There is no doubt that the way we lived has changed since March, with ongoing stay-at-home protocols imposed across local and national governments worldwide- thanks to Covid-19. Little did we even imagine that masks would become an indispensable part of our wardrobes, social distancing will become the new normal forcing doors to close, anything that welcomes a large crowd including events and retail hubs – would be forgotten for good – at least temporarily.
Covid-19 has brought to the retail domain a difficult, unprecedented era. With a customer base that remains wary of visiting public places, retailers without a strong social media presence or the resources to bring to customers the convenience of online shopping, have quickly found themselves left out in the dark. While retailers have plunged back with new creative ways to open doors to customers, their operation models have however undergone drastic changes. A new normal is under its way as operations address changes in demand with displaced inventory and last-mile delivery setup. That of-course, comes with the rise of dark stores.
Dark stores are a lucrative way of enhancing customer experience and optimizing last mile delivery. They are the most efficient ways of serving densely populated areas with large volumes of orders.
Dark stores are converted supermarket or former supermarket space converted into an e-commerce warehouse. They are not open to the public and do not offer cash registers or merchandising. Sometimes they are attached to a traditional brick-and-mortar business, however, their “dark” area only caters to online customers. This would maximize the amount and type of orders that can be fulfilled in one location.
This trend has already established a strong foothold. Retailers like Target and Walmart had already started experimenting with the ship-from-store fulfillment models prior to the pandemic. When jewellery retailer, Kendra Scott, was forced to close down their stores due to the pandemic-led crisis, shifted to the ship from store model and converted their 108 closed stores into dark stores in just a few weeks. Post pandemic, many local, regional and national grocers are making the move to convert their traditional brick-and-mortar stores into dark fulfillment centers as governments restrict the number of people that can scamper outdoors. It was UK’s Tesco that popularized this new trend. In the last few years, they have been setting up dark stores near areas where they had the number of online orders burgeoning, hence allowing them to smoothly fulfill these orders. Although Whole Foods is one of the largest to convert stores into fulfillment centers, Kroger, Giant Eagle, Hy-Vee and Stop & Shop have all set their foot on the same path. Bed, Bath & Beyond plans to convert a quarter of its locations into dark stores. Retail experts claim this is just the start.
Meanwhile in the Middle East, reckoned as one of the slowest in the e-commerce business, has put a swarm of new players into the spotlight, while existing players have invested in expansion to dark stores. In the race to stay afloat, many of them have adapted to omnichannel sales capacity.
“Every chain in the world will be doing this in the future. And the future is now, because COVID-19 has pushed the timeline up for a number of these kinds of initiatives,” says Ken Morris, managing partner at Cambridge Retail Advisors.
For Carrefour, it’s the beginning of a new era of shopping experience. Carrefour, which is owned by Dubai-based Majid-Al-Futtaim, plans to launch around 50 dark stores in GCC, Egypt and Pakistan dedicated to the online consumer market, expanding its reach across the region.
As per CNBC news reports, Carrefour’s online orders spiked by 917% in Saudi Arabia from January to June this year, while the United Arab Emirates and Egypt saw a surge of 257% and 747% respectively over the same period.
Online demand for groceries has seen a “fantastic surge” in the Middle East during the coronavirus pandemic and the trend may be here to stay, Alain Bejjani of Majid Al Futtaim told CNBC.
Carrefour was the first of its kind to launch the novel concept of ‘hypermarket’ in France. It revolutionized shopping in France and moved daily grocery picking from small stores to enormous stores where customers can find anything they want under one roof.
UAE based Majid-Al-Futtaim bought Carrefour to the region in 1995 and fully owns the operations in over 30 countries in the Middle East. Presently, Majid Al Futtaim operates over 350 Carrefour stores in 16 countries, serving more than 750,000 customers daily and employing more than 37,000 people.
Carrefour recently opened its tenth and largest fulfillment center in Garhoud. Aiming to expedite the delivery of products to the online market across emirates, the store spans around 5,000 square meters and can handle close to 5,000 orders per day. This now rounds up the total number of Carrefour fulfillment centers, some of which has been transformed from existing physical stores, to 44.
Carrefour’s online sales are said to have increased by 300 percent in the UAE and by 100 percent in Saudi Arabia during the Covid-19 lockdown period. This exponential growth during the pandemic has fueled ambitious plans to grow five-fold in the next three years. The sudden shift in behaviour has led to the launch of click-and-collect, giving customers the ability to order online and collect from select locations at a time they choose.
As reported in Arabian news, Hani Weiss, CEO, Majid Al Futtaim, the new centre saw 150 new members of staff employed and a further 50 redeployed from other stores, with plans to increase that further to 250 in the near future. “We will be building more dedicated online fulfilment centres (dark stores) in the next 15 months or so. So you can easily talk about 1,500 people who will be recruited and experienced,” Weiss said. “The target is to become as prominent digitally as we are physically,” he added. The massive surge in online demand had kindled Majid-Al- Futaim to re-assign around 1000 of its employees from other areas of its businesses to Carrefour. (Source : https://www.arabianbusiness.com/retail/449569-majid-al-futtaim-reveals-plans-to-ramp-up-carrefours-online-presence)
In Jordan, more than 40 stores were converted into fulfillment centers during the curfew restricting shops to operate.
In Egypt, despite the pandemic bringing in a consumption slowdown, Carrefour has announced plans to invest in around 200 million Egyptian pounds into its operation this year. Around 39 Carrefour branches are expected to open in the region in a period of five years. Majid-Al-Futaim launched Carrefour operations in Egypt in 2002 and currently employs over 7000 people.
Carrefour’s dark stores will leverage latest technology and artificial intelligence to automate and even robotize functions within the store. The first robotized dark store will soon be seen in UAE and later on in Saudi. This new fulfillment centre has helped to accelerate the development of Majid Al Futtaim’s digital transformation strategy. Apart from adoption of revolutionary technology, Carrefour’s recruitment campaign is underway to fulfill its staff requirements. In order to minimize market disruptions, Majid Al Futtaim launched carrefour.ae in April, lending a new pathway for e-commerce businesses across UAE as well as the company’s shopping mall tenants, to reach out to the online consumer market. The initiative enables local farmers to sell produce at competitive prices through distribution and collection centers, while using Carrefour’s services.
Understanding one’s customers and industry trends deeply and evolving the business to align with them is more important than ever as because of the sudden shift in consumer behaviour. Carrefour has hugely invested in data management and analytics to meet their customers where they are. This means expanding their omni channel presence in-order to continue creating a positive experience for their customers and engage with them in a variety of ways. The launching of the latest dark store accomplishes this by increasing the online delivery capacity, while platforms like Automated Click and Collect, and Marketplace provide customers with the choice to shop in whatever way they’re most comfortable with.
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