Indian retail fuels surge in warehousing demand: Report

According to a CBRE report, the retail sector has become a significant catalyst for the surge in warehousing demand in India over the past five years. Its contribution has risen from 8% in 2019 to 13% in 2022.

The report, titled “The Three-mile Tale: Dissecting the New-age Retail Supply Chain Network,” was introduced at the CII Realty 2023 conference in New Delhi and reveals that the retail segment’s share in the warehousing industry reached 9% in the first half of 2023.

As per the findings of the report, e-commerce, FMCG (Fast-Moving Consumer Goods), and retail collectively accounted for nearly 27% of total warehousing demand from 2019 to the first half of 2023. Within the retail category, hypermarkets (51%) and fashion and apparel companies (32%) were the dominant players driving warehousing demand.

CBRE anticipates that the retail segment will further strengthen in the second half of 2023, boosted by expected increased consumption during the festive season.

“Evolving consumer preferences and expectations coupled with a shift in the social fabric, rapid technological advances, complex trade dynamics, and stricter compliance regulations, including sustainability, are key aspects creating a stir in the retail segment,”

Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE

Retail players are trying to stay agile and nimble by reassessing their supply chains, which has led to a rise in demand for warehouse leasing and advanced warehousing solutions, he added.

The report further forecasted growth in specific retail segments like fashion and apparel categories. The category is expected to expand by over 12 times by 2047 and the FMCG category is projected to grow nearly six-fold by 2027.

To support this growth, the report emphasizes the importance of temperature-controlled storage facilities for maintaining product quality. Additionally, it highlights the significance of automated First-In-First-Out (FIFO) rotational methods within warehouses to prioritize the sale of older products and minimize waste.

Furthermore, the report predicts a 1.5-fold growth in the consumer electronics category by 2027.

The massive boom in Q-commerce for quick delivery of food, goods, and services, coupled with the rapid penetration in e-commerce, especially expanding to tier 2 and 3 cities, has led to a surge in demand for retail warehouses.

Rami Kaushal, Managing Director Consulting and valuation Services, India, Middle East & Africa

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