From dark store to hybrid store – adapting to a new world order

It’s safe to say the embattled UK high street had a rocky start to the year, with a reported 18,248 retail jobs lost and 1,211 shops closed in the first two months of the year alone. In fact, in February, the high street saw a 7.8% drop in footfall, as shoppers were deterred by adverse weather conditions. Since then the high street as we know it has ground to a halt, with all non-essential shops closed to the public amid the Coronavirus lockdown. As a result, longstanding, established retailers such as Debenhams are on the brink of administration.

With further turbulence likely ahead, never has there been a greater need to inject value back into the high street. But, all is not lost.

Growing concepts such as the ‘Dark Store’, first adopted by supermarkets, are laid out like traditional stores but are inaccessible to the high street shopper. Instead, in-store pickers use the store to solely fulfil online orders, therefore acting as a small pop-up fulfilment hub. As the demand for online shopping increases, these stores help brands to leverage existing space and technologies to deliver orders faster as they enable them to be closer to customers than one centralised centre, whilst also taking advantage of empty retail units.

Whilst the concept of the dark store may be a necessary solution for high street brands amid the current pandemic, this short-term solution isn’t necessarily ideal for rejuvenating the high street as we know it. As we come out the other side, retailers must take influence from this trend and apply the learnings to create a hybrid store model that has the power to save brick-and-mortar stores.

Here, we discuss how the adoption of new store models can help the high street to adapt in order to thrive alongside the digital realm, whilst overcoming the challenges currently faced by the industry.

Ensuring business continuity

For high street stores that have been temporarily closed due to the pandemic, large piles of inventory will be sitting there that could be used to fulfil online orders. Building an omnichannel order delivery system to support this however, can be an expensive investment requiring significant capital, time, resources and risk. This can add additional stress to already struggling high street brands – stores are not typically equipped with infrastructure for bulk product storage, packing and delivery. High street retailers are not staffed for product picking, packing and delivery processes at the best of times, let alone at a time where skeleton staffing is preferable.

With the right technology in place however, high street brands can fulfil eCommerce orders without allocating additional space, staffing, hardware or software. This enables retailers to maximise the omnichannel value of physical stores. Ready to go, out the box technology solutions, which simplify this process and remove the heavy burden of logistics, are therefore vital for success. Ensuring retailers have the required online tools to operate straight away.

Keeping up with online demand

As increased demand for online orders continue to prevail during these trying times, making the migration to eCommerce will become an increasingly necessary option for the survival of traditional stores. But, that’s not to say there will no longer a place for the high street once our daily lives eventually return to ‘normal’. As well as speed and convenience, consumers still value the tangible experience that comes with being able to interact with and purchase items in store.

This is where adapting existing store models will be extremely valuable. Whilst the dark store caters purely for online orders, by adopting a hybrid store model, already seen in most UK supermarkets that offer home delivery, retailers can make their store location work twice as hard by doubling up as a physical store with a micro-fulfilment centre within it. As a result, and with the right fulfilment technology in place, as the lockdown restrictions start to lift, customers can benefit from access to contactless click and collect. Including omnichannel initiatives such as Buy Online-Pick Up In Store (BOPIS) and Buy Online-Ship From Store.

Overcoming market challenges

Thanks to unforeseen circumstances such as the current Coronavirus pandemic influencing consumer buying behaviour, not to mention the true outcome of Brexit still lingering on the horizon, it is an uncertain time for the high street. In times of such market uncertainty, high street brands need to have options in their armoury and be ready to pivot in the direction of change, quickly and easily.

To be able to do so, retailers must be constantly assessing existing store models – identifying where they can drive additional revenue streams, tighten up on efficiencies and make expensive store space work as hard as possible. Rather than accepting defeat, traditional bricks and mortar retailers must urgently adapt, or else risk becoming redundant in an ever-changing retail landscape.

Joe Farrell, VP of international operations at PFS