Respond to Lifting Restrictions With a Dark Store Strategy

June 24, 2020
 
dark store

One unintended consequence of limiting in-store shopping to only essential retail is that stores like Walmart and Target have become flooded with customers, which has created safety concerns while also hurting non-essential retailers. Recently, Mississippi Governor Tate Reeves said, “”Everyone is crowding big-box retailers… if we can allow Mississippi’s small businesses to do sales in a safe way, we can get some of those people out of the Walmart…We can spread out more. We can actually make more people more safe.” This insight was quoted in an interesting article from Business Insider, which explains the emerging value of “dark stores,” stores that are closed to the public, but that can operate as distribution centers or offer take-out, curbside pickup, and other safe order fulfillment.

Not only can dark stores help spread out customers to more businesses, they can help retailers relieve strain at their central fulfillment centers, an ongoing problem during the crisis. What’s more, they allow for non-essential retail to start connecting with customers again.

Elements to Consider When Opening Dark Stores

At a time when retailers are working double-time to earn a fraction of their former revenue, dark stores can offer some solace. A Kibo customer that previously offered only BOPIS fulfillment, for instance, was forced to close their stores when shelter-in-place rules were at their zenith, but were able to keep a quarter of their stores running as dark stores, working as mini distribution centers.

This innovative transition resulted in a rescue of 20% of normal revenue instead of having to shut down all operations. 

Opening dark stores does require logistical planning and support, however. Therefore, here are some important elements to consider:

Know the Local Regulations

As with many retail logistics, dark stores are subject to the local and state rules on re-opening and safety precautions. 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.

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 that 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, customers need to be told, told again, and then told a third time. 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 such as where to drive and park
  • Offer pickup time windows to reduce uncertainty and manage traffic
  • Explain how delivery works, such as asking for the trunk to be open when making a pickup.

As with all online messaging efforts, the right personalization platform can help deliver the right curbside notifications and experiences at the right moments.

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 an incentive to come again soon.

Maximize Your Earning Potential 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 be a bumpy road, with future shut-downs in regions where cases go back up causing future disruptions. 

Luckily, Kibo offers frictionless order management solutions so that retailers can quickly and easily set up dark stores, determine how to use them, and communicate to customers with personalized messaging. With cloud-based order management, Kibo clients get the control they need to pivot store by store, and the insights they need to manage costs and income to maximize their earning potential.