Dark Stores is a retail concept in which traditional outlets are turned into warehouses to accommodate a click-and-collect service. It's a trend accentuated by Covid-19, where stores that were unable to operate during lockdown have been converted into ‘Dark Stores’ to enable them to continue operating despite restrictions to customer traffic in shops. With the increase in individual players setting up their own dark stores, it is estimated that urban logistics spaces in India are likely to exceed 7 million square feet by 2022.

Dark stores are retail stores, but without customers physically present.  Instead, shoppers browse and shop online and their items then get picked and sent from a store. Or the customer only arrives to pick it up from the store.

Even as the pandemic subsides, consumer demand for dark store retail models continues to rise, where actual retail premises are employed not for customers but for the fulfillment of online orders.

Pandemic Expedited the Dark Store Business Model

The idea of Dark Stores existed long before the pandemic, but their growth accelerated after the world came to a halt, and forced people to stay home. Everyday necessities such as food, groceries, and other hygiene products were still needed, but the fear of infection caused apprehension from venturing out.

And this is where Dark Stores came into play. It helped merchants stay in business and employees stay in jobs, and has now become a full-fledged market.

The big companies, who are still unable to reach the outskirts of major cities or tier-II and tier-III cities, are now employing the aforementioned business model to expand their operations. They can be used for a variety of purposes, ranging from massive warehouses to a specific portion of a physical store used just for online order fulfillment. The technique first appeared in the supermarket business, partly in reaction to the problem of shoppers having to cross aisles filled with pickers from various delivery services and compete for product access. As a result, merchants are either constructing mini-warehouses within their stores or establishing dark stores in different locations dedicated to delivery.

They gain a number of benefits as a result. Featured below are key highlights:

Customer Service - Dark stores combine the advantages of a store with a fulfillment center, allowing retailers to execute orders as close to their customers as possible. They are often set up like a traditional store but are closed to the public, and allow pickers to access merchandise without fighting for space with shoppers. As a result, pickers can swiftly complete orders and send them to a customer pickup site, such as a drop box, or make the same-day shipment to the client's home.

 Underperforming stores make ideal candidates for conversion to dark store concepts in today’s complex environment. They should ideally be positioned in densely populated locations with easy access to a large number of existing and potential clients. Fulfilling from these areas reduces transportation expenses and delivers faster service, more importantly reducing delivery time from days to hours. It can also help to reduce environmental impact and carbon emissions in the last mile of delivery by encouraging customers to click and collect instead.

Inventory Advancement - Dark Stores, by definition, have a better understanding of stock levels and product availability than standard stores because every product is recorded in real-time. Indeed, current order management systems that offer global inventory transparency help optimize dark stores to be even more efficient and efficiently meet customer expectations. Retailers, for example, can route inquiries to the dark store that is best placed to handle fulfillment using a purpose-built distribution order management system.

Because merchants can increase the number of products delivered to drive a more effective operation, dark stores can also improve efficiency and the quality of the consumer experience. For example, while many customers recognize that ordering groceries online does not always equal the quality of in-store shopping, grocers can construct dedicated chilled operation zones that retain the quality and freshness of goods with a dark store. Similarly, products will not be touched and damaged by other customers, which helps to retain quality.

Redeploying Personnel - Many retail establishments temporarily closed their doors when the pandemic struck, putting the destiny of thousands of store employees in jeopardy. Dark stores provided a much-needed lifeline, allowing businesses to keep a significant number of their employees, albeit in a new function. Many retail employees were able to continue working despite store closures because space had been altered to accommodate the large increase in online transactions. Not only has the switch to dark storefronts helped retailers to better meet the demands of their customers, but it has also reduced the potential devastation caused by large-scale job loss.

24-hour Shopping - Because dark stores are not restricted to the hours of operation of typical outlets, they can operate around the clock, expanding the possibility for improving fulfillment efficiency. Furthermore, they can provide chances for businesses to sell new product categories that would otherwise be unavailable in a traditional retail store due to space limits.

As smart merchants embrace dark storefronts, they are not only reimagining retail space, but also addressing the expectations of customers who want the best of both worlds and the ability to combine internet purchasing with the convenience of click and collect or home delivery. Dark retailers may be shedding light on an exciting new trend for retail.