What Dark Stores are and why they're hot right now

📰 Market & News

Until 2017, the retail giant Carrefour had a physical store on Santo Amaro Avenue, in São Paulo, Brazil. Due to the subway works that took place in the region, the volume of customers dropped considerably. The French group could have closed the store, but instead, it decided to turn it into a Dark store.

Dark stores are small distribution centers, usually located close to the central areas of the city, as opposed to the large distribution centers that almost always are far away.

The way dark stores are organized is very similar to that of stores (often, they even used to be regular stores before being transformed into dark stores, as in the case of Carrefour). And instead of a complex structure, they usually have the minimum resources to allow storage, picking, packing, and shipping or (very important!) pick-up of products.

Because they are smaller and located in urban centers, dark stores allow more flexibility to the operation and more convenience to the customer. Consumers increasingly expect to receive their orders on the same day or at the most the next day. To meet this expectation, e-commerce needs to make its logistics more capillary.

This is one of the reasons why big brands are betting on omnichannel strategies that unify the e-commerce catalog with the inventories of the physical stores, turning these stores into mini distribution centers.

Instead of receiving products from a warehouse hundreds of kilometers away, customers start to receive products that often come from a store right over the corner—or else they go to the store to pick these products up.

Dark stores enter this scenario as a resource that allows more capillarization and closer ties with the customer. But there is a limit to the creation of these stores/warehouses, usually associated with a cost: rent in urban areas can become prohibitive. That is why in most countries, this trend is still restricted to large groups.