How changes in omnichannel retail are shaping retail and logistics real estate

The UK’s online penetration rate has returned to trend in the post-pandemic period, and we are forecasting steady growth to continue (Figure 1). Still, physical stores remain a vital part of the retail landscape, driving in-store sales and supporting online channels through click & collect and returns. Moreover, seamless omnichannel experiences rely on strong logistics, fuelling high demand for suitable real estate.

Figure 1: Online retail penetration rate

The role of stores in omnichannel retail

Findings from CBRE’s latest Consumer Survey, together with GlobalData’s UK True Value of Stores report, underline that the share of sales derived from online channels vary significantly depending on product category.

Our survey shows that for non-grocery spending, there is a near-even split between online and in-store retailing, while grocery sales are dominated by in-store. However, it is not a simple online vs offline dynamic, with a symbiotic relationship between the two. The ‘True Value of Stores’ report quantifies the share of online sales that “touch” the physical stores. This is through click & collect or online sales browsed in-store (“showrooming”), playing key roles alongside traditional store sales.

Figure 2: Thinking of your regular grocery spending, what is your typical % split?

Figure 3: Thinking of your regular retail spending (excl. groceries), what is your typical % split?

Figure 4: GlobalData True Value of Stores, sector view by channel %, 2024

The rise of click & collect

Clothing & Footwear retailers are forecast to experience the most significant increase in the true value of stores by 2028, according to GlobalData. This is driven by robust omnichannel capabilities, in particular, offering click & collect fulfilment across the store network. This channel is currently estimated to be worth 10% of sector sales. Retailers like Next, Zara, and Marks & Spencer are investing in improving the availability and speed of click & collect points, making the process seamless for customers.

For example, Zara’s flagship at Birmingham’s Bullring and Grand Central shopping centre features automated collection and return points. while IKEA has expanded their click & collect network to accommodate its growing online business. A key initiative is IKEA’s partnership with Tesco, which involves mobile pick-up points at Tesco stores. As a result, IKEA outlined that this year, over 90% of UK consumers are set to be within five miles of an IKEA collection point.

The impact of online return fees

Another retailer-led initiative which has resulted in an increase in the value of the store is the introduction of online return fees. According to Sendcloud, 79% of fashion retailers have implemented paid online returns. Our Consumer Survey found that when given the option between paying the online return fee to deliver by post, or return item in-store to avoid fees, over half of respondents would rather do the latter. This is further supported by the findings in our European Retail Occupier Survey 2024, wherein of those retailers that introduced the online return fee and analysed its impact, 47% reported a change in consumer behaviour, either via an increase in store footfall, sales, or both. These examples show how consumers are utilising physical stores as easy fulfilment options for online retailing and as a result increasing footfall.

Figure 5: If you need to return an item that you've ordered online, which option would you prefer to use, if any?

Figure 6: If your company has introduced online return fees via post, what is the impact?

Accommodating demand through logistics upgrades and modernising supply chains

Many retailers are seeking to upgrade and modernise their logistics facilities to meet the demands of omnichannel retail. Click & collect usually has faster delivery timelines, necessitating more efficient fulfilment. Consumer demand can also fluctuate quickly, exacerbated by social media trends. As a result, efficient fulfilment is critical, with many retailers considering automation and technology enhancements in their warehouses to deliver the best-in-class omnichannel service. This is reflected in the omnichannel retail sector witnessing an increase in take-up year-on-year, from 1.9m sq ft to 4.0m sq ft in 2024. Additionally, in our European Logistics Occupier Survey 2024, omnichannel and brick-and-mortar retailers were the only sectors expecting to launch more requirements over the next 12 months compared with the previous 23 months.

Modernising supply chains

Modernising the supply chain approaches vary depending on the retailer and their capabilities. Notable examples include Nike’s 20-year lease for a major logistics campus in the East Midlands, while Sephora has opened an omnichannel distribution centre in Coventry in partnership with DHL. Marks & Spencer is seeking additional space for a 1m sq ft site in the East Midlands to serve increasing fashion and homeware sales, while Holland & Barrett’s main distribution centre in Burton is undergoing a major development to scale up online fulfilment. In the meantime, the retailer has outsourced e-commerce operations to THG.

Conclusion

Retailers are increasingly incorporating online retailing into their physical store estate, including through collection and return points, which can drive more footfall in-store as a result. At the same time, retailers are also investing in their logistics infrastructure to enable faster delivery timelines, either directly to the consumer or to the store, facilitating click & collect. Automation and technology advancements are vital components for modernising supply chains to accommodate for the demands of omnichannel retail. By investing in modern logistics facilities and supply chain technology, retailers can deliver best-in-class omnichannel service to consumers and drive business growth.