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Dark Stores are Shining a New Light on Retail

Dark Stores are Shining a New Light on Retail

November 23, 2020

Retailers are leveraging their stores along with ecommerce to drive more sales and faster service. How? They’re going dark.

As consumers expect more from what they can access, schedule for pickup, or get delivered to their doorsteps, retailers have come under tremendous pressure to make more products readily available. According to the latest figures from the U.S. Census Bureau, ecommerce sales increased nearly 45 percent year-over-year in the second quarter to reach more than 16 percent of total sales. 

To fulfill an ever-growing list of holiday orders while continuing to deliver the right product, fastest service, and highest-quality customer experience, dark stores are providing much-needed relief for retailers and their shoppers. A dark store refers to a retail distribution center that is dedicated solely to fulfilling online orders. It’s typically a warehouse or repurposed store used to pack up online orders, which have skyrocketed during the pandemic.

Today, the model has evolved with new technology to help a variety of retailers from home goods to hypermarkets to use dark stores as local fulfillment centers to facilitate buy online pickup in store (BOPIS) and delivery. Similar to ship-from-store fulfillment, dark stores can enhance a retailer’s overall physical layout and logical workflows to accommodate optimal picking routes and capacity.

Retailers like Target and Walmart started testing ship-from-store fulfillment before the pandemic. Jewelry retailer Kendra Scott, when forced to close their doors at the height of the pandemic, used a ship-from-store strategy to turn their 108 closed stores into micro-fulfillment centers in just a few weeks.

In recent months, Home Depot, Whole Foods, Bed Bath & Beyond, and Apple have all shifted to add dark stores for online orders or converted existing stores to permanent micro-fulfilment centers.

Demand for Dark Store Capabilities

According to a September Accenture survey, nearly 80 percent of U.S. shoppers want their purchases delivered directly to their homes.

Ship from store or from dark store provides lower cost, high-speed delivery options to help achieve this by distributing the capabilities of warehouses closer to shoppers. By optimizing the picking process and leveraging staff at select stores, retailers can create responsive ecommerce fulfillment centers.

7 BENEFITS OF A SHIP FROM STORE OR DARK STORE FULFILLMENT STRATEGY:

  1. Expose and move more inventory. Ship from store exposes on-the-shelf, brick-and-mortar inventory to a larger online market. Rather than warehousing ecommerce inventory in a location that is isolated from stores and store inventory isolated from online markets, ship from store shares inventory across a retailer’s locations.
  2. Efficient inventory management. Ship from store requires better inventory management. With the adoption of technology in the load, store and pick stages, retailers are better able to increase the number of units that are delivered along with more efficient operations.
  3. Greater availability. As dark store operations are dedicated to fulfilling orders that are made online, they have a much clearer view of stock levels which results in better product availability than a pick-in-store fulfillment solution.
  4. Additional capacity. Having the flexibility to adjust and deal with volume is important. By shifting a fulfilment center to high-volume markets or having a small fulfillment center in a remote location, give retailers the ability to pick goods, pack, and deliver in areas with high order density or specific needs.
  5. Increased hours of operation. Unrestricted by regular store hours, dark stores can operate around the clock to fulfill demand. Orders can also be delivered faster and at the most convenient times for customers.
  6. New goods and new markets. Dark stores expose ways for retailers to sell new merchandise that shoppers would not typically find in their stores due to space limitations. It also gives retailers the ability to launch operations in new markets without having to open a traditional brick and mortar location.
  7. On-demand delivery. Shoppers welcome having any number of products delivered to their door in minutes. Delivery platforms like Uber, DoorDash, Roadie and Shipt, just to name a few, are helping to provide that instant gratification. A well-placed dark store along with these services can help retailers ensure demand is met while delivery times are kept to an all-time low.
Veras Locate for Dark Store Fulfillment

Veras Locate’s lightweight, easy-to-deploy architecture and efficient order picking allows retailers to meet these challenges without breaking the budget on costly, overly complex warehouse management systems. Moreover, Veras Locate addresses multiple fulfillment use cases to make the best use of resources across stores, warehouses, and offices.

Ultimately, Veras Locate delivers a comprehensive solution to optimally locate, pick, ship, and restock inventory to meet the needs of the cross-channel shopper through:

  • Real-Time Inventory Availability. Many ERP and ecommerce systems rely on batch inventory updates that can’t readily expose the available inventory data for real-time requests. However, Locate can expose the data at any level and to any system.
  • Ship from Store or Dark Store. Successfully compete with ecommerce players by maximizing the impact of your stores. Optimize the picking process by leveraging staff at every store, or select stores, to create responsive ecommerce fulfillment centers.
  • Detect, Replenish, and Move Inventory. With real-time POS integration, alert stores of out-of-stock items on the floor and replenish on the fly from the backroom or off-site storage. From managing backroom inventory to speed customer service or aiding satellite stores to move inventory from a shared location, Locate gets the product in hand to the customer.
  • Easy and Efficient BOPIS. Veras Locate gives the store quick visibility to inventory position for picking the BOPIS order, as well as audible and visual alerts that let associates know they’re falling behind to better prioritize orders and ensure they’re ready for pickup.

Entering the holiday season, we anticipate these dark stores will be bustling around the clock with order fulfillments. And as we look ahead to once the pandemic has settled, it’s certain that shoppers who have experienced fast delivery, BOPIS, or curbside pickup will likely keep some of these shopping habits moving forward.

From streamlining processes to automating order fulfillment, we’re ready to help support your entire dark store strategy.

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    Delivering on New Shopping Expectations

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    DELIVERING ON NEW SHOPPING EXPECTATIONS

    April 23, 2020

    In a future when shoppers are likely to be uneasy about going into any store, only the tech-forward, customer-focused retailers will survive.

    The world is a different place than it was just a couple of months ago. As companies hustle to maintain their business while responding to the new normal, many are considering what the long-term impact of coronavirus will be on the retail industry at large.

    The coronavirus pandemic has pushed retail quickly into new directions with social distancing. According to research and consulting firm Technomic, 52 percent of consumers are avoiding crowds and 32 percent are leaving their homes less often because of coronavirus. With these new behaviors, brands across the globe are worrying about how COVID-19 will impact how (and if) consumers will come back to stores.

    The News is Not All Bad

    Some retailers are seeing significant traffic and sales bumps as shoppers stock up or adjust their habits to limit the number of trips they make to public spaces. And Criteo’s Coronavirus shopping trends show ecommerce and select product categories such as cleaning supplies, home office technology, pet supplies, gaming equipment, outdoor furniture, and exercise equipment are experiencing dramatic sales spikes.

    Moreover, Digital Commerce 360’s 2020 omnichannel survey of 1,000 online shoppers revealed that 78 percent of online shoppers are active with the following omnichannel behaviors:

    • 54 percent of online shoppers checked inventory at nearby stores
    • 41 percent of online shoppers took advantage of BOPIS
    • 24 percent ordered online for same-day delivery from a web-only retailer
       

    Amid the coronavirus pandemic, customers are exerting more control over how, when, and where their orders are fulfilled. So, what does this mean for retailers? It further reinforces that omnichannel is no longer optional for stores. When it comes to any good omnichannel strategy, you’ll find inventory and real-time inventory visibility at its core.

    Here are some ways we are leveraging real-time inventory management to help retailers manage the new dynamics of omnichannel retail, now and in the years to come, by the coronavirus aftermath.

    BOPIS and Curbside Pickup Accelerate

    Buy Online Pickup In-Store (BOPIS) and curbside pickup have become increasingly popular due to COVID-19 and may present a potential survival strategy for retailers to adopt as coronavirus concerns linger.

    Many of our omnichannel customers such as Kirkland’s, Floor & Decor, MEC, and Office Depot have all already implemented BOPIS to varying degrees, and some with added business customizations. In addition to flexing these capabilities during the pandemic, these retailers are far better positioned to respond as shoppers gradually adjust to new buying habits moving forward. Furthermore, through Veras CheckOut point-of-sale, these retailers gain real-time visibility of POS purchases that make online merchandise availability all the more accurate.

    According to Adobe, BOPIS saw a 62 percent year-over-year increase from February 24, 2019 to March 21, 2020. In addition to limiting the time consumers spend in public areas, BOPIS provides a more immediate alternative when home delivery methods are booked to capacity.

    As consumers are drawn to the convenience, safety, and speed of BOPIS, it is essential to provide store staff with the necessary tools to successfully execute.

    Veras Locate does that by giving the store quick visibility to inventory position for picking the BOPIS order, as well as audible and visual alerts that let associates know they are falling behind to better prioritize orders and ensure they’re ready for pickup.

    Even with BOPIS adoption increasing over recent years, the necessity of using it now may cause permanent adoption to peak and stay in retail.

    Ship from Store or from Warehouse

    When store hours are limited, or worse, closed when you’re not considered an essential retailer during COVID-19 stay-at-home orders, retailers can use ship from store to achieve these fundamental retail goals to maximize the impact of your stores:

    • Improve customer experience with low-cost, high-speed delivery
    • Efficient inventory management and responsive ecommerce fulfillment centers
    • Increase revenue and profit from more conversions
       

    Ship from store provides low-cost, high-speed delivery by distributing the capabilities of warehouses closer to shoppers. By optimizing the picking process and leveraging staff at every store (or select stores) retailers can create responsive ecommerce fulfillment centers. 

    Jewelry retailer Kendra Scott provides a nice industry example where they had plans to become truly omnichannel and offer shipping from stores. However, the retailer was still almost a year out from execution. With a ship from store strategy, they were able to accelerate that in just a few weeks by turning their 108 closed stores into mini-fulfillment centers. The retailer is now better able to keep up with growth of its online sales while allowing their employees to practice social distancing.

    A ship-from-store fulfillment strategy may also boost revenue resulting from several retail advantages the approach provides.

    More sales. Ship from store exposes on-the-shelf, brick-and-mortar inventory to a larger online market. A camping tent stored in the stockroom of a Springfield, Illinois sporting goods store at the end of November can still be sold to an online shopper in San Antonio, Texas, where the average temperature that month hovers in the mid-70s.

    Efficient inventory management. Ship from store requires better inventory management. If you miscount inventory in the store, you could easily disappoint an online customer. Improved inventory management can lead to faster turns and better purchasing decisions.

    Move more inventory. Rather than warehousing ecommerce inventory in a location that is isolated from stores and store inventory isolated from online markets, ship from store shares inventory across a retailer’s locations.

    Veras Locate’s lightweight, easy-to-deploy architecture and efficient order picking allows retailers to meet these challenges without breaking the budget on costly, overly complex warehouse management systems. Veras Locate addresses multiple business cases to make the best use of your resources across stores, warehouses, and offices.

    Provide Shoppers with Inventory Visibility

    BOPIS and home delivery provides safer, and sometimes more convenient options, to get products in hand to the customer. But as today’s supply chains are constrained and delivery times range anywhere from two days to two weeks, shoppers are taking to the stores to physically search for the items they need. 

    What do shoppers ask themselves before entering the store? It really comes down to the following:

    • Is the item in stock?
    • Where is it available?
    • What is the most convenient location?
    • How fast can I get it?
       

    Now imagine allowing shoppers to use smartphones to know the availability and location of merchandise before heading to stores (and while in stores). This not only will speed purchases but could be a potential customer-experience game changer during these chaotic times.

    Veras Retail can help retailers achieve much of this today through real-time connectivity from the POS, ecommerce, and checks against real-time inventory.

    Ultimately, if you lack real-time connectivity from your point-of-sale to your ecommerce business, you’re either going to disappoint the customers by accepting orders that can’t be fulfilled, or lose out on sales when stock is actually available by creating buffers that err too far on the side of caution.

    What this all makes clear is how essential the full integration of stores and omnichannel technology has become to retailers. While there are many unknowns, we do know that consumer shopping habits will change, and retailers need to adapt while remaining financially viable.

    For retailers, focusing on customer needs and building loyalty through ideal customer experiences may never be as important as it is right now. And in a future when shoppers are likely to be uneasy about going into any store, only the tech-forward, customer-focused retailers will survive.