Online shopping continues to grow in popularity and it’s not going anywhere. The convenience factor is hard to beat. Whether items are shipped directly to the customer or they order online to pick up in store, more consumers use this method for all types of shopping. With this shift, physical retail stores are becoming less shopped and large retailers are looking for ways to stay competitive with their evolving customers.
Many retailers are embracing the trend by offering online shopping options. This is a great way for stores to stay relevant and offer different options to choose from based on the company’s resources. One emerging trend is to convert large retail stores to fulfillment centers in order to manage the quantity and volume of online orders and ensure the customer receives their items as quickly as possible. After working on a number of conversion projects, we’ve discovered several key factors which make the projects successful.
There is more to this process than simply locating and repurposing an existing building. Key characteristics of the building are important to analyze and understand. The capacity of a building, which is a combination of height and building area, is critical in determining if an existing building is appropriate. The internal building height will dictate the maximum height of the warehouse storage racks and the building area will dictate the width of the racks and the aisles between racks.
Traffic around the site should also be considered as this type of building is in-between a distribution center and retail store, but closer to retail in size and location which can mean more municipalities will be receptive to this type of facility. This type of building significantly reduces the volume of customer traffic but increases the volume of truck traffic. Still, the net result typically is a reduction in traffic. Converting an outdated retail building can restore life to a shopping center with empty storefronts. For example, a recent retail project in Chicago is located in an economically blighted area with vacant spaces in the shopping center. For the owner, this became a prime location as it will bring jobs back to the area, and that created a solid reason for the jurisdiction to approve the project.
Location is key. It’s essential for retailers to choose a site which is conveniently located for both consumer benefit, an easy spot for them to buy online and pick up, and for the retailer to utilize the space for last mile delivery to the customer. The retailer can either use their existing facilities, which should already be ideally located, or it may be beneficial to locate and purchase new property which is more convenient to the customer. Some retailers find this to be the preferred option as it allows them to better compete with other companies offering same-day delivery or express shopping options.
It’s important to determine what the property is zoned and approved for in the early stages of the design process to avoid pitfalls later. It’s crucial to understand what the building was used for previously and what use is proposed for the future as this applies to the city planning, zoning and building code requirements. The primary occupancy classification for the building would be either retail or storage depending on the operation.
If the classification is a storage occupancy, Fire Department access to the building is required if the building includes high piled storage. This requires a fire lane around the building, additional doors to allow the fire department into the building and the performance of the fire sprinkler system to be assessed and potentially upgraded. Many retailers sell products that are considered hazardous when stored in bulk meaning special storage containment areas may be required or limits would need to be made to the quantity of hazardous products.
The building code requirements for a retail occupancy classification differ from storage including distinct code sections to review and apply. A retail occupancy accounts for a higher number of occupants (customers, stockers and cashiers), while the storage occupancy allows a lower occupant load to manage the storage, retrieve product from storage, and then pack and ship online orders. Typically, a warehouse, or home improvement, store is best suited to convert to a storage operation while a big box, or grocery, store is better suited for a retail operation with minor storage needs. Overall, it’s key to determine the use of a particular building early in the process to be sure all requirements are met in a timely manner.
Whether the retailer chooses to maintain some of the original retail character of the store, or they downsize that portion to increase the storage space and act more as a fulfillment center, there are several possibilities for this type of facility. The first would allow for both delivery to the customer, the option to buy online and pickup in store, and the traditional retail shopping experience all in one building. This hybrid option allows the retailer to give every opportunity of convenience to the customer as well as benefit themselves by maintaining one building.
Another route would be a facility that is strictly for fulfillment. This option allows for efficient delivery to the customer and the last mile goal mentioned earlier. This way a retailer can keep the existing brick and mortar store but expand their online offerings with a quicker delivery time to stay competitive. Both options are beneficial to both the consumer and the retailer. The decision should be based on the size of available space in a current store and what is needed most in the area for each retailer.
While there are countless factors to consider while planning this type of project, these can be the most important for a successful outcome. Creating a facility such as these allows a company to stay competitive with online shopping trends and allows stores to be flexible, and customizable, based on varying consumer needs and maximize the return on investment. Finding a balance between online shopping, brick and mortar stores and the constant battle to remain competitive and profitable, it is now crucial to create a space which satisfies the consumers’ need for convenience.
About the author:
Bart Brown, AIA, graduated from the University of Kansas with a Bachelor of Architecture & Urban Design degree. Bart helps lead our Bentonville team, and has more than 30 years of experience working on retail, grocery, fitness center, industrial and other commercial projects. He is a key asset in mentoring young professionals, and shares knowledge gained from his years of practice working through all architectural design and production phases. Bart has also been a key resource for project teams carrying out building evaluation services for sites that have experienced environmental distress or failure. Email him.