129 billion euros. This is the value achieved in 2021 by e-commerce sales in France. This is more than double the figure for 2014 (57 billion euros).
Online food weighs almost 20 billion euros in this first value. This is mainly the delivery of meals or purchases in supermarkets. The fast or even “instant” delivery segment, sometimes called “quick commerce”, generated “only” 122 million euros in revenue in 2021 in France.
This segment continues to be a niche market, essentially reserved for large cities, but it still recorded a growth rate between 2020 and 2021 of 86%. New players developed in Paris, London and New York. They are called Cajoo, Gorillas, Flink, Getir, JOKR or even Gopuff and the explosion of the sector is now imposing itself on the urban landscape.
This activity requires storage and order processing spaces located in urban areas, in order to organize ultra-fast deliveries within a radius of about two kilometers. Equipped like supermarkets, these small warehouses with a surface area of less than 400 m2 are accessible only to the personnel responsible for the collection and delivery of the products. Hence its more widespread name of “dark store”, which some translate in France as “dark store” or “shadow store”.
A recent report by the Atelier parisien d’urbanisme (Apur), estimated in January 2022 their number at 80 in the French capital. Amsterdam had around 28 in operation as of mid-December 2021 and New York 110 as of late February 2022.
The phenomenon is now clearly visible, but far from the outbreak sometimes mentioned in the press or by some politicians. Furthermore, the sector is still in full consolidation, as evidenced by the acquisition process (Frichti by Gorillas, for example) and hasty exits from the market.
not the first
One of the effects of the pandemic has been forcing many companies to expand their distribution methods, or at least speed up the existing movement. Were they just a physical store or just a digital platform? With “click and collect”, many now play both ways, with multiple media in each. We speak of “omnichannel” models.
The store now becomes an all-in-one hub. It functions as a showroom, relay point, return location, micro-warehouse and microprocessing center.
Quick commerce, therefore, did not invent dark stores, but fits into a retail model that was already changing before the Covid-19 crisis. Nor is it the first to test the store as a distribution center for local delivery. For example, supermarket chain Monoprix has operated a shadow warehouse in Paris since 2019. Franprix dedicated five of its stores located in office areas, empty during the lockdown, to online ordering before reopening them again to the public.
The model really finds its origins in Asia. Especially in China, instant groceries delivery has been an established consumer practice for over five years with companies like Hema Fresh.
A mode of development in question
The fact is that, more than other retailers that use dark stores, the fast commerce comes up against its disorderly establishment in the cities. In fact, investors are pursuing the so-called “blitzscaling” strategy. It’s about embarking on a race for growth to gain an edge over your competitors. The idea: become the greatest and take it all away.
Getir thus became the second unicorn, all sectors combined, of Turkish origin. The Brazilian Daki reached this status in just ten months of activity. Gorillas has raised nearly a billion dollars to fund its lightning-fast expansion.
This rapid development, however, raises questions about the need for regulation in this sector. Questions about public space first. How to limit the inconveniences related to the movement and parking of couriers for local residents? How to understand its impact on the excessive use of cycling and road infrastructure?
The question is also commercial in nature: do dark stores threaten small retail or even large urban stores? Does the proliferation of these inaccessible spaces, hidden from the public, threaten a certain form of urban life and street entertainment? And legally, how should dark stores be considered, especially with regard to local planning documents: commercial spaces or logistical spaces? Especially if we know that the competitive logic will lead, a priori, to the bankruptcy of the minors and, therefore, to empty spaces.
Some point out that dark stores are often opportunistically installed in old commercial establishments located in places that have become undesirable. In London, for example, they come to settle under railway arches, in light industrial parks and in the basements of shopping malls. These spaces are therefore given a second chance.
However, municipalities express some concerns and multiply initiatives aimed at regulating or even opposing their development. Some leaders even display a hostility that can sometimes be considered excessive, mobilizing moralizing arguments and neglecting the fact that this offer responds to consumer demand.
The [ville de Paris] decided, for example, to start a lawsuit in March 2022 to close 45 of the 80 dark stores identified by Apur. The argument used: non-compliance with the rules of the local urban plan. It also implemented a procedure that allows citizens to report unauthorized deposits in their neighborhood. In the Netherlands, in Amsterdam and Rotterdam, a one-year moratorium on the opening of new places of this type was decided in January 2022.
circumvent or cooperate
However, the means of regulating fast trade remain quite limited. Since the beginning of 2022, two trends have emerged on the business side. We observe, on the one hand, a willingness to adapt or even circumvent the new local rules. Getir, for example, will try out a click and collect allowing their warehouses to be classified as companies. Others are innovating and offering fresh takeaways, such as GoPuff in New York, which opened the GoPuff Market, combining logistics space, store and cafe.
On the other hand, there is a desire to cooperate with municipalities. In Paris, the city council has also offered to help fast-moving merchants like Cajoo find suitable locations, such as underground parking lots.
The necessary regulation of fast commerce, namely with regard to compliance with urban rules and the limitation of inconvenience, should not, however, make us forget that the sector is now just another manifestation of the evolution of urban commerce. Online sales have penetrated urban life and transformed consumption habits. Delivery from physical stores, click-and-collect, pedestrian drives, lockers are all other city hallmarks of these developments. Furthermore, the effects of dark shops on the local economic fabric should perhaps be put into perspective: Paris currently has less than a hundred warehouses for more than 60,000 intramural businesses.
In these debates, it seems necessary to find ways to collect reliable data. There is a glaring gap here that the Chair of Logistics at the Gustave Eiffel University is trying to fill. She has been involved in counting and observation work in the French capital for several weeks, namely on the movements of couriers and on the vehicles that are used for delivery. It is about putting the organization of sustainable urban logistics in all its dimensions on the local agenda and rethinking a city’s commerce in full evolution.
By Matthieu Schorung, Doctor. Postdoctoral fellow, Logistics City Chair, SPLOTT, Gustave Eiffel University, Gustave Eiffel University;Postdoctoral fellow, Logistics City Chair, Gustave Eiffel University, Gustave Eiffel University and Professor, Gustave Eiffel University.
The original version of this article was published on The Conversation.