2022 retail industry trends by YRC: Retail Dark Stores

With the spread of the coronavirus pandemic, almost everything has changed when it comes to traditional retail. The pandemic has hit the economy and business so hard that many have entirely shut down, and many had to convert their retail space into D2C stores, also known as dark stores. This model uses fulfilment centres and only offers online ordering to meet COVID-19 regulations. In addition, many retailers have opted to fully operate their stores virtually instead of maintaining a physical store, all due to the success rate of dark stores. Hence, if you’re thinking of investing or developing a dark store, here are a few things you should know before going forward.

What are Dark Stores?

Dark stores are local fulfilment centres that provide customers with resources and options of purchasing online and same-day delivery within a few minutes. Mainly they come in the form of grocery stores, but the other sectors have changed customers’ habits looking forward to opting for this model.

It works on the model of D2C business model and offers excellent customer service and satisfaction. People can buy products through the dark store online platforms, websites, or mobile applications and get them delivered to their doorstep within no time.

The concept is to have small warehouses or fulfilment centres close to highly populated areas to reduce delivery times and give a faster and more convenient shopping experience. These warehouses are located at a strategic location within the city limits, catering especially to online shopping. The warehouses store, sort, and manage the orders to facilitate quick delivery and easier automation. Dark stores ensure that retailers have better customer retention and acquisition along with reduced expense and high-profit margins.

Issues in the Retail Industry:

• To take care of the protocols related to Covid-19, such as limiting the number of customers in the store and also ensuring that the customers are keeping a safe distance from other customers.

• To keep up with the changing customer preferences and their demands so that you can retain them.

• To offer a good customer experience so that brand loyalty can be created. Retailers have a thought that they need to only focus on sales and not customers.

• Staff retention is another big problem in the retail industry and in fact the toughest challenge.

• The game of logistics is a key factor for proper distribution within time. High logistics costs will also lead to higher cost prices of products.

• With the innovations in digital platforms, the retail industry is shifting online to reach broader markets.

The Solutions:

As more and more consumers are becoming aware, their needs are also evolving. With the universal and model technology coming in, the retail industry is also witnessing big changes. The retail industry can take advantage of digital media to drive its sales. With the effective use of social media, SEO, user-friendly websites and an overall omnichannel approach, the retail industry can boost both sales and profit.

The key to a great retail business is offering customers the right thing at the right place and at the right time. Hence, proper inventory management as well as implementing the right strategy is essential. Besides this, a robust and integrated IT system and Artificial Intelligence-based software to ensure ease of assessing your inventory, easy finances, taxes, and bills is very important.

The online shopping platforms are hitting the mainstream market, and the direct-to-consumer model is slowly making its place in the retail industry. Retail chains can make use of online content and marketing strategies to attract customers. This would impact the whole scenario of the supply chain and the changing consumer behaviour.

How Dark Stores played an important role in 2022

It is because of dark stores that many businesses kept going in 2020 and 2021. This is because social distancing and recurrent lockdowns due to the coronavirus pandemic restrict the number of customers inside the retail stores. As a result, even some brands have simply closed their physical stores for customers and have turned into dark stores.
Even existing supermarkets who have pivoted to the dark store model have been able to boost delivery times and give competition to big brands. Consumers now trust online ordering or curbside pickup as it saves their time along with an amazing customer experience. The current situation demands the need for advanced and easy-to-use eCommerce solutions. The customers turned to online shopping due to lockdown restrictions. This made the retailers understand to turn their shopfront into temporary fulfilment centres, which is taking a permanent look so far. Overall, the need and demand for that convenience have only grown in recent months, and dark stores stood apart by offering what is needed.
E-commerce has impacted the U.S. retail spending and increased it from 16 per cent to 20 per cent in just three months” in 2020-21, as per McKinsey & Co. This is equal to 10 years’ worth of growth. The dark store eCommerce promises to play an essential role as retailers move forward using various tech-equipped modules and software.

Dark stores were initially more common in the grocery business; however, the trend is shifting to other verticals as well. Several major brands involved in clothing, fashion, sports and other products also have entered into the market of dark stores to provide faster deliveries and reduce the strain of maintaining their shopfronts.

Are Dark Stores the Future?

The high demand for grocery and relative essential items stores have altogether pushed businesses to look for alternative solutions. It is no understatement to say that dark store supermarkets could be the permanent solution for providing better service to the customers and become the future of retail.

As of now, the situation is that it’s not just the innovations in digital technology but also the current global pandemic that has somehow changed consumer behavior towards shopping. Dark Stores have undoubtedly improved customer experience and provide easier access to essential items. Streamlined processes, automation, tight supply chain and delivery within a short period has changed the habit of customers. Customers have adopted the habit of online shopping through dark stores, and even business owners have experienced high-profit margins. Even post coronavirus pandemic, customers would still be exploring these same services and delivery times. After all, in this time of recurring lockdowns, even if the stores open, they allow a limited number of customers inside at a time or instil social distancing measures. Dark stores thus assist in easing all of this process and, at the same time, keeps the customers and employees safe.

Why choose YRC Dark Store Consultants

Whether you are looking to expand your dark store business or want to start a new venture, Your Retail Coach (YRC) is a decade plus experienced consultancy firm that is well aware of the retail industry trends and best practices. We put out focus on various parameters such as SOPs, IT or technical aspects, logistics/ LMD, and customer experience.

At YRC, we have hands-on experience in dealing with various brands and have helped them evolve as successful dark stores retail across the globe. We have an in-house team of expert consultants to help you with operational strategies in the dark store business model. We aim to bring prosperity and consistency to retail dark store business by planning and streamlining all the operations. Contact YRC today if you desire to run a successful dark store business.

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