Thought Leadership Corner: Going dark: The light at the end of retail’s tunnel?

Published by Parcelly Team
 • 06 November 2020

There are few reasons to be cheerful in the face of the Covid-19 pandemic. One of the few industries that has not suffered a downturn as nation after nation locked down, has been E-commerce. 

But the flip side of the boom in demand for online shopping has, of course, been the dramatic decline of footfall in physical retail outlets. There have been periods when visiting a store simply wasn’t possible. There were several months when town centres, malls, and high streets resembled ghost towns – shops were ordered to close, as were offices.

Whether things will ever truly recover is, frankly, anyone’s guess. For the time being, however, the retail sector faces an interesting conundrum. While part of it is in high demand, much of it simply isn’t. Even though the orders to close shops were relaxed, shoppers have not come rushing back en masse (at the time of writing, parts of the UK were in strict lockdown once again).

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Some are staying away for health reasons. Others because their routines have changed thanks to remote working. And some have simply fallen out of the habit, preferring to do everything online instead.

The future doesn’t look bright for the physical store.

No, the future actually looks dark. As in dark stores.

What better way to use underutilised store space than to convert it so it can support booming online sales? Being able to monetise any latency or redundancy within a store or fulfilment network can be a great way to eliminate costs and help drive sales.

It might not be a new concept, but we might be about to witness this idea really come into its own. In the US, Amazon has been converting some of its grocery outlets into dark stores to keep up with growing online demand. According to its Vice President of Grocery Delivery, Stephenie Landry, Amazon’s Woodland Hills grocery store in California has become "a temporary online-only store, focused exclusively on fulfilling grocery delivery orders."

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It did something similar to one of its Whole Foods stores in Brooklyn recently too. The public will no longer be allowed in. Instead, it will exclusively service deliveries – some by vehicle and some by bicycle.

That last point about bicycle grocery delivery is interesting. Think about the online grocery delivery model here in the UK. There are large fulfilment centres looking after fleets of vans, and there are orders being picked and packed in larger supermarkets. And that’s the model – shoppers place big orders, often many days in advance, and await the arrival of the delivery van.

Amazon is signalling the importance of hyper-localised micro-fulfilment. This has offered Amazon the speed and responsiveness it has become increasingly famous for. There are plenty of people living in busy urban centres for whom a rapid-response approach to grocery orders will be just what they want. After all, it chimes with the same-day delivery and within-the-hour options Amazon was at the forefront of.

It’s also an echo of what pre-pandemic grocery shopping looked like. Big suburban hypermarkets were falling out of fashion. People were preferring to make several top-up visits to a conveniently located supermarket. Finding a way to replicate that model online might just tap into something customers are missing – speed and convenience. 

Not everyone wants to spend the weekend planning what they will eat on the Thursday coming. Not everyone remembers to buy more milk, or salt, or tomatoes, or whatever it might be that you are most likely to run out of unexpectedly.

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For retailers with unused or under-used store space, conversion to a dark store format could be worth serious consideration. It might not always work out, of course. There might only be very marginal benefits from a dark store that isn’t actually very close to your customers or your other operations. But maybe, just maybe there is a vacant store out there that is. 

Hyperlocal storage and fulfilment have helped many smaller retail businesses to make money from what was, effectively, empty space. It could be a storeroom or an office that’s no longer needed, but which now functions as a parcel delivery space. At its heart, this approach is all about finding something you don’t need and converting it into a solution to a problem someone else has – how to get deliveries into people’s hands in a quick, convenient and efficient way.

It’s an outlook that might even see businesses make entire premises available to other retailers for use as temporary dark stores. And given how gloomy some parts of the retail world currently are, it must surely be worth considering.

Parcelly adds: “The global pandemic we are currently experiencing has given rise to unprecedented growth within the online shopping space. DHL has reported that the global E-commerce platform market is on pace to reach $11 billion by 2023. This growth has been driven by the shifting needs of today’s consumers, and in turn, leading to greater collaboration between retailers and E-commerce technology providers. This collaboration takes many forms, from digital approaches to customer service, or dynamic fulfilment, delivery and returns options. The dark store model is another exciting example of how E-commerce and brick-and-mortar retail can mesh for the benefit of both.

Parcelly has experienced exponential growth despite lockdowns continuing by empowering our retail and logistics partners utilising our technology platform to facilitate the dark store model. Our technology platform can be integrated with any retailer or logistics provider’s pre-existing supply chain, utilising the shared economy approach. Our dynamic network of PUDO locations enables hyper-local delivery solutions, accessible to all our partners who wish to store, consolidate, cross-dock and fulfil fast-moving items. By bolstering a last-mile infrastructure that utilises excess space and helps to reduce the distance between storage location and final customer, our award-winning PUDO model drives sustainable on-demand delivery options and ensures increased customer convenience and satisfaction.”

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