Perspectives

The rise of the dark stores

5 min read

Dark stores could be the saviour of the out-of-town superstore.

Revisit the retail market of 2009, when the likes of Tesco, Sainsbury’s and Asda were opening new large supermarkets every week on huge plots of land outside of city centres.

Online grocery shopping existed, but the vast majority of people still drove to their nearest supermarket to do their weekly shop.

Now, trends have changed completely. GlobalData found that by 2022 online sales will represent 9.8 percent of the UK grocery market, up from 7.8 percent in 2017 – as young people, who have been the greatest adopters of ordering online, start to have families.

In response, many supermarket chains are closing stores – and those that are expanding are no longer building huge, out-of-town locations. Many of the large stores are slowly being shuttered and closed to the public – but that doesn’t mean they don’t have a future.

Dark stores, also known as ‘dark supermarkets’ or ‘dotcom centres’, have been popping up all over the UK for a number of years, but with online sales continuing to boom and the high street retail market showing no sign of recovering, these are becoming an increasingly popular option for retailers looking at their estates.

Dark stores look like normal out of town supermarket from the outside – minus the consumer branding – but on the inside of many, staff take the place of customers. Wearing hats and scarves to protect against the chill of vast refrigeration systems, employees walk round fulfilling online grocery orders from customers.

In some dark stores, the push towards automation is almost entirely complete, with certain retailers operating automated robotics system that pick groceries from industrial stacks of crates.  These warehouse spaces allow for faster order selection and more efficient storage.

Many of the logistics challenges associated with operating supermarkets, such as staff costs, the careful balance between storage and shelf space, the disruption caused by regular deliveries and limited licensed operating hours do not affect dark stores.

For many retailers, those benefits mean they are an effective way of converting unprofitable and poorly performing sections of their vast retail estates into spaces that add genuine value to their online retail infrastructure.

The change will also have a knock-on effect on the whole logistics chain, with significant savings to be made as products move from suppliers to distribution centres and then to dark stores, rather than active supermarkets.

The location of distribution centres can have a huge impact on the cost of operations for a retailer – and so the location of each centre is a business-critical decision that isn’t taken lightly. Now that retailer estates are changing once again, there are important choices to be made about how to adjust their distribution centre network.

You may not have noticed them – but the dark stores have arrived, and they are here to stay.

In the property sector, this means that we have to understand the best locations for dark stores, how to deliver conversion programmes for existing stores – and be ready to proactively advise our clients on how to manage this new category of real estate.