A warehouse migration is a high-risk and complex undertaking, involving various challenges. Retailers may undergo warehouse migrations for a number of reasons: changing scales of business, cost optimization, multi-channel fulfillment, and increased supply chain visibility, among others. During a retail warehouse migration, the relationship the retailer has with the warehouse can change as well. For example, a retailer may transition from owning their own warehouse to outsourcing to a third-party logistics (3PL) company. Ultimately, though, a successful migration requires careful planning and strategic execution. In this piece, we will examine some key challenges faced during warehouse migrations and outline strategies to address these obstacles effectively.  

Key Challenges in Retail Warehouse Migrations  

1. Disruptions and Downtime Costs 
A significant challenge during warehouse migrations is the potential for disruptions and downtime, which can be extremely costly. Downtime during a warehouse migration can result in losses ranging from $10,000 to $100,000 per day depending on the scope of the migration. Based on what we have seen in industry, these costs stem from things like shipment delays or inventory management errors. Minimizing downtime is essential to maintain business continuity and control operational costs.  

2. Inventory Management and Traceability 
Managing inventory effectively during a warehouse migration is another critical challenge. When relocating large quantities of goods, discrepancies in inventory records can occur, leading to inefficiencies or errors that can have long-term consequences. Retailers often face inventory management challenges during relocations, especially when manual tracking methods are used. Modernizing the way systems communicate, like upgrading the integration layer between Warehouse Management Systems (WMS) and the ERP, can help ensure accuracy and traceability during transitions. According to a 2024 Warehouse Efficiency Report, 45% of businesses that migrated warehouses reported inventory management as one of their top three challenges.   

3. Change Management and Communication 
Poor communication with internal teams and external stakeholders can create confusion during migrations. With so many parties involved in a retail warehouse migration (project teams, warehouse staff, suppliers, logistics providers, customers, etc.), effective communication can be very difficult. For example, a failure to coordinate with the compliance team on proper ticketing, labeling, and palletization procedures can lead to increased B2B customer chargebacks when shipping out of the new warehouse. When communication breaks down, project timelines are pushed back, and inventory becomes harder to manage. As a result, customers may lose trust and become dissatisfied.  

Strategies for Successful Retail Warehouse Migrations  

While the challenges above can be difficult, the strategies below can help retailers navigate them successfully.  

1. Thorough Planning and Phased Implementation 
Successful warehouse migrations require careful planning and organization. A popular strategy is breaking the migration process into smaller, manageable phases by de-coupling inbound and outbound inventory flows, allowing businesses to better control each aspect of the move—from inventory transfer to employee training and systems integration. Phased implementation also allows businesses to maintain operations at reduced capacity, minimizing risk and allowing for adjustments as needed.  

Clarkston takes this approach to help mitigate operational disruptions and ensure that each step is thoroughly executed before progressing. Leveraging forecasts and data from previous years’ sales is another strategy to increase a plan’s efficacy. This helps facets of the migration process, like determining the best time of year to migrate and identifying what products and channels need to be migrated.   

2. Building Redundancy and Risk Mitigation Plans 
Building redundancy is a critical strategy for managing the risks associated with warehouse migration. This may include temporary storage facilities, backup systems for inventory management, or additional personnel to ensure key processes continue without interruption. Retailers with ship-from-store capabilities could add backstock in stores to make the warehouse less critical in the short run. Based on our past successful warehouse migrations, we have seen that redundant processes help avoid bottlenecks and ensure operations remain functional, even when faced with unexpected delays.  

3. Clear and Consistent Communication 
Clear and consistent communication with internal and external teams is key to a smooth warehouse migration. Companies that prioritize communication not only see a reduction in employee turnover during migration, as staff members are better informed and more confident in the process but are also 33% more likely to meet original project goals, 43% more likely to stay within budget, and 58% more likely to complete projects on time. Additionally, effective communication reduces scope creep by 34% and decreases the chance of project failure by 35%.   

From a migration project perspective, effective communication means alerting internal teams pertinent to the project early in the process, consistent project timeline updates with key stakeholders and project teams, and cross-functional collaboration. Standing calls between operations, IT, and others crucial to project success are a great way to facilitate this.  

For retailers, this means communication between production operations and warehouse teams, or coordination between inbound and outbound logistics teams to optimize inventory flow, enhance the supplier and carrier relationship, and reduce costs. For example, Cart.com helped a company boost order efficiency by 60% as a result of a strategic partnership. Lastly, we suggest businesses notify customers in advance of potential disruptions, such as delays in deliveries or changes in return policies, to manage expectations and maintain customer satisfaction.   

4. Establishing Escalation Protocols 
Predefined escalation protocols are essential for addressing issues that arise during a warehouse migration. Critical problems, such as system failures or shipment delays, can quickly derail a migration. Establishing a clear chain of command and ensuring that all teams know who to contact in the event of an issue is a common practice that greatly reduces the blowout from issues that arise. This is achievable by setting up standing hypercare calls or having rapid resolution emergency bridges. Practicing this helps businesses resolve problems quickly and keep the warehouse migration project on track. At the bottom line, businesses with well-defined escalation protocols are better equipped to meet migration timelines.  

Final Thoughts  

Warehouse migrations present various challenges, including managing inventory, minimizing downtime, navigating change management, and maintaining customer satisfaction. However, with the right preparation and strategy in place, retailers can overcome these obstacles.  

Reach out to learn more about our retail supply chain strategy consulting.  

Contributions by Sahab Grover and David Mathai