The dark store: lighting the way for the future of retail
Retailers are increasingly seeing the benefits of introducing online shopping to complement an existing bricks and mortar offering.
With a headless commerce software solution, it is now easier than ever to set up an online sales platform. APIs seamlessly take care of everything from the product catalogue to the shopping cart and the checkout, meaning that the functionality can be set up relatively quickly to provide a solid foundation on which to grow.
As an online store becomes more established, a common growing pain emerges when trying to keep up with the levels of demand to fulfil all orders as efficiently as possible, balancing both instore and online activity.
An approach that has been gathering popularity in resolving this challenge is the rise of the dark store. Opening one can represent a significant milestone in the growth journey of a grocery retailer, but what exactly is a dark store?
Step into the light. Welcome to the dark store.
A dark store is a retail space dedicated to online shopping. It can be a ‘click and collect’ hub or a delivery fulfilment centre that is set up exclusively to manage online orders.
This new generation of stores are not open to the public (they’ve “gone dark”). They can be anything in size from an area within the current store estate that is sectioned off from the public, to an offsite storage facility or even a grand warehouse. Ideally, they are found in strategic locations near large populations and accessible to major road networks to enable easy distribution of deliveries.
The dark store concept is not new, but it’s become a lot more popular as customers become more familiar and at ease with doing their shopping online, creating a surge in demand for an online offering. It’s also a concept that has expanded from online-only retailing to one that retailers of all types now see the benefit in adopting to help with customer order fulfilment.
The dark store brings many advantages, not least in providing the space that an online shop needs to grow, but also in delivering on the holy trinity of customer service.
The advantages of dark stores
Consumers, especially in the grocery sector, want convenience, quality and value for money. The dark store business model feeds these consumer needs.
Convenience: Both ‘Click and Collect’ and grocery delivery serve an always-on, 24/7 economy, giving customers maximum flexibility to do their shopping at the most convenient time. And with no queues, no crowded stores and no parking hassles, it is easy to understand why many customers prefer this option.
This, of course, is provided that they are not then met with delayed deliveries or mistakes in their orders. A dark store will aid the smooth running of an online service. For example, store layout can be optimised for the pick and pack rather than be designed around the customer journey through a store, helping to streamline the process. The dark store also supports more flexible delivery systems, with same-day, next-day and even instant delivery a possibility when a team is available and dedicated to fulfilling orders without needing to attend to other instore responsibilities.
Quality: The quality and freshness of produce can be better managed when separating instore inventory from items that are needed for online delivery. This is because the groceries for online orders can be stored at more optimum conditions when they do not need to be part of an instore display. Increased data that is available via tracking online orders also allows retailers to better control inventory and stock levels directly in relation to demand, meaning less wastage.
Value for money: Improved infrastructures will help reduce road miles by locating dark stores close to high demand residential areas. These locations will likely also be available for lower rents, and further savings are possible since the dark stores will not be customer-facing, so will require less aesthetic maintenance. Fulfilment costs for retailers are also reduced as technology improves and labour costs fall. These savings can then be passed on to the customer.
We can expect to see more dark stores open up as online grocery demand continues to rise. There will come a point in delivering an online grocery provision where order volumes increase to levels that require a dedicated fulfilment team, and this is where integrating a dark store will become an important step in levelling-up for new growth.
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