Dark stores: More popular in Europe than in the United
States, dark stores are retail outlets with no walk-in customer traffic. They execute fulfillment of e-commerce orders
and sometimes provide emergency inventory replenishment for local stores. The dark store layout is similar to a
traditional grocery store or drugstore, complete with fresh,
frozen, and dry food; personal care products; and household goods. However, you will not see price tags, endcap
displays, or checkout lanes. Order pickers use multi-bin
carts and a tablet computer to navigate the dark store while
efficiently filling customer orders. Completed orders are
packed for final delivery to customers’ homes, lockers, or
offices.
Multi-tenant fulfillment: These fulfillment centers allow
retailers to access capacity in urban markets that have low
industrial vacancy rates. These shared e-commerce facilities, run by specialized logistics service providers, offer
space flexibility, market proximity, and variable cost of
operations for retailers. A future opportunity is to create
shared inventory pools to support the fulfillment needs of
multiple retail tenants.
On the plus side, dark stores are highly conducive to
rapid order fulfillment as there are no regular customers
creating aisle congestion. There is also less likelihood of
inventory stockouts as there is no competition for product from walk-in customers. And, existing facilities can
be repurposed rather than completely shuttered. The U.S.
warehouse club store Sam’s Club is doing this with some of
its stores, for example.
This strategy is garnering real estate developer investment.
One example is a soon-to-open two-story, 840,000-square-
foot fulfillment center in New York City’s Bronx borough.
It will have two levels of loading and unloading docks and
the ability to serve multiple retailers. The facility will provide rapid urban fulfillment capabilities with access to 20
million people in metropolitan New York. With no retail
tenants currently under contract, it remains to be seen if
this strategy will gain traction.
The main challenges of dark stores include the real estate
investment and ongoing operating costs. Retailers need
consistent order volume to ensure that the facility can be
profitable.
Pop-ups: Pop-up fulfillment centers are a short-term
approach to urban fulfillment. These temporary operations
are generally located in empty malls or unused warehouses and are used to help retailers maintain service quality
during peak and holiday seasons. When the pop-up facility
is effectively planned and staffed, it can alleviate the strain
placed on primary urban fulfillment operations when order
volumes spike. To succeed, pop-up fulfillment centers
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