A friend of mine was in Scottsdale last month for an ICSC conference where Garrick H. Brown (VP of Retail Research for the Americas at Cushman & Wakefield) delivered this retail presentation.
My friend flipped it to me this week and below are a couple of slides that stood out as I scanned through it.
Apparently over the last five years, a new dollar store has opened every four hours in the US. That’s how quickly this category is growing. A race to the bottom.
Food halls are hot and not just in the US. Check out: “5 huge food halls opening soon in Toronto”.
This is similar to a chart I posted a few weeks ago that pegged online grocery shopping in South Korea at closer to 20%. I’m still fascinated by this market share number and want to better understand what’s driving it.
This is an interesting chart that shows the relationship between retail square footage per capita and sales per square foot per capita. The US has lots of retail space per capita but low sales. Now look at Germany.
Finally, this is a chart that shows where household growth is expected to happen from 2016 to 2025. It follows a very clear historical trend of Americans moving from cold places to warmer/hot places.
For the full presentation, click here.
The World Economic Forum recently posted the below chart showing that 1/5 of all grocery purchases in South Korea are done online. The calculation is e-commerce revenue as a percentage of total fast moving consumer goods revenue in the country.
The explanation they give for this high percentage is that South Korea has some of the fastest and most ubiquitous internet access in the world.
A friend of mine was in Scottsdale last month for an ICSC conference where Garrick H. Brown (VP of Retail Research for the Americas at Cushman & Wakefield) delivered this retail presentation.
My friend flipped it to me this week and below are a couple of slides that stood out as I scanned through it.
Apparently over the last five years, a new dollar store has opened every four hours in the US. That’s how quickly this category is growing. A race to the bottom.
Food halls are hot and not just in the US. Check out: “5 huge food halls opening soon in Toronto”.
This is similar to a chart I posted a few weeks ago that pegged online grocery shopping in South Korea at closer to 20%. I’m still fascinated by this market share number and want to better understand what’s driving it.
This is an interesting chart that shows the relationship between retail square footage per capita and sales per square foot per capita. The US has lots of retail space per capita but low sales. Now look at Germany.
Finally, this is a chart that shows where household growth is expected to happen from 2016 to 2025. It follows a very clear historical trend of Americans moving from cold places to warmer/hot places.
For the full presentation, click here.
The World Economic Forum recently posted the below chart showing that 1/5 of all grocery purchases in South Korea are done online. The calculation is e-commerce revenue as a percentage of total fast moving consumer goods revenue in the country.
The explanation they give for this high percentage is that South Korea has some of the fastest and most ubiquitous internet access in the world.
But as soon as I read this I thought to myself: This can’t be the only reason. When was the last time you really wanted to order groceries online but your internet connection was too slow?
Also, if you look at all online shopping (not just FMCG), South Korea no longer shows up as such an outlier. So what’s happening with grocery?
Without actually knowing the market, I would imagine that there are companies in South Korea who have simply figured out how to offer a great online grocery shopping experience.
South Korea is also one of the denser countries in the world at about 513 people per km2. That would help with distribution.
But then again, the Netherlands is also quite dense (414 people per km2). Why are they only at 2.6%? (For comparison, the US is about 33 people per km2.)
If any of you are familiar with the South Korea market I would love to hear from you in the comments. If they really are at 20%, I am surprised more people aren’t talking about this.
The Globe and Mail recently published an excellent article on “how e-commerce is driving a real estate revolution.” This is a topic that I’m very interested in: how online manifests itself offline.
Not surprisingly, the article talks a lot about Amazon, including their 4th warehouse in the Greater Toronto Area, which is an 850,000 square foot facility in Brampton equipped with 350-pound robots (8050 Heritage Road).
The first thing I did after reading the article was figure out the location of all of Amazon’s fulfillment centers in the GTA. Amazon doesn’t seem to publish this. But according to TaxJar, they are here (I mapped out the addresses):
There are two in Brampton at the precise location where Hwy 407 (toll route) and Hwy 401 meet. The other three are distributed along Hwy 401 in Milton and in Mississauga.
Now let’s get back to that Globe and Mail article:
- In 6 years, Amazon has leased over 2 million square feet of warehouse space in Canada.
- Toronto is the third largest warehouse market in North America. It represents 43% of Canada’s total inventory.
- Average net rents have increased 9.7% over the past year and vacancy rates have dropped to 2.7% (CBRE data). In Vancouver, those same numbers are 5.1% and 3%, respectively.
- Online shopping is thought to account for about 6.5% of all retail sales in Canada. But in Toronto, 23% of all industrial space is already e-commerce-related (CBRE data, again).
- CBRE believes that every $1 billion in new online sales per year requires an additional 1.25 million square feet of warehouse space.
- Based on online sales projections, Canada needs another 27.5 million square feet of industrial space over the next 5 years. We don’t have that much space in the pipeline.
- Clear heights are increasing for stacking purposes. Amazon’s new Brampton facility is 45 feet tall / 4 floors. 10 years ago new warehouses were 26 feet tall.
- Average sale price of warehouses in the GTA has gone from $119.35 psf to $142.19 psf over the last year.
Perhaps the most interesting takeaway from the article is the discussion around “last mile” distribution hubs. These are fulfillment centers located closer to the city, which are used to offer shorter delivery times:
“…instead of having inventory stored for days or months, these fulfilment centres will turn over their inventory in one day, sometimes twice a day.”
This is something that I addressed in my recent presentation about the “mall of the future” at B+H’s retail design charrette. Where do these physical distribution centers want to be as online sales continue to grow and delivery times continue to compress? Where’s the future growth?
According to this article, it’s going to be in “last mile” fulfillment real estate – relatively smaller spaces that are located very close or directly in the city center.
Photo by Samuel Zeller on Unsplash
But as soon as I read this I thought to myself: This can’t be the only reason. When was the last time you really wanted to order groceries online but your internet connection was too slow?
Also, if you look at all online shopping (not just FMCG), South Korea no longer shows up as such an outlier. So what’s happening with grocery?
Without actually knowing the market, I would imagine that there are companies in South Korea who have simply figured out how to offer a great online grocery shopping experience.
South Korea is also one of the denser countries in the world at about 513 people per km2. That would help with distribution.
But then again, the Netherlands is also quite dense (414 people per km2). Why are they only at 2.6%? (For comparison, the US is about 33 people per km2.)
If any of you are familiar with the South Korea market I would love to hear from you in the comments. If they really are at 20%, I am surprised more people aren’t talking about this.
The Globe and Mail recently published an excellent article on “how e-commerce is driving a real estate revolution.” This is a topic that I’m very interested in: how online manifests itself offline.
Not surprisingly, the article talks a lot about Amazon, including their 4th warehouse in the Greater Toronto Area, which is an 850,000 square foot facility in Brampton equipped with 350-pound robots (8050 Heritage Road).
The first thing I did after reading the article was figure out the location of all of Amazon’s fulfillment centers in the GTA. Amazon doesn’t seem to publish this. But according to TaxJar, they are here (I mapped out the addresses):
There are two in Brampton at the precise location where Hwy 407 (toll route) and Hwy 401 meet. The other three are distributed along Hwy 401 in Milton and in Mississauga.
Now let’s get back to that Globe and Mail article:
- In 6 years, Amazon has leased over 2 million square feet of warehouse space in Canada.
- Toronto is the third largest warehouse market in North America. It represents 43% of Canada’s total inventory.
- Average net rents have increased 9.7% over the past year and vacancy rates have dropped to 2.7% (CBRE data). In Vancouver, those same numbers are 5.1% and 3%, respectively.
- Online shopping is thought to account for about 6.5% of all retail sales in Canada. But in Toronto, 23% of all industrial space is already e-commerce-related (CBRE data, again).
- CBRE believes that every $1 billion in new online sales per year requires an additional 1.25 million square feet of warehouse space.
- Based on online sales projections, Canada needs another 27.5 million square feet of industrial space over the next 5 years. We don’t have that much space in the pipeline.
- Clear heights are increasing for stacking purposes. Amazon’s new Brampton facility is 45 feet tall / 4 floors. 10 years ago new warehouses were 26 feet tall.
- Average sale price of warehouses in the GTA has gone from $119.35 psf to $142.19 psf over the last year.
Perhaps the most interesting takeaway from the article is the discussion around “last mile” distribution hubs. These are fulfillment centers located closer to the city, which are used to offer shorter delivery times:
“…instead of having inventory stored for days or months, these fulfilment centres will turn over their inventory in one day, sometimes twice a day.”
This is something that I addressed in my recent presentation about the “mall of the future” at B+H’s retail design charrette. Where do these physical distribution centers want to be as online sales continue to grow and delivery times continue to compress? Where’s the future growth?
According to this article, it’s going to be in “last mile” fulfillment real estate – relatively smaller spaces that are located very close or directly in the city center.
Photo by Samuel Zeller on Unsplash
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