While GST is eagerly awaited, it is the E-tail market that packs a punch and sets the way forward for the warehousing sector. (Reuters)
Over the last decade, there have been major changes in the country’s warehousing sector. The warehousing sector is on the cusp of some remarkable expansion and this is could get a further boost with the likely passage of the GST bill.
While GST is eagerly awaited, it is the E-tail market that packs a punch and sets the way forward for the warehousing sector. For instance the sudden resurgence in India’s E-tail market has necessitated the need for huge warehouses close to urban centres in order to deliver at the shortest possible time. Such factors have brought the warehousing industry to the forefront of the retail business and compelled retailers to focus on this segment.
To further explain this and help us understand how this boosts the warehousing market here is an example – in the NH-8 region of NCR, with the emergence of E-tail, the delivery time from the warehouse to the customer has shrunk to under three hours. In order to cater to such demand, it becomes necessary for E-tailers to have a warehouse within driving distance of 60-90 minutes to reach city centres of Delhi and Gurgaon within a time-frame of 30-90 minutes from warehousing markets situated in clusters.
Moreover, the E-tail sector has emerged as a major driver for the incremental warehousing space requirement in recent years and currently accounts for 14% (5mn sq ft) within the retail sector. While brick-and-mortar stores still lead in terms of space requirement, at 31 mn sq ft, the E-tail segment contributes up to 5 mn sq ft. This is significant, considering that until just a few years ago, this entire segment was non-existent.
To put it in perspective the warehousing space requirement from the E-tail segment will increase by 60 per cent, from the current 5 mn sq ft to more than 8 mn sq ft by 2020. These numbers point out among the many positives e-tailing brings in for the warehousing sector.
Moreover, both E-tail and the warehousing sector go hand in hand. For one to progress the other seems to play an imperative role. There are of course several other factors such as efficient infrastructure, favourable government policies, global market condition, among others that will help the warehousing sector come a full circle. However it is the E-tail sector that helps it levitate in the long run.
The author is chairman and managing director, Knight Frank (India) Pvt. Ltd.