Europe gets ready

These days it is hard to remember a time before ASOS or Amazon Prime, a time when you actually had to leave the house to do your shopping. However, it was in fact only seven years ago in 2012 that total online retail sales hit the 10% tipping point here in the UK, which set the significant changes in the logistics market in motion. 

As retailers scrambled to adapt their supply chains to this strange new world, the logistics market saw a knock-on effect with vacancy rates falling dramatically, leading to a significant growth in both rents and land prices. The Europeans, on the other hand, have yet to face the same challenges as here in the UK, but change is definitely afoot. Having experienced double-digit growth in the last three years, the logistics markets on the continent are on the cusp of an online retail revolution. 

In the meantime, e-commerce has continued its meteoric rise here, with ONS figures showing that online retail purchases hit 21.5% of total retail sales in the last quarter of 2018. Germany is not far behind at 15% and at present is the only other European country to have passed the tipping point and to consequently have seen significant movements within its logistics market. The US comes in at third place with sales at circa 14%. 

On average, European online purchases are still less than 10% of total retail sales according to Statistica, however, we are beginning to see growth across the continent. In fact if you look at it by the percentage of each population that is now shopping online, then figures from Eurostat show that countries such as the Netherlands and Sweden are leading the way with up to 82% of the population having shopped online in the last twelve months. With the UK and Germany ranked sixth and seventh place respectively, it suggests there is still major growth to come. 

The effects of the rapid growth of e-commerce have been well documented here in the UK. In the last five years vacancy rates have fallen to lows of 5%, whilst prime quoting rents have risen by as much as 95% in certain markets with land prices also soaring. What’s more, Savills research shows that retailers, parcel firms and logistics companies accounted for 64% of take-up in 2018, highlighting the scale of the impact e-commerce has had on the logistics market. 

Despite Europe lagging behind, the general forecast for the sector is incredibly positive. The UK ultimately acts as a very useful case for investors looking for potential opportunities on the continent. Of course, one size does not fit all, but by looking at the different European logistics markets and where they are compared with the UK in circa 2012 should help to forecast how this success might be replicated and also what lessons can be learnt. 

What’s clear is that the retail revolution is upon us and its looking distinctly continental.