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Dark Days For Dark Stores

Despite the pandemic boom of rapid grocery delivery apps and dark stores, the quasi-retail spaces for rapid grocery fulfillment, they are disappearing almost as quickly as they were leased. Once a white-hot commodity, dark stores allowed commercial landlords an opportunity to stay afloat when lockdowns tethered retail customers to their homes. But now, landlords are beginning to shun these kinds of operators.

Phil Lempert, the Food Trends Editor for NBC’s Today Show, said that he’s not surprised that the dark store model is beginning to implode. “It was built on quicksand,” he said in an interview. Less than a year ago, ultrafast grocery delivery startups like Getir, Gopuff, and Jokr repeatedly made a splash in headlines for their lightning-fast growth. Now, the sector is on shaky ground. In May, Getir let go of 14 percent of its workers and the New York State Department of Labor is currently looking into employee pay disputes at the company. Gopuff has closed 76 of its locations, while Jokr has pulled out of the U.S. market completely. 1520, another popular rapid grocery delivery app, shut down operations last December.

These companies offered grocery delivery services within the span of 15 minutes or less, and venture capitalists banked on the model. But in order to fulfill the promise of delivering to customers that fast, these startups could only operate in densely-populated urban centers. Rapid grocery fulfillment tenants gobbled urban storefronts, inevitably driving up rent prices. But these companies also bled capital as they tried to undercut their competitors by lowering their prices in an effort to gain market share, a tactic that truly began to backfire when the inflation rate skyrocketed. Rapid grocery delivery isn’t dead, but the explosive growth and rapid demise of so many dark store locations is proving to landlords that leasing to dark store operators may not be the best strategy if they want a long-term tenant.

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