The term “Dark Stores” may have a rather sinister and almost dystopian ring to it. But in reality, it represents one of the many bright ideas and concepts that have helped numerous retail businesses stay afloat during the pandemic.
DARK STORES: A POST-PANDEMIC RETAIL MODEL HERE TO STAY
When the going gets tough, merchants get creative. We’ve witnessed this in all kinds of contexts the past year, as hotels have turned empty rooms into co-working spaces for the WFH-crowd and restaurants have started offering takeaway menus and home delivery. And along those same lines, many retailers have converted their physical stores into “dark stores.”
Because even though confined indoors, consumers did not stop consuming. Despite incomes going down significantly for many, global shopping volumes overall increased, with the retail sector gaining 35% in market capitalization from February 2020 to April 2021. And yet, many retail businesses have been struggling. So what separates the leaders from the laggards?
Well, McKinsey puts it like this: “In many cases, the strengths enabling some companies to surpass their industry peers—tech-forward and asset-light business models propelled by the tailwinds of growing demand—became even more important during the crisis.”
And one of the ways retail stores have successfully adapted their business models to the pandemic has been to “go dark.”
Related reading: Digital Ecommerce Business Models – The Current Landscape
WHAT IS A DARK STORE?
Let’s first define what a dark store is and how it’s different from other hybrid and ecommerce business models. A Dark Store is basically a brick-and-mortar location that has been shut down and turned into a center for fulfillment operations.
These distribution outlets are not open to visitors, allowing more space for store inventory and to quickly and accurately fulfill orders. Dark Stores provide shoppers with resources and options like purchasing products online, same-day delivery, or pickup in-store.
Of course, this concept is not new. Some companies that have long been implementing variations of this process include Whole Foods, Walmart, Target, Bed Bath & Beyond, and the majority of large fashion retailers. But as brick-and-mortar stores have struggled during lockdowns, the number of Dark Stores has grown significantly during the past year.
