129 billion euros. This is the amount that e-commerce sales reached in France in 2021. This is more than double the amount of 2014 (57 billion euros). Online food at this first figure weighs nearly 20 billion euros. This is basically the delivery of meals or shopping from supermarkets. The express or “spot” delivery sector, sometimes called “express trade”, generated “only” 122 million euros in 2021 in France.
This segment is still a niche market, mainly reserved for large cities, but it still sees a growth rate between 2020 and 2021 of 86%. New players developed in Paris, London and New York. Their names are Cajoo, Gorillas, Flink, Getir, JOKR or even Gopuff and the sector’s explosion is now making its mark on the urban landscape.
Dark Warehouses: Little Warehouses Hidden in the City
This activity requires warehouse and order processing spaces located in urban areas, in order to organize ultra-fast deliveries within a radius of about two kilometers. This small warehouse equipped like a supermarket with an area of less than 400 m2 Available only to employees responsible for the collection and delivery of products. Hence their more common name, the “dark shop”, which some in France translate as “the dark store” or “the shadow warehouse”.
A recent report by Atelier parisien d’urbanisme (Apur), estimated in January 2022 their number at 80 in the French capital. Amsterdam had about 28 operations in mid-December 2021 and New York 110 at the end of February 2022. This phenomenon is now clearly visible, but it is far from the increase sometimes mentioned in the press or by some politicians. Moreover, the sector is still undergoing a complete consolidation process, as evidenced by acquisitions (Frichti by Gorillas, for example) and hasty market withdrawals.
The allure of the universal channel model
One effect of the pandemic has been forcing many companies to expand their distribution routes, or at least to speed up the current movement. Were they just a physical store or just a digital platform? With Click and Collect, many are now playing both ways, with many modes in each.
Talking about “omnichannel” models. The store is now a multifunctional center. It functions as a showroom, relay point, return site, small warehouse and precision processing center.
not the first
Thus, express commerce did not invent dark stores but rather fit the retail model that was already changing before the Covid-19 crisis. Nor is it the first to test the store as a fulfillment center for local delivery. For example, supermarket chain Monoprix has been running a shadow warehouse in Paris since 2019. Franprix has designated five of its stores located in office areas, empty during reservations, for online orders before reopening to the public again.
The model actually finds its origins in Asia. In China in particular, instant grocery delivery has been an established practice for consumers for more than five years with companies like Hema Fresh.
The method of development in the question
The fact remains that more than other retailers using dark stores, fast commerce comes against their uncontrolled establishment in cities. In fact, investors follow the so-called “blitzkrieg” strategy. It is about embarking on a race for growth to gain an advantage over its competitors. The idea: to become the biggest and take it all away.
The Getir thus became the second rhinoceros horn, of all sectors combined, of Turkish origin. The Brazilian Ducky reached this state in just ten months of activity. Gorillas has raised nearly $1 billion to fund its very rapid expansion.
Should – and how – regulate this sector?
This rapid development however raises questions about the need to regulate this sector. Questions related to the public space in the first place. How can the inconvenience associated with the movement and parking of delivery workers be reduced to the local population? How do we understand its impact on excessive bicycle use and road infrastructure?
The question is also of a commercial nature: Are dark stores threatening small retail stores or even large urban stores? Is the proliferation of these inaccessible spaces, hidden from the public, threatening a particular form of urban life and street animation? And legally, how should dark stores be viewed, especially in relation to local planning documents: commercial spaces or logistics spaces? Especially if we know that competitive logic will lead, a priori, to the bankruptcy of the smallest companies and thus to empty spaces.
Some point out that dark shops often settle, out of opportunism, in former commercial premises located in locations that have become undesirable. In London, for example, they come to establish themselves under railway arches, in light industrial parks and in the basements of shopping centers. Thus these spaces are sometimes given a second chance.
However, municipalities express certain concerns and multiply initiatives aimed at regulating or even opposing their development. Some leaders even display a hostility that can sometimes be considered excessive, marshaling moral arguments and ignoring the fact that this supply responds to consumer demand.
The [ville de Paris] It decided, for example, to begin procedures, in March 2022, to close 45 of the 80 dark stores identified by Apur. The argument used: non-compliance with the rules of local urban planning. It also established a procedure that allows citizens to report unauthorized warehouses in their area. In the Netherlands, in Amsterdam and Rotterdam, it was decided to stop the opening of new premises of this type for a year in January 2022.
fraud or cooperation
However, the means of regulating express trade is still very limited. Since the beginning of 2022, two trends have emerged on the business side. On the other hand, we observe a desire to adapt or even circumvent new local rules. Getir, for example, will test a service Click and collect Allow its warehouses to be classified as business. Others innovate and offer quick sale of fresh produce, such as GoPuff in New York, which opened GoPuff Market, which combines a logistics space with a convenience store and café.
On the other hand, there is a desire to cooperate with municipalities. In Paris, the Town Hall has also offered to help fast merchants like Cajoo find suitable places such as underground parking.
With dark stores, consumer habits are disrupted
However, the necessary regulation of express commerce, particularly with regard to compliance with the rules of town planning and the reduction of inconvenience, should not make us forget that this sector is now just one manifestation of developments in urban commerce. Online sales have permeated urban life and changed the habits of consumers. Deliveries from physical stores, click and collect, pedestrian drives, and lockers are all the other brands in town for these developments. In addition, perhaps the effects of dark stores on the local economic fabric should be put into perspective: Paris currently has less than a hundred warehouses for more than 60,000 internal trading firms.
In these discussions, it seems necessary to find means to collect reliable data. There is a glaring shortage here that the City Chair of Logistics at Gustave Eiffel University is trying to fill. For several weeks I have been involved in making statistics and observations in the French capital, particularly the movements of delivery men and the vehicles used for delivery. It is a matter of putting on the local agenda organizing sustainable urban logistics in all its dimensions and rethinking city commerce in full development.
About the authors:
Matthew Schurung: female doctor. Postdoctoral fellow, President of City of Logistics, SPLOTT, Gustave Eiffel University, Gustave Eiffel University.
Helen Boldeo Ray: Postdoctoral fellow, President of the City of Logistics, Gustave Eiffel University, Gustave Eiffel University.
Laetitia dublanc: Professor, Gustave Eiffel University.
This article has been republished from The Conversation under a Creative Commons license. Read the original article.