of gravity” location

Parcel hub/sortation center - High length to width ratio - Low site density - Cross-dock configuration with extensive loading for lorries - 360-degree circulation around the building - Highly automated internal operation involving sortation systems

- Center of gravity location to feed local parcel delivery centers in “hub and spoke” network

Parcel delivery centers and urban logistics depot - High length to width ratio - Low site density - Cross-dock configuration with extensive loading for lorries - 360-degree circulation around the building

- Edge of major cities and urban areas for home delivery to collection points

Return processing centers - Typically bespoke, depending on operation - Located to return items to e-fulfillment centers

Dot.com warehouse for online food fulfillment - Specification reflects type of operation – e.g. degree of automation

- Bespoke loading provision for vans - Extensive yard area for trailer and van parking and ample

parking for high number of staff

- Edge of major cities and urban areas where online food order volumes are highest

JONES LANG LASALLE

Is your Omni-channel Strategy Real Estate Ready?

Real Estate’s role in retail success