retail: the fast vs. fun conundrum 

Lights out

Hi there,

Dark stores. The name sounds ominous, but these shopper-free storefronts may be the wave of the future.

The model has different names — delivery-only, dark stores, “ghost” restaurants, and more — but it’s really all one trend. It refers to small warehouses or kitchens with no “front” that just exist to fulfill online orders.

For the past few years, retailers have used existing stores to fulfill online orders quickly. But, the strategy leaves retailers paying rent on more space than they might need, and forces in-store shoppers to compete with delivery staff for the best products.

Dark stores solve for speed. Compared to centralized e-commerce fulfillment centers, small warehouses can be situated in urban areas closer to shoppers, supporting same-day delivery.

Dark stores also solve for cost — they let retailers invest in real estate close to the consumer without having to pay for a 5th Avenue (or equivalently appealing) address, staffing, or interior decor. And with no need for aisles or checkout areas, dark stores can fit far more products.

Startups like Darkstore and Commonsense Robotics have begun to offer automated mini-warehouses for brands and grocery stores. The model can be risky for restaurants, but both DoorDash and Deliveroo recently announced investments into delivery-only kitchens, and former Uber CEO Travis Kalanick just joined a related startup.

Further out, robo-run dark stores could integrate with delivery drones. Amazon showed us its vision for fully automated dark stores serviced by fleets of flying drones in a recent patent.

What does this mean? 

Dark stores make online shopping even more convenient — shortening the time from click to shipment. And, the model improves the in-store experience, as it frees staff to focus on shoppers rather than packing online orders.

And as sales move online, we’ll see fewer stores. But, those stores that thrive will highlight experiences — offering personalized apparel and makeup, cooking classes, fitness programs, and more.

By offering both options, brands can ask shoppers: do you want something fast, or do you want to have fun?

By doubling down on convenience online and experiences in stores, brands can serve shoppers on their own terms.

Stay hungry,

Zoe
@Zoe_Leavitt