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Industrial Retailers, Developers Should Take a Page from Amazon’s Playbook

E-commerce giant Amazon, which is investing heavily in New York State and in Orange County, is increasing its national footprint in the midst of a global pandemic.


The firm is building a 1-million-square-foot fulfillment center in Montgomery and will occupy a 227,000-square-foot building a 500 Hudson Valley Ave. adjacent to Stewart International Airport in New Windsor for a new delivery facility. In addition, the company announced significant expansion plans for its operations in New York City and other major U.S. markets. On Aug. 18, the firm reported it intends to invest $1.4 billion and expand operations in key cities, including New York. The initiative involves the hiring of 3,500 new tech and corporate jobs.


In Manhattan, Amazon plans to create 2,000 new jobs and has acquired the Lord & Taylor Fifth Avenue building, where the company plans to open a new 630,000-square-foot office. Amazon has invested more than $7 billion in the State of New York since 2010 and currently employs 24,000 workers across the state.


In an article in NAIOP’s Development magazine, author Ed Klimek, AIA, NCARB chronicles Amazon’s strategies that led to the company’s explosive growth that continues even during the COVID-19 pandemic.


The partner with Princeton, NJ-based KSS Architects notes that Amazon generated $280.52 billion in net sales in 2019, up 20.5% from the previous year. Since the coronavirus crisis began, consumer spending at the e-commerce giant is up 35% compared to the same period last year according to Facteus, a firm that analyzes daily payment card transactions. In addition to the aforementioned growth plans in New York and other key markets announced recently, Amazon reported in April that it was seeking to hire 75,000 additional workers following more than 100,000 new hires in March.


Klimek notes that one of the most crucial drivers of Amazon’s growth is its “continuous ability to bring customers back to purchase new products and services on Amazon.”


He related, “Industrial development must implement its own marketplace mechanism to better connect consumers with products and services, and to help eliminate friction from horizontal integration as new networks are created. This will mean rethinking warehouses that store goods outside the suburban and urban landscape. Instead, development will favor true mixed-use developments where ideas are generated, companies collaborate, and the newest products are created and distributed at a rapid pace to a continuously returning consumer base. As opposed to traditional industrial development, these will be mixed-use marketplaces consumers will visit, where the integrated possibilities of commerce are spread out before their eyes.”


Another winning strategy employed by Amazon is its mantra to continue to improve the customer experience at every opportunity, at least in part by adapting its supply chain to be in close proximity to its customers.


“Industrial development must have the ability to both produce and distribute in ways that are driven by the values and complexities of an increasingly localized market, even as it interacts with the remaining global supply chain," Klimek notes. “A client recently captured this well as he said, ‘You can get a whole lot more product out there if you can simply get components rather than rely on waiting for completed assemblies.’”


Klimek relates that as the COVID crisis continues, Amazon founder and CEO Jeff Bezos continues to grow its infrastructure in order to increase scale, customer base and business.


Looking forward, he notes, “The infrastructure that will support new integrated development will no longer have as its sole focus the 40-foot box of global trade. This typology will, of course, remain, but infrastructure will count on connection and connectivity through digital and physical means. For example, integrated industrial development will rely on a robust network that supports multi-sized vehicles working in multiple modes with increasing sustainability and decreasing friction. Industrial clients will begin to control an increasingly large portion of local transportation infrastructure, while still relying on externally controlled transportation infrastructure.”


Kilmek concludes, “It is possible that in the post COVID-19 environment we may have lost some of the obsession with same-day or within-the-hour delivery. But, regardless, we will expect a localized system of delivery that is better integrated within our daily lives.


For the full Development Magazine article, go to: