The New Shopping Hubs for Cities: Warehouse Distribution Centers
Stores are giving way to offices and housing as residents say goodbye to the weekly shopping trip
Amazon warehouses can deliver orders in one or two hours to much of Los Angeles. PHOTO: PATRICK FALLON FOR THE WALL STREET JOURNAL
UNION, N.J.—Past scrapyards, railroad tracks, stacks of old wooden pallets and rusty shipping containers here sits a nondescript warehouse, alongside a snarl of freeway overpasses, with two dozen trucks parked at its docks.
This is where families across the dense New York City metropolitan area are getting their essential household shopping done.
Every day, tens of thousands of bulk household items move through the Boxed.com fulfillment center, destined for the online retailer’s customers along the Northeast corridor. Incoming orders get assigned to large plastic bins that travel along an automated system of nearly 2 miles of conveyors. Workers stationed along the winding route drop each item—from paper towels to peanut butter—into the bins as they pass by. When the order is complete, packers arrange the items in a box, tape it shut and set it on another conveyor headed for a waiting delivery truck.
“All these undesirable locations are now really desirable” for retail, Boxed founder Chieh Huang said on a recent tour of this facility.
Warehouses like these are becoming a way of life for many urbanites. Instead of spending the afternoon choosing items off store shelves and standing in a checkout line, city dwellers of the future will tap a few buttons on hand-held devices and a part-human, part-machine warehouse crew in a nearby industrial district will handle the transaction from start to finish. The weekly shopping is done in 10 minutes, and the shopper never has to leave the house.
“It’s shopping as infrastructure,” says Adie Tomer, a fellow at the Brookings Institution’s Metropolitan Policy Program. The growing network of e-commerce sites, warehouses and delivery services will “function like a utility,” says Mr. Tomer, who has two small children and subscribes to receive regular deliveries of diapers from Amazon.com Inc.
Similar to running water or broadband internet, he says, “when it’s off, it’s a great inconvenience to our family, but when it’s on, I kind of take it for granted. Magically, the diapers are at the front door—great. I don’t even think about it.”
Unlike the familiar shopping center that draws shoppers in with lighted signs, colorful advertisements, ample parking and public-transportation hubs, these neighborhood fulfillment centers aren’t designed with the public in mind. They’re often plain, designed to blend in and go unnoticed, and they’re in areas most people wouldn’t think of going to shop: industrial parcels in vacant pockets close to and inside cities, adjacent to railroad tracks and freeways.
These long-tucked-away areas are experiencing “a bit of an economic renaissance,” says David Egan, who leads industrial market research at real-estate brokerage CBRE Inc. “Industrial corridors that used to be centered around manufacturing—now they’re centered around distribution.”
In a small industrial pocket of the Los Angeles neighborhood of Atwater Village, an unmarked warehouse sits at the end of a long driveway, tucked behind a car-repair shop and a bulk flooring business. Inside, dozens of Amazon workers push carts up and down narrow aisles, selecting dry goods from shelves and cold items from grocery-store-style freezers, then placing them into brown paper bags for delivery.
With the Atwater Village warehouse and three other similar facilities in the Los Angeles area, Amazon Prime Now can deliver orders within a one- or two-hour time frame to a large swath of Los Angeles County. Aside from groceries, the facility stocks everything from children’s books and toys to makeup, mobile-phone chargers and luggage.
“We sell a lot of consumables, but we’re also fulfilling a need customers have when they’re in a pinch,” says Amazon spokeswoman Amanda Ip.
The mad dash by Amazon, Boxed and others to meet the immediate demands of e-commerce shoppers coincides with the hastening decline of many urban and suburban shopping centers. Department-store chains, such as Kohl’s Corp. , Macy’s Inc. and Sears Holdings Corp. , which historically anchored megamalls, have announced dozens of store closings in the past year. Shopping-center vacancy rates are on the rise.
Many cities are razing downtown shopping centers from a bygone era to make way for hotels, office buildings and new housing developments. Suburban malls trying to keep the doors open have shifted their focus to higher-scale restaurants and new entertainment offerings, such as golf driving ranges, wall climbing and skydiving simulators.
For some shoppers, bypassing malls and ordering necessities is becoming a routine. As the mother of a 9-month-old baby boy, Katie Neumann of Albuquerque says she’s starting to do more of her shopping online—through theWal-Mart Stores Inc. website and other retailers—because it’s more convenient. “I don’t have to get the baby all ready to go somewhere, and online it’s easier for me to judge how much I’m spending,” she says. “Aside from waiting a few days for shipping, it’s nice to not have to go in anywhere.”
Ms. Neumann, who is 27 and married, says she doesn’t get out of the house for fun too often. “But if I were to go out, it probably wouldn’t be to a mall, at least not to buy anything,” she says.
That’s the ideal result of shopping’s new infrastructure, say some observers—that city dwellers spend less time pushing around shopping carts and more time in restaurant booths, out for walks or meeting friends at the park.
“Getting goods delivered to one’s home doesn’t eliminate that other part of the human experience—wanting to get out of the house to get fresh air,” says Brookings’s Mr. Tomer. “People will just exchange it. ‘Now that this other itch is scratched, maybe I’ll sit outside with a newspaper.’ ”