LOGISTICS

No One's Afraid of the Dark Store

Some retailers are switching entire stores to dark mode, but it’s not to make them migraine-proof. 

Grab those retail flashcards

Dark stores are local fulfillment centers converted from formerly shopper-populated stores. With widespread stay at home orders in place, retailers are voluntarily turning the lights out at some locations to accommodate growing online demand.  

• Whole Foods converted at least two locations, one in NYC and one in LA, to dark stores this week. 
• Several other supermarket chains, including Giant Eagle and Kroger, are presently operating temporary or permanent dark stores. 

Picking up speed 

Before the world became a dystopian YA novel, chains from Stop & Shop to Walmart had piloted dark stores for months. There weren’t enough online grocery shoppers for a waiting list then, but retailers guessed that moving fulfillment centers closer to densely populated areas would shorten delivery times and build affinity via convenience. 

You know what comes next. The number of U.S. adults who tried and liked online grocery services doubled earlier this year, per CivicScience data. Grocery’s also one of the only U.S. retail sales categories that grew in March, up nearly 27% monthly. 

• Given that demand, some grocery chains are graduating dark stores from test concepts to potential solutions. 

Zoom out: Sales of so-called essential items like body care and bread machines are surging alongside online grocery. That’s encouraging non-grocery retailers to adopt the dark store playbook. Bed Bath & Beyond said Thursday that roughly 25% of its stores in the U.S. and Canada will become temporary fulfillment centers. 

My takeaway: I’d wanted to write an entire newsletter without the words “new normal.” But that’s exactly what dark stores could become in the post-pandemic world.

E-COMM

When More Business Is Bad for Business

Like a politician confronted with their voting record, Amazon is backtracking on its old ways. But it’s not to win shoppers over—it’s to send them away, the WSJ reports. 

To keep pace with higher quarantine demand, Amazon reportedly implemented measures to discourage shoppers from loading up their carts.

• Amazon removed widgets that suggest items purchased by other shoppers.
• Upcoming holiday discounts for Mother’s and Father’s Day were canceled, and Prime Day, typically in July, was postponed indefinitely. 
• It dialed back Google ad spend to prevent search-to-shop conversions. 

Amazon has already added 175,000 warehouse positions to fulfill tall orders for toilet paper and pasta, hold the human interaction. All those hands aren’t strong enough to pry open Amazon’s supply chain bottleneck, however. 

Executives reportedly hope removing spending nudges will eliminate impulse buying. That way, the company can prioritize orders for essential items without calling off orders for nonessential goods. 

Looking ahead...Not even the Everything Store can expect operations as usual in a pandemic. Sources told the WSJ that Amazon won’t return to pre-COVID fulfillment and shipping capacity, including consistent two-day delivery, for more than two months.

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STORES

The Only Opening Day We'll Get

Starbucks CEO Kevin Johnson must know I’ve missed saying “no whip low-fat caramel macchiato” out loud. In an open letter to employees yesterday, he said the company is preparing to reopen U.S. stores. 

The game plan: Starbucks calls it “monitor and adapt,” but it could also go by “common sense.” 

• Store reopening dates will vary by location, depending on COVID-19 cases in the area, guidance from health officials, operational readiness, and local community sentiment.
• Mobile pickup and to-go orders will return, but in-store seating won’t yet. Not that sippers will mind: Before the pandemic, around 80% of orders were already placed on the go.

The strategy seems to have worked in China, where Starbucks closed more than half of its roughly 4,290 stores due to the coronavirus by January. By the end of February, 85% of them had reopened with the monitor and adapt plan. 

My takeaway: Even as retailers reopen their doors, customers won’t find the same experience inside. Analysts say coronavirus-inspired changes like contactless payments and traffic limits will last for months and may become permanent.

WHAT ELSE IS BREWING

• The Small Business Administration reached its limit for coronavirus relief loan funds.
• Amazon may start testing every employee for COVID-19. 
• Shoptalk will host virtual events about retailers’ pandemic responses next week.
• DSW will sell shoes on grocer Hy-Vee’s website.
• Fashion Nova is facing social media backlash after suggesting shoppers spend their stimulus checks at one of its online sales in a text marketing campaign.

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FROM THE CREW

It doesn’t take a retail scientist to know that COVID-19 is devastating the industry. Some retailers cut hours and pay while others cut positions altogether. At many brands, staffing changes are affecting store clerks and c-suite executives alike. 

If you work for a retailer, we’re asking you to complete a short survey about your career and the coronavirus. It’ll help us understand effects on your job today and your opportunities down the line. As a small token of our thanks, you’ll be entered to win a $25 AmEx gift card for completing the survey. 

TL;DR: Share how COVID-19 is impacting your career, get entered to win an AmEx gift card. All survey responses are anonymous. Take our two-minute survey here.

FROM THE CREW

It doesn’t take a retail scientist to know that COVID-19 is devastating the industry. Some retailers cut hours and pay while others cut positions altogether. At many brands, staffing changes are affecting store clerks and c-suite executives alike. 

If you work for a retailer, we’re asking you to complete a short survey about your career and the coronavirus. It’ll help us understand effects on your job today and your opportunities down the line. 

TL;DR: Anonymously share how COVID-19 is impacting your career with our two-minute survey here.

SWAPPING SKUS

“How can retailers outlast the pandemic?” No one has a definitive answer to this question—but because we’re all wondering, I found two Oxford-educated guesses. 

• If DTCs want to make it to the other side, they’ll need more than a sticky Instagram campaign. They’ll need cash (Fast Company).
• Businesses that went digital may stay digital—and managers will have to adapt (WWD).

FRIEND OR FAUX?

Let’s see if you’re still sharp after a news quiz bye week. Which retail story did I make up? 

1. With gym members stuck at home, Equinox launched a DTC home equipment brand. 
2. A former Adidas exec developed a hypebeast phone game—it’s Pokémon Go, for sneakers.
3. Jane Fonda’s raising funds for climate change and COVID-19 relief efforts by selling tracksuits.
4. You, too, can dress like Tiger King “star” Joe Exotic, thanks to a listing on eBay.

FRIEND OR FAUX? ANSWER

1. Nope, Equinox hasn’t pivoted to selling free weights yet.