Amazon got the ball rolling in August with rumors that some of Simon Property Group’s big-box mall spaces may become Amazon fulfillment centers. Variations of this online fulfillment need are showing up in “dark stores,” in which retail spaces are specifically used for fulfilling online orders without offering any in-store customer shopping. An additional variation of this theme is that stores are being configured for walk-up ordering only, without allowing any in-store shopping.
Malls Enter the Fulfillment Center Trend
Over the summer four mall owners, Simon Property Group, Taubman Properties, Macerich and Brookfield Properties all agreed to partner with Fillogic Partners, a New York-based technology company, which will provide tech-enabled micro distribution Fillogic Hubs, along with its own staff, to help retail tenants with online fulfillment orders at select malls. The Fillogic staffers will physically fulfill orders for the various mall tenants and handle freight delivery services. To date, the malls utilizing Fillogic Hubs are the Brookfield’s Paramus Park mall in Paramus, N.J., Taubman’s Stamford Town Center in Stamford, Conn., Simon’s Livingston Mall in Livingston, N.J., Simon’s Gloucester Premium Outlets in Blackwood, N.J., and Macerich’s Deptford Mall in Deptford Township, N.J. Fillogic generally seeks space between 2,000 and 10,000 s.f. in unused basements or storage sites within the malls, but can also directly take up retail space as well.
Dark Stores See the Light
In October, Macy’s converted two of its brick-and-mortar mall locations into dark stores: its unit in the Dover Mall in Dover, Del., and its unit in the Southwest Plaza mall in Littleton, Colo. These test pilot sites will remain this way at least through the holiday season and, if successful, there is a probability that more Macy’s mall sites will also be converted to fulfillment-only centers in the future. This coincides with Macy’s making a concerted effort to open more of its future brick-and-mortar units with a much smaller square footage on retail street-front sites in non-shopping mall locations, with Atlanta, Dallas and Washington, D.C., being eyed for the first of these off-mall locations.
Whole Foods Market, owned by Amazon, opened its first online fulfillment-only space, in a retail setting that is closed to public shopping, in Brooklyn’s Sunset Park/Industry City neighborhood in September. The 28,000-s.f. former CMI, Inc. furniture store on the ground floor of a mixed-use building is dedicated solely to fulfilling online delivery orders within the surrounding Brooklyn neighborhood.
Though other Whole Foods locations had temporarily become online-fulfillment only spaces such as in Baltimore, Chicago, Castle Rock, Colo., Austin, Texas, San Francisco and the Bryant Park neighborhood of Manhattan, this Brooklyn space is the first new store opening that will be remain permanently “dark.”
Pickup-Only Stores Gain Traction
Apple is repurposing up to 50 of its stores by the end of October in to “Express stores” that are pickup-only configurations, with plexiglass barriers separating customers from the salesperson. The product pickup will be by appointment only for online orders, or by appointment only for “Genius Bar” tech services, with no walk-in shopping or browsing allowed. These locations will be in indoor mall spaces that are still disrupted by coronavirus distancing concerns. The Express stores are expected to ease holiday social distancing foot traffic worries — in anticipation of Apple’s release of its iPhone 12, 12 Pro with 5G and iPad Air models.
Starbucks is also ramping up its pickup-only store configurations and expects to open between 25 and 40 such units over the next 18 months, a faster timeline than its previous plan to open these over the next three to five years. The pickup-only store, which currently only has one U.S. prototype, a 300-s.f. unit in New York City’s Penn Plaza that opened in November of 2019, utilizes the Starbucks mobile pre-pay app in order for customers to pick up their prepared orders. Look for these units to roll out in dense urba n metropolitan areas such as Seattle, San Francisco, New York City, Chicago and other major U.S. cities.
The Kroger supermarket chain reformatted one if its stores in the Mount Carmel neighborhood in Cincinnati into a click-and-collect pickup-only drive-up service store in March. Though the grocery chain has not yet revealed if future stores will also become pickup-only, the customer-less click-and-collect unit is being used a testing site to improve the pickup services at all of Kroger’s other locations.
