How dark supermarkets are changing the way we shop

Angus Kidman 29 November 2017

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The Amazon effect is being seen even in traditional retailers.

Before you ask: no, a dark supermarket is not just your local store during a power outage. It's a store that has been set up purely to serve online orders. It has staff, supplies and shelves as well as unattractive uniforms, but no access for customers.

Most online supermarket deliveries come from regular branches, and that's been the case ever since Woolworths launched its first online sales (from Sydney's Eastwood) back in the late 1990s. A staff member goes around with a trolley and fills it, then it's packed and dispatched. That system means delivery is possible from almost anywhere a supermarket operates, but it's not the optimal approach for efficiency.

Woolworths and Coles have both been experimenting with dark supermarkets for some years. In locations where there is high demand for online shopping, the strategy makes a lot of sense. What's in stock can be matched to the profiles of online customers, which may be very different from typical shoppers. You don't need to waste time rolling out price labels throughout the store. You don't have staff members bustling for elbow room with meatspace customers. And because you don't need a full-scale car park, you don't spend as much on property costs.

Coles has two dark stores running, one in Richmond (Victoria) and one in Alexandria. Woolworths has one dark outlet in Mascot, which it launched in 2014, and plans to open as many as four by the end of 2018. It makes no secret of the fact that much of its motivation comes from wanting to deal with the looming threat of Amazon Australia.

"We should give customers a choice as to how they want to transact with us," Woolworths chairman Gordon Cairns told the AFR while explaining the dark store expansion plans. "If we do that effectively, we are in a position to compete much more effectively with Amazon."

While Amazon has ambitions in food delivery, they're not likely to be activated in Australia for a while. Even in its home market of the US, Amazon Fresh is not nationally available, and the service has recently been scaled back. But that doesn't mean the local supermarket chains are going to hang around and do nothing.

Working in a dark supermarket means you wouldn't have to deal with the great unwashed Australian public, but there are other restrictions. For example, the hours are similar to normal stores. Woolworths recently advertised for positions to fill a new dark supermarket in Brookvale, and noted that the working hours ranged from 5am to midnight, seven days a week.

We shouldn't imagine that dark supermarkets are ever going to become the norm or totally replace conventional supermarkets. But as more of our shopping shifts online, chances are we'll see more, especially in our capital cities.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.

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