Adam Mullen

ATLANTA—Retailers face few more daunting challenges these days than balancing their e-commerce operations with their physical stores. Increasingly, successful retailers operate the two not as separate systems but as a combined omnichannel network serving customers across all channels: online, in-store, mobile and others.

CBRE recently started an Omnichannel Real Estate practice to help retailers manage that transition. GlobeSt.com spoke with the leaders of that practice—Adam Mullen, senior managing director and Americas Leader of Industrial & Logistics, and Brandon Famous, Americas Leader of Retail Advisory & Transaction Services—about the inherent challenges for retailers converting to omnichannel networks.

GlobeSt.com: What are the most common mistakes that retailers make when designing or building out their e-commerce-fulfillment networks and store portfolios?

Mullen: Designing an omnichannel network that operates smoothly is an exceedingly complicated challenge, so it is understandable that retailers can misstep at any of several points. Some have difficulty truly aligning all of their departments on how to build their combined network, who it will serve and how.

Others can't settle on an ideal balance of cost and service. Free, same-day delivery wows customers, but that level of service often isn't profitable for the retailer. Only about 20% of the retailers who we speak with are handling omnichannel profitably.

Finally, some retailers underestimate the cost of this transition. In addition to selecting the right real estate, they'll also need to recruit, hire, train and retain the right people.

GlobeSt.com: How can these types of pitfalls be avoided?

Famous: The key is flexibility. The market is moving so quickly, with the rapid growth of e-commerce and the reshaping of traditional retail, that the successful companies are those that build omnichannel networks that can continually and nimbly adapt to the market's evolution. That can mean shorter lease terms for stores, shorter terms for third-party-logistics arrangements and investing in equipment and store interiors that can be changed quickly without excessive cost.

To best align their business on an omnichannel strategy, retailers may have to force their departments to adhere to the overall company's goals. They'll need to keep a spotlight on traditionally independent departments that now are tasked with conforming to the consensus goals. Many choose to hire a single advisor that understands both retail and e-commerce logistics.

Adam Mullen

ATLANTA—Retailers face few more daunting challenges these days than balancing their e-commerce operations with their physical stores. Increasingly, successful retailers operate the two not as separate systems but as a combined omnichannel network serving customers across all channels: online, in-store, mobile and others.

CBRE recently started an Omnichannel Real Estate practice to help retailers manage that transition. GlobeSt.com spoke with the leaders of that practice—Adam Mullen, senior managing director and Americas Leader of Industrial & Logistics, and Brandon Famous, Americas Leader of Retail Advisory & Transaction Services—about the inherent challenges for retailers converting to omnichannel networks.

GlobeSt.com: What are the most common mistakes that retailers make when designing or building out their e-commerce-fulfillment networks and store portfolios?

Mullen: Designing an omnichannel network that operates smoothly is an exceedingly complicated challenge, so it is understandable that retailers can misstep at any of several points. Some have difficulty truly aligning all of their departments on how to build their combined network, who it will serve and how.

Others can't settle on an ideal balance of cost and service. Free, same-day delivery wows customers, but that level of service often isn't profitable for the retailer. Only about 20% of the retailers who we speak with are handling omnichannel profitably.

Finally, some retailers underestimate the cost of this transition. In addition to selecting the right real estate, they'll also need to recruit, hire, train and retain the right people.

GlobeSt.com: How can these types of pitfalls be avoided?

Famous: The key is flexibility. The market is moving so quickly, with the rapid growth of e-commerce and the reshaping of traditional retail, that the successful companies are those that build omnichannel networks that can continually and nimbly adapt to the market's evolution. That can mean shorter lease terms for stores, shorter terms for third-party-logistics arrangements and investing in equipment and store interiors that can be changed quickly without excessive cost.

To best align their business on an omnichannel strategy, retailers may have to force their departments to adhere to the overall company's goals. They'll need to keep a spotlight on traditionally independent departments that now are tasked with conforming to the consensus goals. Many choose to hire a single advisor that understands both retail and e-commerce logistics.

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