OUT OF THE BIG BOX THINKING
With a population of just over 133,000, Visalia, California, isn’t what many would call a big city. Located halfway between Fresno and Bakersfield, Visalia may seem like an unlikely place to set up a retail distribution center, but it’s working well for such businesses as Joann Fabrics, VWR and Hilti USA. Why?
“Geographically, we’re in the sweet-spot, so to speak,” says Devon Jones, the city’s Economic Development manager. “We have a high quality industrial area with infrastructure in place.”
Visalia currently has 1,000 acres of land “zoned and ready to go,” according to Jones, who also boasts about one of the most streamlined permitting processes in the Golden State, a sizeable investment in roads over the past few years and a “very efficient connection” to Highway 99 and the rest of California.
For businesses looking to serve the central part of the country, a central location is imperative. That’s what makes Joplin, Missouri, such an ideal location for retail distribution.
“Joplin is very centrally located in the Midwest, with very good transportation access,” explains Rob O’Brian, president of the Joplin Area Chamber of Commerce and Joplin Regional Partnership. “We also have a foreign trade zone, which can be very helpful for companies bringing product into the United States from other countries.”
Joplin is currently home to distribution facilities for nationally and internationally known brands such as Blue Buffalo and the newly formed Newell Brands, a merging of the Newell Rubbermaid and Jarden companies. Newell Brands ships everything from consumer appliances and electronics to camping equipment from Joplin to retail locations across the county.
Joplin and Visalia demonstrate that big cities may not always be the best fit for retail distribution centers. Smaller cities are often a far better value, offering all of the same technology as bigger cities but with less traffic on the lines. As for workers, smaller cities often have just as many qualified workers as big cities do, but they often require lower wages than equally qualified workers in larger metropolitan areas.
Small is Beautiful
Location is arguably the most crucial factor to consider when searching for a site for your retail distribution center. You want to be close to your customers, but you also must avoid high overhead and oppressive taxes. You’ll also need to consider infrastructure and logistics. Working with an economic development (ED) team in your desired region of the country can help yield many options you may not have considered, such as build-to-suit locations or local buy-ins.
A “central but suburban” location helps alleviate a big headache many retail warehousing businesses face: traffic.
“Smaller cities make it easier to pick up and drop off loads and be back on the highway really quickly,” O’Brian says. “In bigger metro areas, sitting in traffic costs time and money. Here in Joplin, almost every location is within minutes to a major state or Interstate highway. That means more productive transportation time, more time spent in motion, getting things to the customer or getting things in from retail distribution center.”
A good rule of thumb is positioning your warehouse within a two-days drive to your farthest customer. Keep in mind that this varies by business. For some retailers, two days’ transit is more than enough time, but for others (such as medical or fresh produce suppliers) two days may not be fast enough. Proximity to airports and third-party logistics hubs for services such as UPS, FedEx and DHL also must be considered. The closer you are to a hub, the faster your turnaround should be.
Reducing truck traffic benefits employees who commute to Joplin’s warehousing businesses,” according to O’Brian. “Because traffic congestion is very light here, 30 minutes is 25 miles,” he explains. “In a larger city, you may not get very far in 30 minutes. This really expands the workforce opportunities.”
Workers of the Burbs Unite
For Nancy Lockwood, executive director of the Visalia Economic Development Corp., it is the people of Visalia that make the city such a draw to retail distribution businesses.
“Executives appreciate the fact that this is a very welcoming community, their employees can afford to buy a home, there’s a downtown, lots of restaurants, live entertainment. You don’t have to go out of town to hear a symphony. They appreciate … that they can be in Los Angeles in two-and-a-half hours or San Francisco in four hours.”
But it is important to consider whether there is a surplus of available, local logistics workers in smaller cities. Not that it’s a problem in Joplin, to hear O’Brian tell it.
“People here have a strong work ethic,” he says, “and they’re looking for good job opportunities.”
Visalia boasts having the lowest cost of labor in California. “We have an available workforce; people here want to work, and they’re hard workers,” Lockwood says. “When they need to work overtime, they work overtime and are glad to do it.”
In addition to the low-cost labor, Visalia also has one of the lowest costs of living in the state, according to Jones. “We may not be considered a first glance by many retailers,” he says, “but they really need to drill down and consider smaller locations.”
Where to Warehouse
Joplin has a solid reputation in particular for its warehousing workforce, according to O’Brian.
“We have a workforce in the Joplin region that understands warehousing and distribution,” he explains. “We have a lot of transportation and trucking companies here. Some places contract to trucking firms, but we have people here that can do both.”
O’Brian believes Joplin has a competitive edge thanks to numerous partnerships with local schools, such as nearby Missouri Southern State University, which has a logistics program in its business school.
“They have partner relationships with universities in Germany, Ukraine and a few countries in Asia,” O’Brian says of the MSSU program. “They have worked hard to teach logistics on not just a national scale but on a global scale.”
The Joplin area is home to a number of technical schools that work with local businesses to custom build curriculum and training programs for students looking for employment at local logistics businesses following graduation.
“They learn to run automated retail distribution equipment, forklifts, packaging—there’s a wide array of training opportunities,” says O’Brian.
From Small Town to Big World
These days, parent companies of retail distribution centers serving North American consumers are not always headquartered on this continent. Economic development teams not only extol the benefits of warehouses in smaller cities to U.S.-based retailers but to international clients as well.
That can take some convincing due to perceptions that big cities are filled with more potential low-cost workers. Smaller cities across the country must dispel such notions while playing up the advantages of newly arriving companies becoming big fish in small ponds.
“Sometimes, international companies might wonder what kind of reception they might get in a smaller metro area, but the door is really open here,” O’Brian says of Joplin. “There’s a lot of diversity for being a smaller metro area.”
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