Dark stores – a brighter future for retailers?

Image by icondigital from Pixabay
As we are now entering the next phase of post-pandemic retail with more and more high street stores reopening, it’s still clear that the boom in online shopping is here to stay. Dark stores as a retail concept are traditional outlets converted to warehouses. They facilitate services such as delivery and click and collect. Dark stores are constantly evolving to cope with the increase in demand. Large and small retailers are now relying on a decentralised model in order to run more local fulfillment centres and to improve efficiency.
At the beginning of lockdown, supermarkets especially struggled to meet the increase in demand. National retailers have since opened up dark stores in separate locations all over the country devoted to online shopping. Supermarkets such as Sainsbury’s doubled their capacity of online slots, and Iceland has increased its online delivery capacity by 250%.
Small businesses are also jumping on the bandwagon, with a forecast growth rate in online shopping of 34.5%. The UK has the most advanced eCommerce market in Europe with multichannel retail and mobile commerce on the rise. Advanced order software such as OMS system and easy to use eCommerce platforms like Shopify, means that smaller businesses are now able to easily outsource their fulfillment to third parties.
Savvy retailers are adding more dark stores to serve as local fulfillment centres. They are employing a more decentralised method. This enables them to make decisions on inventory based on location. It also means that each dark store is purposefully stocked with items that have local appeal, based on data analysis and market research.
There are several benefits to decentralised fulfillment. Advances in technology have made this possible. Data-driven research can provide information on local trends. Forecasts are made based on this data to ensure fresh produce is delivered at the right intervals. Perhaps this is the most cost-effective way for retailers to meet demand and save on delivery. Making dark stores more “local” can also reduce the environmental impact. More customers will be encouraged to click and collect and delivery times will be reduced. Technology is also used to optimise the floor plan of dark stores, and ease of order picking.
With improvements in efficiency, dark stores are perhaps the sign of a brighter future for retailers. There have been recent signs of retail recovery, but it might not be time to get optimistic just yet. The boom online shopping meant that many dark stores were born out of the pandemic. There were therefore created to accommodate a certain lifestyle and change in habits. It’s not clear if these stores will stay as competitive in a post-pandemic era.
Having said that, decentralised fulfillment is definitely the way to go to cope with demand and improve efficiency, particularly for businesses selling high-turn products. Along with improved efficiency, they are also meeting the needs of more customers. Dark stores combine the benefits of high street shopping with online fulfillment. Retailers are able to complete orders in closer proximity to their customers.