Changes in the Retail and Distribution Landscape...Changes in the Retail and Distribution Landscape:...
Transcript of Changes in the Retail and Distribution Landscape...Changes in the Retail and Distribution Landscape:...
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Changes in the Retail and Distribution Landscape: Behavioral and Logistics Modeling ImplicationsMiguel JallerAssoc ia te P ro fessor, C i v i l & Env i ronmenta l Eng ineer ing ,Co-D i rec to r, Sus ta inab le F re igh t Research Cen te r,Ins t i t u te o f Transpor ta t i on S tud ies ( ITS)Un ive rs i t y o f Ca l i f o rn ia , Dav i s (UCD)
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Outline Background
Disruptions in the Retail & Distribution Landscape Retail Shopping Behaviors
Examples in California
Key Modeling Implications
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Retailing and Distribution
Economic Transactions
(Purchasing & Selling)
Movement of People & Goods
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Growth in Retail Sales
E-commerce has grown almost 30% since 2009
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ShoppingAny day…
40% of the population shop(5-6% shop online) (ATUS, 2016)
Today…55%-80% of the population shop online79% of all shopping influenced by e-
commerce (NHTS, 2017)
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Retail and Behavioral Disruptions
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Disruptions
Freight & Logistics Shopping Practices
• Location of freight facilities• Location of demand• Retail landscape• Inventory practices and
distribution services
• Shopping process (search, purchase, transport)
• Tradeoff between individual’s travel and deliveries
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Freight & Logistics
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Retail
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Changes in Recent Years
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Retailers are Closing Stores268
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https://www.forbes.com/sites/pamdanziger/2018/10/14/the-fall-of-the-mall-and-three-ways-to-make-them-rise-again/#6f30d37b58ef
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Forecast
1/5 – 1/4 of all malls will close in the next 5 years
Credit Suissehttps://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=csplusresearchcp&document_id=1075851631&serialid=0H35FD75wQHBUjm3x5lkvUaUWAN03QsDSMQWFvss5x4%3D
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Cascading Effects
E-commerce will grow form 17% of industry sales to 35%+
Credit Suissehttps://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=csplusresearchcp&document_id=1075851631&serialid=0H35FD75wQHBUjm3x5lkvUaUWAN03QsDSMQWFvss5x4%3D
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Shopping Behavior
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How We Shop
Source: UPS Pulse of the Online Shopper™ White Paper, June 2016
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Shopping Travel
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Delivery Preferences
Source: UPS Pulse of the Online Shopper™ White Paper, June 2016
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Convenience of Returns
Source: UPS Pulse of the Online Shopper™ White Paper, June 2016
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Examples from California
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Distribution Landscape1998 2014
Warehouses and Distribution Centers in Southern California
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Serving Los Angeles
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Serving Los AngelesLos Angeles
Service region
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Warehouse Sales Price ($/sq. ft.) vs distance from downtown LA (mi)
Fast delivery services come at cost
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Proximity to CustomersCosts
Fixed: warehouse, fleet
Operational: driver, maintenance, fuel
Externalities: GHGs and criteria
Time windows: 1, 1.5, and 3 hours
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Market ShareRetailer’s market share
Large: 47%
Small: 6%
Crowdsourcing: Flex vehicles
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Serving Sacramento
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Amazon Facilities“SMF1” Amazon Fulfillment Center
“DSM1” Amazon Delivery Station
“UCA9” Amazon Prime Now Hub in East Sacramento
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Distribution Patterns
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Estimated Impacts1 mile radius from the facility
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Efficiency per Delivery Option
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Key Implications
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Location and DistributionNeed to be located closer to the customerAt the expense of facility costSmaller facilitiesHigher delivery frequencies
Time windows: Increase the overall cost significantlyDecrease the distribution efficiencyRequire more vehiclesLocate even closer to customer
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Location and DistributionUse of crowdsourced deliveriesReduce capital expenditures Increase freight activity due to smaller vehiclesLess efficient than vans or trucksAllow contending with demand fluctuationTrade-offs with other costs
Distribution structureSmaller facilities for distribution, require sortation, and fed by larger facilitiesLast few feet could use alternate distribution modes
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Shopping Malls in the US
Source: International Council of Shopping Centershttps://digital.hbs.edu/platform-digit/submission/death-to-american-malls-its-2018-and-the-largest-mall-operator-in-the-us-refuses-to-agree/
(2012-2017)19% drop in:Regional andSuper-regional Shopping Centers
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Shared Delivery Services
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Delivery Tours
Delivery tour length (miles) Stops in a tour
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Proximity Costs
Fast delivery services come at cost
y = 356.37x-0.231
R² = 0.1442
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Warehouse sales price ($/sq.ft.) vs. distance from downtown L.A.
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ExternalitiesTime windows have a negative effect on the externalities from the delivery operation
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Example fromSan Francisco and Dallas
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Omni-channel vs. in-Store
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Online vs. in-Store
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Shopping BehaviorsIn-store vs. onlineOnline increasing very rapidly In-store still dominatesStore closures increasingLess availability in-storeCustomers willing to pay a premium for fast and reliable shipmentsClick-and-pick and option but may not be attractive
DemographicsDifferences among shoppers and geographic locations
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Shopping BehaviorsIn-store vs. onlineOnline increasing very rapidly In-store still dominatesStore closures increasingLess availability in-storeCustomers willing to pay a premium for fast and reliable shipmentsClick-and-pick and option but may not be attractive
DemographicsDifferences among shoppers and geographic locations
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Shopping BehaviorsShopping includes:Pre-purchase: searching/comparisonPurchasing: channel location and delivery methodPost-purchase: returnsBasket size: items per purchase/orderAn related travel
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Shopping BehaviorsShopping includes:Pre-purchase: searching/comparisonPurchasing: channel location and delivery methodPost-purchase: returnsBasket size: items per purchase/orderAn related travel