The rapid growth of e-commerce food businesses requires the creation of an additional 187 million sq ft of logistics space in the UK between 2023 and 2027, according to research produced by Valor Real Estate Partners.
The company estimates that around 42 million sq ft of logistics space will need to be delivered in London’s North and South Circular corridor alone in that timeframe to meet growing demand for online food orders placed by people living in the capital.
Valor surveyed more than 4,0000 people in London on their grocery purchasing patterns and fulfilment requirements and found that 40% of people order groceries online at least once a week, with 35% ordering ready meals online from third parties such as Deliveroo and UberEats.
Delivery speed and fees were ranked as the two most important factors for people when buying.
Qiong Xu, head of research at Valor, said: “Despite the challenges posed by higher inflation and consumers’ return to brick-and-mortar shopping, the online channel continues to demonstrate resilience, with consumers blending their online and offline shopping behaviours. Our research suggests that the proportion of food purchased online is significantly higher in London than national data suggests, and with grocery spend being largely non-discretionary we can expect these online channels to continue to grow despite economic headwinds.
“Consumer behaviour and the preference to buy more goods online is shaping how cities develop and is creating more demand for critical last-mile infrastructure. In order for grocery retailers to meet consumer expectations around deliveries it is vital they have the right distribution facilities in the right locations to complement their store portfolios. The primary cost in fulfilling orders is transport but well-located last-mile facilities reduce vehicular miles and reduce the carbon cost, which is increasingly important to the conscientious consumer.”
