Retail Logistics Market Trends

Growth Drivers

• Growing advancement in AI & big data analytics - The integration of AI and big data analytics in the industry has fostered the automated real-time assessment of traffic patterns, goods transportation capabilities, consumer preferences, and delivery schedules. These technologies enable merchants to cut down on operation costs. Companies such as Oracle, Koerber, Manhattan Associates, and Blue Yonder, are leveraging AI-powered Software-as-a-Services (SaaS) to offer efficient supply chain execution systems. In March 2024, Walmart Commerce Technologies introduced Route Optimization SaaS software solution that provides local fulfillment including pickup, shipping, and delivery.
  
  Machine learning (ML) facilitates predictive analysis of upcoming product demand, calculates lead time, and ensures informed decision-making in a fast-paced retail logistics environment. AWS Supply Chain, Microsoft Supply Chain Platform, Google Cloud Vertex, and IBM Watson are some of the available ML-based supply chain management (SCM) tools in the market. These tools help retailers optimize their net working capital deployment, and develop better customer experiences. Consequently, the retail logistics market is expected to experience an upswing over the forecast year.
• Adoption of sustainable multimodal transportation - The utilization of multimodal transportation such as road, rail, water, and air, simplifies customs processes, reduces carbon emissions, and lowers cargo processing time. As per 2023 research, multimodal transportation is predicted to reduce carbon emissions by about 29% in contrast to single-mode transportation.
  
  Big-box retailers are broadening their transportation channels to lower their carbon footprint. For instance, in March 2023, IKEA partnered with KLOG, to create a long-distance block train intended for the Poland-Spain-Poland corridor. This eliminated the need for 4,500 trucks and lowered CO2 emissions by 5,100 tons per year. Hence, the trend of multimodal transport systems is growing in retail logistics to achieve the target of net zero.
• Rise in disposable income among the middle-class population - With the improving standard of living, the expenditure on discretionary purchases including home furnishings, clothing, electronics, and luxury items has increased. The rising middle-class population in developing countries provides a tailwind for the trading sector. According to the National Institutes of Health (NIH), the number of middle-class households in China increased from 270 to 490 million from 2013 to 2019. Thus, growing buying capabilities is fostering market expansion.

Challenges

• Growing supply chain disruptions - The market is anticipated to be hindered by operational inefficiency in logistics. A successful supply chain is constructed and operated by optimizing resources, lowering inventory, facilitating greater cooperation and interaction between external and internal stakeholders, and speeding product cycle time.
  
  Achieving enough operational efficiency can be difficult in retail supply chains since they lack transparency across key business units. Furthermore, the suppliers must use the newest business resource planning software in place of traditional spreadsheets. As a result, it is anticipated that supply chain interruptions will restrict market expansion.
• Fluctuations in the price of logistics transportation - As the fuel prices keep fluctuating, it affects the overall logistics expenses. Thus, managing this kind of expense is a crucial concern for logistics businesses, as it will negatively impact the demand for retail logistics.