Online Sales Forecasts Drive Amazon’s UK Commercial Property Expansion

Posted on 28 November, 2011 by Neil Bird

High Street commercial property is bracing itself for a turbulent period ahead as analysts predict little growth over the coming festive season. Tough economic conditions and lack of consumer confidence are the two factors persuading experts that we are likely to see no more than a 1% rise over the same period last year when freezing temperatures were blamed for lower than expected spending.

This is not encouraging news for the retail sector which employs over 2.9 million people across 290,000 commercial properties in the UK and was relying on a buoyant Christmas following a disappointing last quarter. If the forecasts are correct it will also represent bad news for the government as consumer spending is seen as vital in stimulating growth and aiding economic recovery.

It isn’t all bad news however. A recent report from the Interactive Media in Retail Group (IMRG) predicts that, despite the gloomy economic climate, online sales during December will rise by14% over last year’s total to a staggering £7.75 billion. In a separate report eMarket Services claims that, 240 million European consumers will shop online in the run up to Christmas with UK shoppers, who lead the way ahead of Germany and France, accounting for 30% of that figure.

One of the leading beneficiaries of these forecasts is certain to be Amazon whose Christmas sale is already fuelling demand. The US based company which was launched in 1998 has expanded way beyond its original role as a book retailer and is currently growing at a rate of 20% each year.

This is in large part due to the phenomenal success of the Kindle ebook reader which sold out in five and a half hours when it was launched in 2007. Now, according to figures released earlier this year, of the 12.8 million e-readers sold annually 48% are Kindle models. This has led to a revolution in publishing and with software available for many operating systems and a new tablet on the market Amazon now sells more ebooks than traditional print versions.

This growth has encouraged the online giant to invest in more commercial property in the UK to meet the growing demand. Recently Amazon has opened offices in Edinburgh to provide technical support and customer services while two new fulfilment centres have opened in Dunfermline and Rugeley, increasing the number of UK distribution depots to seven.

The Rugeley centre, which is expected to be fully operational in 2012, is on a 700,000 square foot site close to the town’s power station and will eventually create between 700 and 900 permanent and temporary jobs, fulfilling orders from customers in the UK and Europe. Amazon is believed to have taken out a 15 year lease on the commercial property which demonstrates the company’s confidence in its long term strategy and its commitment to the operation.

Speaking about the new fulfilment centres, Amazon’s vice president of operations, Arthur Valdez, said: “We have a busy Christmas coming up and look forward to assembling a team of talented people who will play their part in ensuring that customers receive the millions of items that will be ordered over the festive season.” If the analyst’s forecasts are correct they will also play a major role in contributing to the growth of the UK economy over the same period.

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