Are Dark Stores the Future For Post-pandemic Retailers?

June 14, 2021

After traditional retail was upended by the coronavirus pandemic, more and more retail brands are converting locations to become “dark stores.”

If 2020 was all about adapting, then 2021 is all about innovating. Retail success in this new era means making physical locations work harder than ever—in the physical and the virtual worlds.

We’re seeing retailers invest in a surge of new technologies like BOPIS and curbside pickup, and more new concepts like dark stores. So what is a “dark store” and how are retail brands leveraging them to meet customer needs?

What is a dark store?

To keep up with the growing demand for online ordering, some retailers have converted regular stores into dark stores to serve as warehouse and distribution centers.

Dark stores are designed to make fulfilling online orders as simple as possible. It’s no secret that COVID-19 has changed the way that customers shop.  By converting traditional storefronts into dark stores,” brands can leverage the space as a retail distribution center or outlet designed exclusively to serve online shoppers. 

With the supply-chain and fulfilment challenges that retailers faced early in the pandemic, it’s no wonder that retailers, from supermarkets and grocery stores to convenient stores and department stores, have begun to “go dark.” With online retailers’ demand for space and physical stores experiencing less traffic, these dark stores may be the answer to logistical challenges. Merchants that must satisfy large numbers of online orders and store more inventory can respond to customer needs, reduce contact, and still raise sales.

Permanent dark stores may be the future

Converting locations into dark stores in order to reduce cost, boost supply chain, and support online shopping has been an effective option for retail stores since long before the pandemic. Many chains have tested the concept, and retailers have teamed up with ecommerce brands to meet customer demand. Grocery delivery and online sales were already on the rise, even before the pandemic.

After the emergence of 2020’s  global pandemic, we saw rapid growth in demand for ecommerce, bopis, curbside, and instant delivery. (stats here) With these new advancements, it’s likely that dark stores may become permanent. 

To take advantage of this behavioral shift, retailers are changing store operations to make them work as distribution hubs. With big box brands closing locations permanently, rightsizing, and converting into dark stores, we know that instore and online are no longer a dichotomy- they are one whole. 

Digital delivery services

In addition to boosting retail sales for conventional retail brands, dark stores serve non-traditional brands with business models devoted to on-demand delivery. Dark stores, warehouses, and fulfilment centers are key for innovative on-demand digital delivery services such as Gopuff. 

Shoppers can order anything immediately, from household goods, food and drinks, to over-the-counter medicine. Customers can shop inventory at local warehouses and fulfillment centers, and employees fulfill the items and bag them for drivers to deliver. 

Digital delivery services like this were rising in popularity even in pre-pandemic times, but we’re seeing retailers offer same-day delivery services at increasing rates in the wake of the pandemic. It’s no secret that customers now expect more integrated, flexible shopping solutions, and brands must meet their needs while maintaining health and safety. 

Store Comms for Dark Stores

While these shifts in strategy might seem obvious and effortless in consumers’ minds, they are massive undertakings for brands. Success requires strong leadership, agility and the ability to educate and communicate effectively with each and every employee, including store associates, who are the face of the brand and the most likely to speak with customers.

While new same-day, 2-hour, and digital delivery services are fantastic for the needs of customers, there is a huge increase in complication that comes with it. At Zipline, we believe that clear, effective communication is crucial for this kind of complexity. It’s the key to fostering a more agile workforce, and ultimately the only way retailers can guarantee consistent, precise execution. 

With so many brands considering “dark stores” and digital delivery services like Gopuff that are managing their own inventory, this is the perfect time to take on a store communications overhaul.

Reinventing retail requires comprehensive communication

As you make rapid shifts in strategy and operations, it’s important to keep the entire company in the loop and use communications to align the people throughout your organization. 

If you are converting locations into dark stores, the store closing can be painful for employees. In the wake of change, those who remain will be called on to help reinvent their roles. It’s also crucial that people in mid-level management roles understand the rationale behind major changes. The stakes for retail are higher than ever, and we can’t afford to leave anyone behind. The good news is that a comprehensive communications solution will unite everyone on your team. 

Successful digital delivery services prioritize communication

Digital delivery services that prioritize communication can standardize processes, streamline channels, help employees access information, and get the right message to the right users. Too much information, too many channels, and inconsistent information can lead to disorganization, lack of prioritization, and ultimately impact execution. 

For digital delivery services who don’t work like traditional retail stores, a communication platform is more crucial than ever. From queue time, pack time, bin time, to drive time, there are many moving parts in the process, and a streamlined solution that simplifies overly complicated content is key.

Zipline’s feature-set and communication philosophy ultimately transcends industry.

Whether you’re a traditional retailer looking to convert dark stores or an innovative digital delivery service, reach out to transform the way your frontline employees operate, execute, and engage.

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