India is currently experiencing the rapid progression of Industry 4.0. The pace of this transformation is unparalleled, and the impact extends far beyond anything witnessed in the past. Two fundamental elements that drive growth – intelligence and energy – are achieving new milestones every day. In this context, the impact on consumer behaviour for product discovery and the purchasing process is bound to witness immediate short-term changes. With greater internet penetration, accelerated broadband speeds and affordable smartphones, transformations in consumer behaviour have extended beyond metropolitan areas, encompassing Tier I, II and III cities. The advent of digital payment has also revolutionised purchasing patterns, allowing businesses to bypass the conventional supply chain and connect with consumers directly. Advancements in mapping technology, coupled with the proliferation of gig workers, have effectively bolstered these emerging structures, facilitating seamless product delivery to consumers’ doorsteps. As a result, a new paradigm of business referred to as “quick commerce” has emerged.
Tracking growth
As individuals increasingly lead fast-paced lives, the demand for quick-delivery services has surged. Consumers now expect same-day delivery, or even delivery within mere minutes of placing an order. As market competition intensifies, platforms catering to everyday essentials such as groceries, medications, and various retail products have begun offering consumers an unprecedented level of flexibility – delivery services available any time and anywhere.
During the previous retail transformation, India witnessed a transition from local kirana stores to chain retailers, improved outlets and a wider merchandise selection. This pivotal transition necessitated a revamp of the physical warehousing infrastructure. Escalating land prices, the need for value-added services and the imperative for enhanced logistical efficiency have led to the development of Grade A warehouses outside urban clusters. In the past decade, these warehouses have undergone substantial growth, becoming larger, better and more environmentally sustainable.
The escalating demand for instant product delivery is generating an unprecedented need for in-city warehousing infrastructure. These novel warehouses will differ from their traditional counterparts in terms of their use cases, network within a city and the technology employed in their supply chain operations.
In-city warehouses need to deliver on the promise of efficient turnaround time (TAT). Hence, these warehouses will be located all around us, much like retail stores, bank branches or fuel pumps. However, these establishments will be located in high-density residential and office complexes in low-profile buildings, discreetly delivering the value that brands promise to provide.
Ongoing trends
In quick commerce, be it cloud kitchens or the prompt delivery of groceries, the quest to minimise the time between order placement and despatch remains an ongoing endeavour. Achieving rapid TAT is crucial for delivery vehicles and manpower, necessitating a fundamental shift in the design of warehouses. Rather than prioritising expansive storage capacities, the focus should be on accelerating operational velocity. This can be accomplished by implementing the following techniques:
Shared repository for inventory
In the next 3-5 years, a comprehensive system is likely to be established to enable the monitoring of all unsold inventory across various warehouses, retailers and distributors. The TAT of receiving an order to its delivery will depend on the brand’s “customer promise”.
Automation in picking
Warehouses are increasingly employing artificial intelligence (AI) and other solutions to quicken the picking process. The usage of technologies, including internet of things applications such as cart automation and robots, are witnessing a significant surge in converting orders to picking requests.
Quicker packaging and despatch
New sorting machines are expected to be introduced in in-city warehouses within the next 4-6 quarters to enhance the packaging and despatch processes for accelerated order fulfilment.
In-city warehouses must have the following attributes to service these needs:
- A design structure that allows them to co-exist with urban infrastructure: Unlike large-scale warehouses situated outside city boundaries, in-city warehouses coexist within the fabric of urban infrastructure, alongside office complexes, residential buildings, restaurants and cinemas. Consequently, their design and construction should blend with the surrounding environment, facilitating a seamless coexistence.
- Layout and building automation, which allows the use of multiple floors for logistics: Given the spatial limitations inherent in urban areas, in-city warehouses are typically constrained by smaller spaces, which impede horizontal storage expansion. To enhance storage capacity, these warehouses must employ innovative layouts that effectively utilise multiple floors. Moreover, the incorporation of advanced automation systems will enable the efficient movement of goods across these vertically oriented spaces.
- Accessibility of various types of vehicles for inbound and outbound services: In-city warehouses may operate within cramped spaces, where obtaining plot frontage for traditionally used large vehicles such as trucks and lorries proves challenging. Consequently, alternative modes of transportation, such as bikes and scooters, are commonly employed for deliveries within a radius of 0-5 km. In order to cater to a diverse array of vehicles, the warehouse infrastructure should be capable of accommodating and servicing various types of vehicles.
- Incorporate ergonomic features to support the needs of people living and working in big cities: The workforce in in-city warehouses often have prior experience from working in various urban establishments such as retail stores, office complexes and residential support systems. Therefore, people operating within these warehouses should receive training that enables them to effectively utilise the skills they already have for operations within in-city warehouses.
In-city warehousing networks and supply
In-city warehousing will expand with time and will lead to the creative discovery of new supply sources. These establishments are usually built by repurposing existing structures like old office complexes, abandoned cinemas and parking lots. Additionally, new buildings will co-create space for warehousing. All stakeholders must come together to ensure the successful operation of this emerging infrastructure.
Governments must draft policies to allow zoning and development of in-city warehouses, developers need to come up with creative strategies to develop the asset class, and finally, companies need to identify suitable structures for in-city warehouse operations.
Supply chain technology
Technology plays a primary role in expediting various warehousing processes such as picking, sorting and allotment. Going forward, there will be a full-fledged establishment of omnichannel delivery, where businesses of all sizes will allocate substantial resources to enhance their supply chain technology.
Businesses can revolutionise their warehouse operations by embracing cutting-edge technological solutions to significantly reduce the time required for crucial tasks. Automated systems equipped with advanced algorithms can swiftly and accurately identify and retrieve items for order fulfilment, streamlining the picking process. Similarly, sorting mechanisms that use machine learning and AI can efficiently categorise products.
As omnichannel delivery begins to take root, businesses are integrating various sales channels into their supply chains, resulting in a shift in supply chain organisation and operation. To meet the increasing consumer demand for convenience, organisations must reimagine their supply chain infrastructure and make strategic investments in innovative technologies that enhance omnichannel delivery. From advanced warehouse management systems to real-time inventory tracking solutions, businesses must use technological advancements for robust supply chain operations. Organisations that proactively invest in cutting-edge technologies will gain a competitive edge and ensure growth.
In sum
In a nutshell, in-city warehouses are going to be next-door neighbours to the stores we visit, the houses we live in and the offices we work in. In metro cities, in-city warehouses are estimated to occupy 8-10 million sq. ft in the next few years. City planners and development authorities will come up with suitable policies to support such infrastructure. Developers are likely to experiment with various options in green and brownfield projects, with tenants and operators developing automation and technology to service customer needs. This presents an opportunity for all to participate in this disruption and leave a mark.
