4 Things Retailers Need to Know About Dark Stores and Fulfillment Centers
In the United States, some of the most powerful retail stores rely on a hybrid sales design pairing eCommerce with in-store shopping and fulfillment for tremendous financial success. It’s a system that corporations, like Walmart and Target, have been using for years.
However, after the pandemic hit, many retailers had to reevaluate how they would complete business transactions, and many started converting their retail space into dark stores or fulfillment centers using online ordering and curbside pickup to meet COVID-19 regulations. With such rapid success, many retailers have started to question if they two should reallocate their storefronts into dark stores. If you’re considering investing or converting your storefront into a dark store, here are four things you need to know before moving forward.
1. Dark Stores Have Kept Many Businesses Going in 2020 and 2021
You might be wondering to yourself: what’s the difference between dark stores vs. eCommerce hybrids and fulfillment centers? Simply put, a dark store is a brick-and-mortar location that has been shut down and changes to fulfillment operations. They provide shoppers with resources and options like purchasing products online, same-day delivery, or pickup in-store.
Retail fulfillment centers can be utilized by grocery stores, clothing brands, and even home-goods retailers. Some note-worthy companies implementing this process include Whole Foods, Kroger, Giant Eagle, Walmart, Target, Bed Bath & Beyond, and countless fashion retailers.
Those who have adapted to utilizing dark stores have been able to boost delivery times and compete with retail giants like Amazon, giving more success to smaller businesses. Consumers rely on hybrid solutions like online ordering, in-store/curbside pickup, and quick delivery times, now more than ever. Even when the pandemic finally ends, consumers will continue looking for these same services and delivery times.
2. Dark Stores are Advancing eCommerce Retail
Lately, the call for reduced foot traffic in-store and the rise of retail fulfillment centers has boosted the need for advanced and easy-to-use eCommerce solutions. According to McKinsey & Co, “retail consultants estimate that e-commerce as a share of U.S. retail spending jumped from about 16 percent in 2019 to more than 20 percent in the first quarter of 2020”. That’s a leap equivalent to 10 years’ worth of growth in just three months.
With droves of customers turning to online shopping, many retailers have found that their primary key to success was turning their storefront into a temporary fulfillment center. Going dark or creating a hybrid retail solution has allowed many retailers to boost their overall sales, primarily if you use a fulfillment center to replace complete closure. It’s these kinds of setups that have helped stores increase their eCommerce revenue overnight. The use of dark stores, paired with eCommerce, promises to play an essential role as retailers move forward using POS add-on modules like WooCommerce.
3. Many Dark Stores Rely on Android Mobile POS Solutions
Fulfillment centers are most beneficial to industries where order timeliness is critical. While food immediately comes to mind, there are strong use cases for pharmacies and apparel as well. As storefronts become fulfillment centers, they need a POS system to move with them as they travel through the store, gathering orders. Many of those retailers are currently using Windows CE or Android solutions. After the last extended support for Windows CE occurred in April, many retailers looking to make fulfillment operations mobile are turning to Android.
Android provides mobile POS solutions that are durable and user-friendly; making it easy to train staff on the new hardware while adapting to dark store operations. Many organizations, such as Home Depot, Best Buy, Whirlpool, and the United States Air Force, have already transitioned from Windows CE to Android mobile devices to handle their order and fulfillment operations.
Here are some reasons why retailers are choosing Android mobile solutions:
- Security — Android has updated, supported, and secure technology. Their device security enhances with advanced authentication and the option of biometrics.
- Manageability — Flexible, robust platform for managing devices and corporate data, Android provides several setups for different retailer needs.
- Wireless Communication — Android OS includes several APIs for wireless communications on the network, P2P, and Bluetooth.
- Leading OS for Ruggedized Devices — Data capture can enhance with fast and accurate barcode scanning. Power management is also better, delivering longer active use, less time required for charging, and longer battery life.
4. Experts Predict a Balancing Act for Future Dark Stores
Despite all the benefits, there are challenges for those considering retail fulfillment centers in the long term. Here are some struggles that retailers might face eventually:
- How to manage their physical footprint and deciding whether or not to have a storefront
- Issues with customers losing the in-person experience
- Changing of customer loyalty and using third-party delivery services
- Third-party delivery service partnerships and problems with losing customer loyalty/data and promotional advertising dollars
Successful dark stores must balance blending multiple channels and fulfillment solutions with online and offline experiences to guide consumers toward purchasing their products. Many businesses have already begun considering how to pivot their current real estate. A great example of this is grocery chains—they’re more conscious of disruptions within their supply chain, and ready to address those disruptions with proper stocking, online ordering, and inventory and chain management.
To be effective, stores must strategize and automate wherever possible. Streamlining processes and automating order fulfillment decreases the strain of permanent dark stores. The future of fulfillment centers and hybrid models remains open for interpretation to each retailer. But, the need for eCommerce and portable POS solutions are the keys to turning these systems into successful enterprises.
Whether you’re looking to expand upon your dark store or hybrid retail solution or just eager to get back to normal, The General Store can help get you there. Contact us today!