El Corte Inglés launches logistics business unit
What: The department store will create an independent logistical subsidiary to offer its infrastructure to third parties, duplicating its revenue thanks to the online retail increasing success.
Why is it important: Logistics and distribution have become a key factor in the unstoppable rise of online retail. By creating its own unit dedicated to logistics, Spain’s El Corte Inglés aims at competing with Amazon, taking advantage of its current logistics and transport infrastructure. This division already employs around 5,000 people and has 1.2 million sqm of floor space in 50 "central and regional" warehouses.
ECI will offer to third parties the possibility to become an end-to-end logistics operator, from product storage to delivery to the customer’s home. With this new business unit El Corte Inglés seeks to replicate successful operations such as the creation of the travel agency or the insurance brokerage, which started as internal units to eventually open to third parties and become independent companies within the group. This plan has been in the works for a couple years with the support of the consultancy firm Kearney and Goldman Sachs and if everything goes according to plan, the logistical unit should become independent within a year.
El Corte Inglés has been looking for new sources of income for months, a process accelerated by the pandemic after having to deal with a heavy blow in the retail division in 2020 (usually the biggest turnover for El Corte Inglés with revenues of EUR 12,000 million in 2019). This new project will also serve some real estate assets since they will build five logistics platforms in Spain to provide the service to third parties, which will at the same time, double the workforce.