Retailers’ megashed plans

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Three retailers have put forward proposals for individual megasheds upwards of 650,000 sq ft each around the country as they put in place supply chain systems to deal with growing consumer demand.

Tesco is submitting plans for an £65 million 850,000 sq ft depot at Sterling St James’ 310-acre Centreport scheme in Goole, East Yorkshire, while Ikea is looking to build a 1.23 million sq ft warehouse near Bury St Edmunds in Suffolk and John Lewis has secured a deal for a 650,000 sq ft automated distribution centre at Gazeley’s and Land Securities’ Nova MK scheme in Milton Keynes, Bedfordshire.

Property pundits claimed these deals show the way for future supply chain configurations with large megasheds centrally located within the country or specific region and smaller satellite sheds to supplement them.

Lambert Smith Hampton is advising Tesco on its acquisition, which also includes the 127-acre former NEC production facility in Livingston, Scotland where the supermarket will build a one million sq ft multi-temperature distribution centre. The centre will cater for the expansion of Tesco’s Scotland operations and will replace smaller facilities in Dundee and Livingston and reduce trunking from depots at Manchester and Doncaster. A further 400,000 sq ft building has been acquired in Crewe for the retailer’s continued expansion of its dot-com operations.

The site, Cross-Flow 380, was a ProLogis speculative distribution centre development scheme. It has also acquired the former Wincanton/Eddie Stobart 200,000 sq ft warehouse at DIRFT East in Daventry, again for dot-com activity.

The £45m John Lewis depot is a major part of the company’s programme of supply chain investment, supporting the plans to open ten new shops in ten years, and accelerating improvements in productivity, availability and customer service.

Patrick Lewis, supply chain director at John Lewis, said: “To win in our market, we need to improve our service continually. For the supply chain this means improving availability and at the same time reducing our costs so that we can invest in front line service. This development gives us the space we need to increase the scale of our business, and allows us to provide better service to our shops and customers at a lower cost “.

The distribution centre’s automation equipment will be provided by Knapp and will deliver the capability to issue stock little and often, based on demand. It will also allow John Lewis to fulfil more items direct to customers from its central DCs, improving customer service and consolidating the company’s position as a leading multi-channel retailer.

Nigel Godfrey, development director, Gazeley, said: “The [John Lewis] building will incorporate a range of design initiatives which will contribute to a projected saving of 66 per cent of carbon dioxide emissions and a significant reduction in energy costs when compared with a standard unit. The building is being leased for 20 years and is scheduled for completion in June 2007. Gazeley will undertake a £7 million fit-out of the building.”

The distribution centre will handle stock, which is currently held in John Lewis’s Stevenage warehouse. The Stevenage facility will remain as a storage depot for larger items of stock, and the company will invest £3.5 million to refit the warehouse for its new role and update its computer systems. Up to 60 redundancies might be made from the Stevenage warehouse during 2009. All partners will be offered the opportunity to transfer to the new site.

The Ikea development at Property Recycling Group’s site at Stanton, Bury St Edmunds is expected to create some 300 jobs and is the result of three years negotiation.

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