Econ Insights: Mapping Retail Distribution Centres
In this series, we look at interesting data sets to uncover hidden insights.
As part of a broader piece of work on the future of retail employment I was interested in the geographic distribution of retail warehousing and distribution centres. As this data was not readily available I manually collected data from 42 major supermarkets, online and high street retailers.
Blue = Online only, such as Amazon and Asos
Grey = High Street retailers such as Next, Boots and Sports Direct
Red = Supermarkets
As may be expected distribution centres track the motorway network forming a significant cluster in the Midlands around the so called 'golden triangle' from which 90% of the population can be reached within 4 hours. Other clusters exist around Liverpool / Manchester and Leeds / Doncaster. A number of centres, predominantly those of supermarkets serve London and the South East although these are usually satellite operations.
One interesting observation from the analysis is the level of variation in the number of DC's operated by different retailers. Supermarkets which need to supply fresh produce on a daily basis have the largest networks with an average of 13 DC's, ranging from Tesco with 20 to Morrsions with 6.
Amazon currently operates 18 distribution centres in the UK allowing them to guarantee next day delivery. However, in general online retailers tend to operate with fewer distribution centres than traditional retailers.
On the high street there is again significant variation. Many retailers are moving towards single-site operations and investing significantly in automating significant portions of their warehousing operations such as Sports Direct and JD Sports. In contrast, brands such as M&S, Next and the Arcadia group operate between 5 and 10 distribution centres.
In general, firms which have smaller distribution networks seem to be faring better in the current economic climate (based on an unscientific recall of the BBC R4 business news). This makes some logical sense - high street retailers are struggling to compete with online firms which lack the cost of maintaining bricks and mortar stores. In order to meet this challenge they need to (1) cuts costs and (2) develop an attractive online offer.
Streamlining their distribution networks helps by enabling greater investment in a single facility which over the long run reduces labour costs and enables a more reliable next day delivery service, something that few major retailers have achieved.
The map below shows the distribution centres of online and high street retailers. Yellow dots represent those retailers operating a single site, moving through orange (2-4), purple (5-8), blue (9-12) and 12-20 (black).