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The rise of ‘dark stores’—and how they could save struggling retail

Fast Company_09-11-20

Fast Company – September 11, 2020

Whole Foods “opened” a new “store” that you can’t walk into or shop at. Located in Brooklyn and slightly smaller than a typical Whole Foods, the store is dedicated solely to fulfilling online orders. It’s the company’s first purpose-built online-only store. With longer aisles, no salad bar, and missing those checkout candy displays, the store will be used to pack up online orders, which have skyrocketed during the pandemic. Amazon, which owns Whole Foods, says its grocery sales tripled, year over year, for the second quarter of 2020.

“Every chain in the world will be doing this in the future. And the future is now, because COVID-19 has pushed the timeline up for a number of these kinds of initiatives,” says Ken Morris, managing partner at Cambridge Retail Advisors.

Unlike the new Whole Foods store, not all of these facilities need to be purpose-built. Grocery chains such as Stop & Shop and Hy-Vee, based in Iowa, are already experimenting with turning stores dark. Other retailers are converting stores into micro fulfillment centers, Morris says. Walmart has one in New Hampshire. Bed, Bath & Beyond plans to convert a quarter of its locations into dark stores. Some shopping malls are also being converted into fulfillment centers.

Key to this change is robotics, Morris says. Even without the social distancing rules of the pandemic, the typical grocery store can handle only so many customers. Warehouse technology startups such as Fabric and Alert Innovation are already beginning to work with retailers and grocers on integrating robotics and adding more product into smaller, robot-only spaces. “These things are very quick. They can pick 15,000 orders a day, and they do it in a small footprint,” Morris says.

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