Logistics sector on the cusp of a new wave

Published: 6 May 2020 - 11:21 a.m.

The logistics landscape in Dubai is witnessing an exciting wave of transformation. Through evolving consumer tastes and the rapid proliferation of disruptive technologies, and an ever increasing demand for e-commerce, the city has successfully positioned itself as a leading hub for logistics within the Middle East and globally.

It is a popular investment sector with growing interest globally and the sector also enjoys strong government support, comprising a key element of plans for the city’s continued economic growth. As a result, the government has invested heavily in boosting the trade and logistics sector through spending on supporting infrastructure such as ports and roads.

Recently, the sector is seeing increased occupier demand for modern logistics facilities as many of the older warehouses in Dubai have become functionally obsolete. Much of this occupier demand is being driven by retail operators, as they are faced with the challenge of boosting the productivity of their spaces while cutting costs in order to successfully keep up with the growth of e-commerce.

From this stems the need to innovate, adopt new agile ways of working, whilst abandoning the traditional models of doing business in order to thrive. As a result, more and more retailers are examining the interplay between bricks-and mortar, as well as online retailing, in order to compete in a rapidly changing environment. As retailers continue to grow their consumer base and promise more choice and convenience, this is increasing the demand for new and better quality warehouses and distribution centres. To this extent, both industries are rapidly merging to create what is being labelled ‘retail logistics’.

Moving forward, industry players in Dubai will need to rethink and rationalise their spaces. To keep up with the expected growth, entities in both the private and public sector will need to cooperate and incorporate a number of elements to ensure the success of omni-channel servicing.

Digitisation of Addresses

Delivering packages may seem like a straightforward process, however it often becomes a challenge as a result of wrong or incomplete addresses. In some cases, retailers or their last mile delivery partners have built-in systems within their platforms that automatically verify the address formatting to specific authority standards. Elsewhere, governments have invested in digital property addressing systems which provide every location with a unique digital address. This ultimately reduces transit times and improves the accuracy of last mile delivery. In 2015, the Dubai Municipality introduced ‘Makani’, an application aimed at improving location finding in the emirate. However, the application is not widely used and not many delivery services provide the option of entering the relevant Makani code in the address field.

Investing in Pick-Up Locations

Investing in near door delivery points and designated areas from where customers can collect their parcels is key to improving efficiencies, particularly in periods of high-volume online orders. This can either be through delivering to local stores or a secure locker facility. Retailers should incorporate technology that gives online shoppers the option to collect their parcels any time from locations convenient to them, allowing parcels to be tracked in real time so customers can have visibility and control over their shipments.

Innovations in Supply Chain

Scaling requires a different business model which includes more complex supply chain webs - this ranges from identifying the most appropriate approach to inventory management to the role of distribution centres. This also means incorporating technology in last mile delivery, such as automated delivery mechanisms (drones and driverless vehicles), to improve delivery service levels and potentially reduce costs.

Personalisation

Retailers are also focusing on customer demand when setting their expansion strategies. Integral to this is better customer relationship management (CRM) whether through managing the customer journey or ensuring engagement and the delivery of a seamless experience. Technology is the key enabler of this. Entities need to actively resort to real-time analytics to better detect patterns in customers’ shopping behaviours in order to successfully push more tailored products.

Leading the way

As a global leader in retail and logistics, Dubai has been at the forefront of this shifting landscape, which is leading to the rapid growth of retail logistics as an industry. With older industrial spaces struggling to cope with high volume orders and fulfilment demands, a new wave of innovative solutions are being incorporated to ensure industry players react quickly to the rapidly changing demands of consumers. Those that adapt faster will be in a better position to make the most of the opportunities available in a market as dynamic as the one in the Middle East.

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