Image credits: Dennis Siqueira
News Article

Stores Go to the Dark Side

By Jorge Ramos Zwanziger | Fri, 08/06/2021 - 15:53

How can physical supermarkets keep up with rising demand and handle their logistics and operations more efficiently? They cannot, argued Victor Benavidez, Director General of TIBA Mexico, during the virtual conference Business Logistics Dialogues, organized by T21.

“[They] are not efficient, because a physical store does not have a Warehouse Management System (WMS).” Benavides argues that the sector is headed towards a new direction in Mexico, which will be beneficial for both businesses and customers.

The pandemic has impacted the way people consume and the way businesses address their consumers’ demands, particularly because customers could not physically go to stores and would prefer to get products online. But Benavidez believes the future of the sector could go hand-in-hand with dark stores.

What is A Dark Store?

A dark store is a retail space that is not open to in-store shopping, explains REEF, these are developed exclusively to fulfill online orders. These types of stores are usually found in suburbs or on the outskirts of cities, which allows them to take advantage of more affordable real estate and easier road access. These stores can also take the form of dark supermarkets, where customers shop digitally for their produce and items.

Dark stores usually look more like warehouses than stores, because they are not set up to attract customers to certain products. Instead, they are set up in a way that facilitates item identification to be able to finish as many orders as fast as possible.

Dark stores have different advantages, as they address a lot of the problems that come with traditional physical stores which include the following:

  • Inventory management: A common problem when dealing with digital and in-person demands, when sometimes there are product outages and the business cannot keep up, causing customer dissatisfaction.
  • In-Store Experience: Physical stores can get crowded, particularly when restock is happening during busy hours.
  • Delivery Speed: A lot of traditional stores do not have the means to meet delivery expectations set by modern consumers, particularly for same-day and next-day delivery. According to REEF, 66 percent of Millennials expect to get their order within 24 hours when they paid for the delivery.

Is This Already Being Done in Mexico?

Merqueo, a Colombian online supermarket, plans to become the largest dark supermarket in Latin America, according to T21. This announcement was made after a successful Series C Capital raise where it received over US$50 million. However, it has not made clear what goals it exactly has or how many stores it plans to install in the three countries it currently participates in: Colombia, Brazil and Mexico. However, it did explain that it wants to take even more control of the supply chain, without any intermediaries, as this allows it to offer better quality and speed. Its participation in Mexico could have a big impact on the supermarket sector and could change the way consumers understand grocery shopping.

The data used in this article was sourced from:  
Photo by:   Dennis Siqueira, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst