up button image
Food Broker News

Online Shopping Is Reshaping Real-World Cities

Is the Complexion of Neighborhoods Permanently Changing?

urban run down

ith the advent of modern technology, consumers have been increasingly doing their day to day shopping online.  This has led to an impact towards the urban landscape, especially in bigger cities.  Nowadays, online shopping reduces the need for retail spaces, increases the demand for freight transport, and heavily decreases the need for parking lots and bigger shopping establishments.  Constant reliance on e-commerce has also led to a surge in the popularity of something known as a “dark store”.  Read on to learn more about online shopping’s impact to cities in today’s landscape.  

Impacts of Modern Online Shopping & Delivery in Cities

Looking back less than a decade ago, it can be surprising to think that cities were swarming with people going to and from various retail establishments and shopping centers.  The world of retail has definitely changed, and opinions can be divided as to whether or not that change is positive or negative.  Studies have shown that there has been a consistent decrease in retail shopping, alongside a sharp and steady increase in online shopping.  With the global pandemic ravaging the world’s economies, the drastic drop  has become even more evident, and urban landscapes have felt this impact the most.  

This current shift towards online shopping means lesser demand for physical retail space.  We’re now seeing lower need for retail spaces in cities, even though spending reaches all time highs.  From gadget stores and bookstores, to famous clothing stores like Zara, Uniqlo, and Aeropostale, men and women alike have started to see the advantages of doing their shopping online.  Even grocery shopping, once a very personal experience, is now being done on the internet.  While this shift has boosted e-commerce and has caused major companies to rethink their selling strategies, it’s also caused a negative impact on places such as shopping malls, who rely heavily on renting out retail spaces to earn a profit.  It also lessened the need for parking spaces, and you can definitely see more and more empty parking lots nowadays compared to a few years ago.  

On a more positive note, online shopping has led to a surge in the delivery industry, paving the way for an army of delivery personnel to encroach upon the lives of every American.  Let’s be real here, not a week goes by where you don’t interact with delivery personnel, delivering anything from food to appliances straight to your front door.  What this tells us is while the change in shopping landscape has negatively affected bigger establishments, it’s definitely helped small and medium-sized businesses and industries survive and thrive.  

Dark Stores: What Are They?

The rise of e-commerce has led to the rise of the concept known as ‘dark stores’.  A dark store, also known as a micro-fulfillment center, is an area dedicated towards online shopping.  With a focus towards rapid online order fulfillment, dark stores make do without the presence of customers and focus its space and services towards efficient storage and delivery.  A dark store conventionally still has shelves and aisles for all its products, with personnel going to and fro picking out items for various orders for customers ordering online.  

The Impact of Dark Stores

From an inventory planning and management perspective, dark stores offer maximum efficiency for deliveries, reducing the time it takes for customers to get their orders down to the teeth.  Nowadays, depending on your location, you can order online and expect your delivery within the day.  In some areas, you can even get your request within mere hours.  An incredible advancement in the world of shopping indeed.  Aside from cutting on costs involved in opening a retail space, dark stores also allow you to cut back on parking-related and overhead costs as well.  

While dark stores offer incredible benefits for all types of businesses, it does come with a set of challenges that these establishments need to overcome in order to maximize its potential.  Inventory management has to be laser-focused towards efficiency and proper execution, as the slightest problems in the supply chain can cause ripple effects with subsequent orders throughout the day.  Companies will need to analyze their customers’ preferences and demands in order to properly predict when to restock on certain items at different points of the week.  This can be even more challenging for perishables, as short expiry times make inventory management more sensitive to changes and errors in the supply chain.  

Changing Urban Neighborhoods

Importantly, dark stores have a major impact towards the urban landscape, and this depends on the size and density in any given urban neighborhood.  While having one dark store in a block of buildings is acceptable, the problem arises when multiple dark stores are bunched together in close proximity, disrupting the balance of the urban environment around the place.  

Because of this, several Dutch cities such as Amsterdam have begun limiting the number of establishments who are allowed to set up dark stores in various locations.  In the United States, certain policy makers have been adamant that using retail storefronts to solely complete orders is a zoning violation.  City planners have stated that in order for dark stores to thrive in urban-rich communities, businesses must look for areas that do not disrupt the regular flow of urban environments.  This means choosing locations that don’t disturb the flow of walking traffic, as well as locations that aren’t as visible as your regular run-of-the-mill retail storefront.  

Long-term Outlook of this Phenomena

Nowadays, we rely more and more on our technology to help us in daily tasks.  That’s why most experts foresee online shopping as an ever-growing phenomenon.  As customers continue to rely heavily on the benefits of buying things on the internet, the appeal of online shopping cannot be underestimated.  

In the case of dark stores, such as the ones in New York City, these establishments are definitely in it for the long-term.  With lower costs of rent and overhead, as well as the reliability of a dark store’s inventory and supply process, it can be foolish not to think about setting one up for any business that wants to grow and scale.  It’s also clear proof that we’re headed towards a world vastly dominated by e-commerce.

Long-term, e-commerce can be seen as the standard for shops everywhere, with more and more brands shifting their priorities towards setting up an efficient delivery system within their organizations.  This is already very evident nowadays, with big industry leaders focusing on their logistical efforts, and with SMEs (small and medium enterprises) putting effort towards e-commerce sites like Shopify, Etsy, or AliExpress. Shopping malls and large shopping complexes have slowly closed up shop all over the world, or have downscaled their operations to adjust to the trying times.  For the world of online shopping and dark stores, it's definitely “sky’s the limit'' from here on out.

February 3, 2023