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[39]Business Retailers holding more 'safety stock' to be ready for more Covid-19 disruptions, CBRE says Marta Steeman06:00, Jun 26 2020 * [40]Facebook * [41]Twitter * [42]Whats App * [43]Reddit * [44]Email Real estate firm CBRE says retailers are stocking up to be more resilient if there are more Covid-19 disruptions. Monique Ford/Stuff Real estate firm CBRE says retailers are stocking up to be more resilient if there are more Covid-19 disruptions. Some retailers are stocking up to ensure their businesses are more resilient in any further Covid-19 disruptions. Real estate agent CBRE said this is driving interest in warehouse and logistics properties, and estimates some retailers were increasing inventory by up to 10 per cent to avoid being caught short. Retail specialist Chris Wilkinson of First Retail Group said some retailers were holding more stock because they had been able to purchase from distressed supply chains in other parts of the world. "In other cases we've got some real challenges with supply chains where manufacturing and distribution companies have folded and through Covid there hasn't been the manufacturing done." READ MORE: * [45]Supermarket without customers opens in Auckland * [46]"Super depot" for NZ Post in Wellington could create 350 jobs First Retail Group managing director Chris Wilkinson says some retailers have taken the opportunity of buying more stock from distressed companies overseas. Cameron Burnell/Stuff First Retail Group managing director Chris Wilkinson says some retailers have taken the opportunity of buying more stock from distressed companies overseas. Some large retailers were increasing their online distribution capability. "They've had such a seismic shift to online that they are looking at putting more main centre type distribution hubs in, just like we've seen in Wellington where [47]Courier Post are putting in a big new distribution centre." Some retailers were considering developing "local fulfilment hubs" where products were distributed locally. [48]And supermarkets were establishing "dark stores" dedicated to online retailing. "There's likelihood we will see more dark stores happen," Wilkinson said. Retailers were looking at large distribution sites for that. "Everyone is thinking about resilience right now. It doesn't take much to lose goodwill," Wilkinson said. Big retail companies' shareholders wanted to see strategies that would make the companies they had invested in more resilient. The trend to more online sales has been accelerated by the pandemic, experts say. Joseph Johnson/Stuff The trend to more online sales has been accelerated by the pandemic, experts say. Head of CBRE’s Supply Chain Advisory across the Pacific region Christine Miller said Auckland was probably seeing the most increase in demand for industrial property in response to retailers increasing inventory. E-commerce operations took three times more space than just storage because there was space needed for picking up, package, dispatching and staging processes. "Businesses are now increasing their inventory "saftey stock" so they are starting to hold more inventory so that when the disruption occurs they are not caught unprepared," Miller said. This was very different from "just in time inventory" previously where businesses were careful not to have too much money wrapped up in stock and that stock did not spend much time in a warehouse. "In the current environment where we've seen the degree of disruption, it is actually becoming far more tolerable to have higher levels of inventory. "And we're seeing indications that that could be upwards of as much as 10 per cent of additional inventory." If a warehouse was operating efficiently it would not normally have space for that much extra cargo. “We’re seeing businesses indicate that they are going to hold product for up to 12 months in order to avoid pushing it into the clearance channels," Miller said. Greg Harford , chief executive of Retail NZ, says it will take a few months to more clearly see the impact of the pandemic on retailing. Supplied Greg Harford , chief executive of Retail NZ, says it will take a few months to more clearly see the impact of the pandemic on retailing. "I'm certainly aware of some businesses that have ordered more stock than they would normally do because they are a bit worried about risks to supply chains and so forth," Retail NZ chief executive Greg Harford said. "But I'm not aware that's necessarily terribly widespread." "I don't think we are going to see a huge upswing in rehousing needed by retailers particularly over the next little while," Harford said. 'The trend we are seeing is a move to online sales and that will drive ultimately more logistics arrangements out of warehousing but I think it's a long way before that necessarily happens." "It's going to take time for the market to adjust to the new reality, I think. "We're only two to three months into the new world so it could be some months before we have a really good sense of how things are going to settle down," Harford said. 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