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Parcels returns boost Europe’s logistics need by 1.7m sq m

[Image: Amazon]

An additional 8.6 million sq m of warehouse space is required by parcel companies in Europe between 2021 and 2025 to keep up with growing ecommerce demand according to a recent report from Savills.

The firm’s analysis of data in a report from Effigy Consulting, revealed that a total of 12.3 billion parcels were delivered in Europe during 2019. By applying data from UK communications regulator OFCOM, parcel delivery which indicates annualised growth of 9.1% in parcels in the UK which implies that the next five years in Europe “will require a significant development pipeline” Savills said in a statement.

Furthermore, if it is assumed that 20% of goods bought online are returned over this period, an estimated 1.7million sq m of this space will be required just to accommodate and process goods returned by parcel companies.

“We have seen a huge surge in online shopping over the course of 2020, fuelled largely by the impact of the Covid-19 pandemic,” said Savills European research associate Mike Barnes. “While we anticipate retailers’ omnichannel strategies will become more streamlined in order to reduce the number of returns, it’s clear that the level of demand for warehouse space used for both new stock and returns will be significant.”

Returns operations vary across Europe

There are slightly varying ecommerce returns operations from country-to-country across Europe. While the UK is furthest ahead in line with the level of ecommerce penetration (28% in 2020), notably in The Netherlands, third party logistics operators (3PLs) are introducing new measures to improve the ease of returning goods and process inbound returns faster.

Director regional investment advisory EMEA Marcus de Minckwitz said that the speed at which retailers are expanding their warehouse provisions shows no signs of abating. “What will be interesting to see is whether, when retail stores reopen post-lockdown, retailers will manipulate them for use as returns hubs meaning a shift in the role of the store as a purchase point.”