What: A retail veteran’s view on the current paradox between online retailers buying land and department stores being pushed to sell off real estate.

Why it is important: Warehouse space is the new gold rush in the US and elsewhere in the world, to allow smarter, faster, more efficient and less costly logistics.

Walter Loeb, who spent most of his career in retail (Macy’s, May Department Stores and Allied) reviews the current paradox and dichotomy between online players rushing to acquire real estate, while at the same time department stores are urged to divest in stores and switch to become 100% digital.

According to the retail veteran, major US retailers are currently buying a significant number of square metres dedicated to warehousing as a matter of control, both in terms of costs and operations. The top 25 US retailers bought 3,8 m square metres in 2020, a decade high. Owning the warehouse allows to operate more efficiently and save on logistics, but also to be able to tamper with global supply shortage, like the one we are going through this year. This allows for instance to anticipate orders and stock products well in advance, and limit reliance on just-in-time logistics. Amazon is currently the largest corporate land owner in the US, with 78 buildings and 8,36 m square metres.

In the meantime, other retail companies such as Macy’s are being urged to divest their real estate holdings by activist investors who want stores to be sold off. Saks Fifth Avenue is currently going in that direction, by its split between an online company and a real estate one. Loeb is currently in wait and see mode for what relates to this strategy.

Why Retailers Win Big By Owning Real Estate