The Elements of a Dark Store Strategy

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The Elements of a Dark Store Strategy

By Meyar Sheik - 09/14/2020
Curbside pickup

In the early days of the pandemic, big-box retailers such as Walmart and Target saw an influx of customers, while others deemed non-essential suffered from reduced or halted traffic. This was just one unintended consequence of limiting in-store shopping to adhere to CDC guidelines, but it also brought to light the emerging – and in some cases, smart ¬– trend of “dark stores.” Retailers are beginning to see the value of stores that are closed to the public but that operate as distribution points, or which offer safe options for shopper-involved order fulfillment.

Not only can dark stores help spread out customer touchpoints, dispersing shoppers to alternate locations to ease the burden of in-store crowds, but they can also help retailers relieve strain at their central fulfillment centers, which has been an ongoing problem during the health crisis. What’s more, dark stores have allowed for non-essential retailers to start connecting and interacting with customers again. 

At a time when retailers are working double-time to earn a fraction of their former revenue, dark stores can offer some solace. Let’s say a retailer that previously offered only BOPIS fulfillment, for instance, was forced to close its stores when shelter-in-place rules were at their peak. A dark store strategy would potentially allow them to keep a quarter of their stores running as dark stores, working as local distribution points rather than having to shut down all operations entirely. 

While there is a benefit to adopting a dark store strategy, opening and running them requires ongoing logistical planning and support. 

Here are some important elements to consider:

Know the Local Regulations
As with many retail logistics, dark stores are still subject to the local and state rules on re-opening and safety precautions. It’s not a work-around. Even if customers are not in stores, the workers inside will need to comply with established regulations and ordinances.

Determine the Best Use of Dark Stores 
In some cases, dark stores are best used as mini distribution centers for servicing online orders, improving delivery times, or reducing strain on larger warehouses, as we see in grocery specifically. Dark stores can also operate as fulfillment locations for curbside pickup, delivery, and other contactless options that are allowed in those regions. 

Staff Dark Stores Accordingly
Depending on the use case, work out which team members will be the best fit for operating dark stores, be it curbside pickup or packing and shipping, depending on their level of training and ability to work on the fulfillment side of things.

For Curbside Pickup, Create a Customer Communication Plan
When a new fulfillment option opens up, especially in a locale where customers aren’t used to going, customers need to be told and reminded of all available options. Across website, email and mobile content, it’s important for retailers to provide ample information about how the new option will work:
•    Provide pickup directions so shoppers know exactly where to navigate to and park
•    Offer pickup windows to reduce uncertainty and manage traffic
•    Explain how delivery works, such as asking for the trunk to be open when making a pickup, or to have their app ready, as in the case of Target’s Drive-Up.
•    Leverage your knowledge of each shopper and each store inventory to deliver personalized and relevant cross-sells offers for BOPIS or curbside (BOPAC) pickups. 

Create a Follow-Up Communication Plan
As soon as a customer drives away, retailers have the opportunity to keep a relationship going. Don’t just thank them for their order; ask them to rate their experience, and offer them a personalized recommendation and an incentive to come again soon.

Maximize Your Retail Strategy with Dark Stores
Getting comfortable with dark stores will help retailers respond to future ups and downs related to COVID-19. It’s possible that re-opening will continue to be a bumpy road, with future shutdowns in regions where cases go back up causing future disruptions. 

Additionally, as the holiday sales season approaches, a dark store strategy can help retailers further supplement their fulfillment strategy by continuing to provide an outlet for consumers to safely pickup their purchased products. To succeed, retailers will need to determine how to best utilize their dark store strategy and communicate to customers with personalized messaging that this option is available to them. 

Meyar Sheik is the president and chief commerce officer at Kibo, which provides cloud commerce software and services that include e-commerce, order management, Certona personalization, Monetate personalization and optimization, and mobile point of sale for retailers, manufacturers and brands. Kibo acquired Certona in 2019, where Meyar served as CEO and co-founder.

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