Will This New Idea Turn Shopping Malls Around?

Case Equity Partners developed a patent-pending solution to the challenges facing brick and mortar and e-commerce: The Shopping Fulfillment Center (SFC). The SFC is a “hybridization of brick and click” combining a last-mile fulfillment center with a lifestyle retail center – requiring minimal up-front retailer investment or fixed costs, while providing shoppers with the best of e-tail and retail.

The retail conundrum

Brick-and-mortar retailers aren’t lean or nimble enough to compete against e-commerce juggernauts. Brick-and-mortar provides opportunities to touch and feel and instant gratification but lacks the vast product assortment that is possible online. Furthermore, brick and mortar's traditional retail stores and outdated distribution networks drive up fixed costs.

E-commerce, too, cannot survive shoppers service/pricing expectation. Though vast amounts of products can be displayed online, e-tail incentivizes shoppers to wait for their products — often to be disappointed upon receipt. E-tailers incur significant expense shortening delivery time while absorbing its costs. Real estate on the web is plentiful, so differentiation often comes down to price and yes, free shipping/returns.

Without a revolutionary solution to the retail conundrum, brick-and-mortar retailers find themselves competing with a rival whose business plan isn’t profitable, and for now have the resources to continue undercutting their margins.

The solution

The SFC allows retailers to shed fixed costs and focus on their core competency. Retailers should not be in the logistics business, but rather focus on marketing and sales. This is achieved by locating within the SFC; the rear holds vast amounts of product utilizing modern robotics and logistics, and the front consists of a lifestyle retail center providing shoppers with a cutting-edge retail shopping experience.

The SFC’s omnichannel nature extends to technology that ties e-tail and retail together. Shoppers at home using a web version of the SFC app have their orders fulfilled at a local SFC where they can view and touch samples of products. When in the SFC, a push of a button on your handheld device instructs the fulfillment center robotics to pick your shopping cart contents in real time - mere feet away. Customers can receive their products in several ways, including pickup lines, same-day home delivery, or purchasing and taking it home on the spot.

A key component of the national network of SFC’s is that its managed by one third-party logistics company, which allows retailers to share costs across one logistics network and rollout or reduce stores as needed. Entering a market no longer requires an infrastructure investment. This reduces retail store sizes and balances stock efficiently while reducing expenses.

For the shopper: imagine a toy store is a playground with barcodes, electronics stores are laid out like an Apple Store, and apparel stores only display one of each product, allowing shoppers to digitally call a specific color and size to pre-designated dressing rooms.

SFCs enable retailers to  (1) sell more product, (2) reduce online returns (no need to buy seven shoes to return six as the SFC is a mere drive away), and (3) shed the dead weight of legacy logistics infrastructure by employing the most modern of infrastructure networks, paid for on a per use basis.

In development for over a year, Case Equity Partners have worked closely with material handling and logistics leaders and have recently begun discussions with retailer partners. Overseeing retailer/e-tailer recruitment is the international brokerage Jones Lang LaSalle’s Matt Powers, head of its retail/e-commerce initiative, and Larry Kilduff who oversees retail in the Midwest.

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