The rise of dark stores

November 26, 2020
StoreShippers - Nienke van Meekeren
November 26, 2020
StoreShippers - Nienke van Meekeren

Due to the current COVID-19 pandemic and accompanying measures, many retailers saw foot traffic in their brick-and-mortar store drop drastically this year. The online channels, on the other hand, saw an influx of customers: shoppers who no longer wanted or were unable to visit the physical store found their way to the online store instead. Although the concept has been around for some time, the combination of empty stores and high online demand has further highlighted the trend of “dark stores”. More and more retailers are seeing the value of handling orders close to the consumer. Let’s see why you should turn your store into a dark store.

What is a dark store?
The term ‘dark store’ refers to a miniature warehouse-adjacent space that caters exclusively for online shopping. This can be an existing store during non-function hours or a separate location. It is meant for storing, sorting and handling online orders. A dark store is different from a regular warehouse, because a dark store can facilitate a click-and-collect service, where a customer collects an item they have ordered online. A warehouse will not do this. Moreover, a dark store is located in close geographic proximity to the consumers, which makes it easy for pick-up and/or fast delivery. An alternative to a dark store is ship-from-store, where the store is still in use for shoppers.

By moving the fulfilment process to the store, retailers can use their stores efficiently and increase sales

A solution during COVID-19
During the COVID-19 pandemic, consumers have increasingly turned to e-commerce as a means to get the items they want or need. Social distancing and lockdowns have made it increasingly difficult, or even impossible, for consumers to enter stores and shop in person. Online shopping is therefore an easy and safe alternative. Because many brick-and-mortar stores are now completely closed, or only open to a small number of customers per day, and online demand is increasing, more and more retailers are choosing to turn those locations into dark stores. By moving the fulfilment process to the store, retailers can use their stores efficiently and increase sales.

Improve customer experience
The concept of dark stores is beneficial not only during the current pandemic, but also beyond. In a continuous struggle to remain competitive, retail giants are increasingly determining consumer expectations. Consumers are becoming conditioned to expect instant gratification. They want to receive their online orders whenever, wherever and however they want. With traditional ecommerce, which uses traditional distribution infrastructures, it can be difficult to offer delivery options such as same-day delivery and click-and-collect. Dark stores are located hyperlocal, meaning they are close enough to where consumers live to reduce the last-mile delivery cost and enable more seamless and rapid delivery services, and easy click-and-collect. By turning retail stores into dark stores, the increasing expectations of the modern consumer can be met, improving the customer experience and increasing sales.

A sustainable alternative
Using a store as a mini-fulfilment centre is better for the environment than traditional forms of ecommerce logistics. This is because local sourcing of products helps to reduce carbon emissions as drivers won’t have to travel as far in order to make fast deliveries. In addition, using a dark store reduces the number of transport movements with polluting vehicles, because products can travel in bulk to the store before they are packed for delivery to the final consumer, while parcels travel thousands or at least hundreds of miles when shipped from a central distribution centre.

Turning stores into dark stores offers great opportunities for retailers to cope with store closures during the Covid-19 pandemic and to meet the increasing customer demands in a cost-efficient and sustainable manner.

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Blog by: Nienke van Meekeren
Sources used: IGD, Trendhunter, Consignor 
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