Covid-19: Stores go dark to serve online demand

For several months, Levi’s CEO Chip Bergh has been talking up the fashion retailer’s infrastructure work to support ship-from-store services for its online operation. Now, as the Covid-19 coronavirus has forced the closure of most Levi's shops, it is time for the service to shine.

Commenting, last week, on the company’s ability to pick and fulfil online orders from stores, Bergh said “we’ve built that muscle”, and “we're going to start firing that back up here in the next week or so”.

He was speaking on Levi’s first quarter earnings call, and said the reason for ramping up ship from store at this time was to help manage inventory – and it is also a precaution in case the retailer’s eCommerce distribution centre is shut down due to the virus.

The move will help Levi’s shift some of the seasonal ranges it has in stores, even at a time the physical premises are closed to the public. Bergh added: “We have plenty of flexibility to shift inventory from stores to eCommerce and in both directions.”

Although developing the ability to ship goods from stores was planned by Levi’s, fulfilling orders from closed stores was not the specific strategy.

Levi’s is effectively operating dark stores, in the manner grocers – including Tesco, Sainsbury’s, and Asda in the UK – do to support their online businesses in non-pandemic times. It’s the model Sainsbury’s is adopting with the relaunch of its Chop Chop rapid delivery service in London, in reaction to the current crisis, while Amazon-owned Whole Foods has also ringfenced at least one US store for online fulfilment.

But Levi’s is not the only non-food retailer doing this as the health emergency prompts retailers to pivot quite significantly.

Books and booze dark stores

Bookseller Blackwell’s is using its flagship Oxford store to pick online orders, with the historic multi-floor Broad Street location now effectively a dark store with six pickers rifling through its circa 100,000 titles.

Due to Covid-19 safety measures, the main book wholesalers in the UK, Gardners in Eastbourne and Bertrams in Norwich, are running a reduced service or closed, respectively, causing disruption to the traditional supply chain.

Kieron Smith, digital director at Blackwell’s, says: “We’re picking from distance and it’s much easier to do when the shop is closed, so we’re using that as a mini warehouse as well as distribution centre in Gloucester.

“We’re moving stuff around to fill the gaps as we’ve lost parts of the supply chain.”

Blackwell’s online has 16 million books available. Highlighting the need to keep a broad inventory, Smith adds: “If a customer wants books, it’s no good saying ‘I haven’t got that, but I’ve got this instead’ like you can with other categories.”

There is one picker to each floor in the Broad Street store, making it straightforward to keep the required distance apart and reduce the risk of spreading the virus. Picked items are placed in a van and taken across to the cross-docking Gloucester warehouse, where they are unpacked, scanned and sent to customers.

“If a customer wants books, it’s no good saying ‘I haven’t got that, but I’ve got this instead’ like you can with other categories”

Meanwhile, drinks retailer Majestic Wine has switched to a 100% delivery model. In doing so, it turned its entire store estate ‘dark’ overnight, and is now serving local communities from stores, with distribution support from its central Europa-run Northampton warehouse.

John Colley, executive chairman & CEO of Majestic Wine, says: “We made the decision to close our doors to the public and, instead, use our fleet of 200 vans nationwide to continue to offer home delivery.

“That way we can keep our people safe by dramatically limiting the number of people in our stores at any one time, and still continue to serve our customers during this difficult time.”

Both Blackwell’s and Majestic note they have received “record” levels of orders since the lockdown, although they didn’t provide exact numbers. Smith says online orders were up by at least 100% compared to usual during the week the government ordered schools to close.

Additionally, both of these retailers have paused click/reserve & collect services, hence their shops’ newfound status as dark stores.

New role for B&Q stores

Like Majestic, DIY chain B&Q is on the government’s pandemic era ‘essential’ list of retailers, but it too opted to close its stores to visitors. The Kingfisher-owned retailer has instead introduced a contact-free click & collect service in its store car parks, as well as continuing with home delivery.

Since the coronavirus took hold, B&Q has extended its distribution capability, with deliveries being made to shoppers’ residences direct from selected stores. This represents an addition to the company’s usual delivery network, and once again shows how the health emergency is reshaping the way stores interact with online operations.

Many UK retailers, particularly those in the mid-market fashion space, have been implementing new technology in recent years, allowing them to use stores as mini online distribution hubs. Typically, though, these stores remain open as eCommerce orders are picked, but this crisis is prompting retailers into completely new processes.

Graham Bell, B&Q CEO, says: “We’ve been working hard to adapt our business to meet our obligations as an ‘essential’ retailer, while keeping our colleagues safe and continuing to meet our customers’ needs.

“We’re seeing extremely high demand and doing everything we can to manage this. A big thank you goes to our store colleagues who have been incredible. They’re picking and fulfilling thousands of orders every day in stores designed for browsing and shopping, and are working hard to ensure that customers can collect items in our store car parks in a safe and secure way.”

Brian Kilcourse, managing partner at RSR Research, an industry analyst group, predicts the growing use of dark stores by retailers to fulfil orders will be one outcome of the Covid-19 crisis, fuelled by greater customer demand for delivery and click & collect.

“Just as consumers learned to use their smartphones in the great recession to make better purchasing decisions, some will adopt new omnichannel fulfilment options more quickly than they might have done otherwise – and they won't forget those new learned behaviours,” he explains.

“Retailers who were considering dark stores before the crisis are being pushed to go faster.”

Image credits: Tero Vesalainen / Weedezign