October 26, 2023 Press Release
Dark stores are not some low-light shopping experience. Dark stores are a rapidly evolving new trend emerging in the retail space—one that has firmly taken hold during the COVID-19 pandemic but which may have changed the way consumers shop for and receive goods forever.
These so-called “dark stores” are technically neither dark nor stores. They are former brick-and-mortar locations that a retailer has closed to shoppers and converted into hyper-local fulfillment centers for online orders. Also known as micro-fulfillment and omnichannel delivery centers, dark stores were born of the exponential growth of e-commerce and the repeatedly raised bar of customer delivery expectations.
It wasn’t so long ago that Amazon began offering free shipping, or that they accelerated the offer to free two-day shipping in 2015. One-day and same-day delivery shipping has become the norm.
And now, in an effort to improve upon even that high standard, Amazon plans to purchase empty JCPenney department stores, hoping to expand the company’s network of hyper-local fulfillment warehouses and further reduce shipping times.
Converting traditional retail locations into dark stores is a way for merchants to adapt to changing times and shifting consumer demands. Online shopping was obviously a thing prior to COVID, but demand and expectations ramped up rapidly when everyone was stuck at home but still needing things like groceries, clothing, and home goods.
Dark stores are a way to be closer to consumers with the items they’re ordering, reducing last-mile shipping costs and speeding up delivery times, often in less than 15 minutes. Using dark stores, retailers are able to fulfill or deliver orders more quickly because the products are already warehoused or stocked near their final destination. Other benefits include less time in the store and contact-free shopping options for customers, as well as optimizing inventory and reducing delivery costs for retailers since deliveries are often made by staff, often within a one-city block radius.
Consumers’ expectations and shopping habits have changed, and things are not likely to go back to the way they were.
In fact, one source estimates that in just three years, e-grocery orders will account for over 25 percent of total food sales in the U.S.
But what are the implications for how dark stores will affect postal operators? What role can Posts play in a world with more and more hyper-local warehouses?
Well, just as postal operators can form partnerships with traditional retail and e-commerce companies, the same is ture here. Perhaps Posts can dedicate a driver to a network of dark store locations, to deliver items within hours – maybe even minutes – of a customer’s order. It certainly makes sense to be more involved from this logistics standpoint. And technology will make much of this possible, especially route optimization software.
Some believe this trend was always the future of retail, but COVID lockdowns and desperate shoppers accelerated the timeline, and now it appears the dark store retail model is here to stay. Merchants must stay ahead of the curve and continue to evolve to stay in business. There appears to be a real opportunity here for Posts, or any company for that matter, that can offer innovative delivery solutions that are competitively priced yet are economically viable over the long term. Be sure to visit Escher’s blog often as we continue to stay on top of this and similar trends impacting postal operators around the world.
