Grade A and B Warehousing Expected to Witness a 20 Percent Y-O-Y Growth in Next Five Years: Praxis Report

Mumbai, India, February 24, 2021 --(PR.com)-- The warehousing segment under the logistics sector has witnessed a phenomenal run in the past few years. Warehousing has witnessed investments from private equity, real estate players, and other new entrants, who have invested large sums in this segment.

A recent study by Praxis Global Alliance, a leading management consulting and advisory firm highlights a detailed perspective on the key warehousing trends and emerging opportunities as the economy is rebounding from the COVID-19 crisis.

Further, assessing seven key end-user industries across India, the report estimates that the growth in warehousing demand is chiefly attributed to the top 2-3 end-user industries such as FMCG, retail, Ecommerce, and auto & auto ancillary. These industries are expected to witness a 2.5 to 4x growth from FY20 to FY25. This demand is on the back of robust growth in these industries over the past few years.

Some key insights from the report include:

In India pre-COVID – Grade A and B warehouse grew at 18 percent CAGR over FY18-20; Post-COVID – Recovery witnessed in terms of labor availability and order fulfillment time.
Going ahead, Ecommerce and retail segments are expected to push Grade A and Grade B warehousing demand in India with 25+ percent CAGR over FY18-25.
Ecommerce, FMCG, retail industries, would witness significant growth ranging from 2.5 to 4x from current levels.

Ecommerce warehousing stock is expected to grow from ~56M sqft in FY20 to ~227M sqft in FY25; a 4x growth;
FMCG warehousing stock is expected to grow from ~17M sqft in FY20 to 44M sqft in FY25, growing at 2.5x;
Retail warehousing stock is expected to grow from ~60M sqft in FY20 to ~205M sqft in FY25, about 3.5x growth.

FMCG, FMCD, Retail, and Pharmaceuticals have great potential for investment opportunities like automation in warehouse operations, racking optimization & growth of full-stack logistics.

Rahul Mehta, Domain Leader, Transportation and Logistics, Praxis Global Alliance said, “The boom in warehousing sector was primarily led by sectors such as retail, Ecommerce, FMCG, etc., and is expected to witness continued momentum over the next five years. The warehousing sector faced issues during COVID but has bounced back strongly and poised to cross the pre-COVID level growth trajectory.”

Savio Monteiro, SVP, Transportation and Logistics, Praxis Global Alliance said, “Grade A warehouses are expected to grow at a CAGR of 25 percent over the next five years on the back of robust demand from Ecommerce, retail, FMCG and other sectors. Private Equity has evinced significant interest in this sector with huge investments during the pre-COVID period. We expect this trend to continue post COVID too, as the economy comes back to full steam.”

“Some of the key trends expected in warehousing sector over the short-medium and long term are automation (IoT, Robotics, AI) in warehousing, expansion to tier 2 and 3 cities and full stack solutions 3PL/4PL etc. across the end use sectors. These emerging opportunities would shape the growth path of the warehousing sector,” he added.

Going ahead and backed by this buoyant growth in these seven end-use industries, the demand for Grade A and Grade B warehousing is expected to grow at a CAGR of 25 percent from 107M sqft to 325M sqft between FY20 to FY25 and 20 percent from 167M sqft to 419M sqft between FY20 to FY25 respectively.

Apart from the existing trends, future trends are emerging in the warehousing segment. These trends are expected to be implemented with a short term (3-6 months), medium-term (6 months to 1 year), and long-term focus (about 5 years).

The key emerging trends witnessed in the warehouse growth over the next few years across these end-use industries range from warehouse automation, expansion to tier-2 cities, racking solutions, full-stack logistics, multi-logistics parks, etc.

About Praxis: Praxis Global Alliance is the next-gen management consulting and business research services firm revolutionizing the way consulting projects are delivered. It delivers practical solutions to the toughest business problems by uniquely combining domain practitioner expertise, AI-led research approaches, and digital technologies. The company operates four business units including Praxis Global Alliance Financial Investor Group (FIG) offering pre-deal support, commercial due diligence, post-acquisition value creation, Praxis Global Alliance Business Enablement and Transformation (BET) for practitioner-led business advisory and consulting, PGA Labs focused on technology-led business and market research and tools, and PraxDigital™ delivering data engineering and analytics, AI, OpenData and visualization solutions to clients across verticals. Present in 4 locations in India and Singapore, Praxis Global Alliance works with C-suite to the front-line executives across business streams helping them with end-to-end business enablement, organizational transformation, and revenue maximization support in an agile environment.