Accurate inventory and extended hours: Are dark stores the way of the future?

If you haven’t heard about dark stores yet, let’s fill you in.

The term refers to retail outlets catering exclusively to online shopping, sending orders to customers and, in some cases, offering a click-and-collect service as well.

The actual facility can run the gamut from a large purpose-built warehouse down to a dedicated section of an actual store that is used solely to fill online orders.

This tactic, which originated in the grocery industry, holds great potential for other retailers as they explore their fulfilment strategies in a post-COVID-19 world.

Although the concept of dark stores originated in the UK and the EU, it has spread rapidly around the world through the grocery sector. Already, grocery aisles in Australian stores cannot meet the growing demand for online orders.

Today’s grocery shoppers have to compete for access to products as they navigate aisles crowded with pickers from assorted delivery services.

In response, savvy retailers are either building mini-warehouses in their stores or opening up dark stores in separate locations devoted to delivery.

Let’s look at some dark store advantages.

Closer to the customer

Dark stores combine the best of a store with a fulfilment centre so retailers can quickly fill orders as close to their customer as possible.

Often laid out like traditional stores, these facilities are closed to shoppers from the general public, so they give pickers access to products without interference. That means pickers can complete orders as quickly as possible and then either deliver them to a customer pickup location, such as a drop box, or make them available for same-day shipment to the customer’s home.

Underperforming stores make great candidates for dark stores. Ideally, these would be located in densely populated areas where there is access to a large number of existing and potential customers.

Fulfilling from these locations would reduce transport costs and provide quicker service, shortening the delivery time from days to hours.  It could also reduce environmental impacts and carbon emissions associated with delivery and encourage customers to click-and-collect instead.  

More accurate inventory

By definition, dark stores have a clearer view of stock levels and product availability than with a pick in-store solution because everything is being tracked in real-time.

Dark stores can even improve efficiency and the quality of your customers’ shopping experience. With the addition of technology in the pick-and-pack process, retailers can increase the number of products that are delivered to drive a more efficient operation.

As far as quality goes, anyone who has ordered groceries online can attest that the quality of many produce items often isn’t up to par.  With a dark store, grocers can create dedicated chilled operating zones that maintain the quality and freshness of food.

Likewise, products will not be manhandled by other shoppers so there will be fewer reductions in quality.

There are many other benefits to dark stores for Australian retailers.

For example, they can provide additional capacity in high-density areas.  Unlike typical stores, they can carry a full range of items, making them the real-life equivalent of the endless aisle offered by e-commerce.

Extended hours

Since dark stores are not restricted by opening-hour regulations that are imposed on typical stores, they can operate non-stop all year. Once again, this can mean an exponential increase in fulfilment efficiency.

Dark stores can even open up opportunities for retailers to sell new goods that customers might not find in a typical retail store because of space constraints.

As a fulfilment strategy dark stores are still in relative infancy in Australia. How they evolve in the coming years will be determined by the shifting forces of retail.

But now, more than ever, it’s a strategy that any savvy retailer is wise to consider.

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