Dark Stores on the Rise

The growing importance of last-mile delivery, urbanization, boom in organized retail and time sensitivity of delivery of perishable goods are driving this segment. The increased focus of quick commerce and e-grocery companies on improving last-mile delivery and customer experience has resulted in the rapid growth of dark stores.

How they function 

These are micro-fulfilment centres for online shopping and located in densely populated locations. Dark stores stock a variety of products similar to those in supermarkets or retail stores to fulfil online orders.  Dark stores operate around the clock and enables quick access to inventory, reduces transportation costs, quick turn-around time, and improves last-mile delivery capabilities.

Leasing and tenant prospective  

A significant portion of dark stores are located in buildings which were built for retail and commercial purpose including standalone retail stores, small offices, restaurants, grocery stores/supermarkets and mainly situated on the ground floors, which come in varying sizes, typically ranging from 3,000 sq. ft to 8,000 sq. ft

Landlords typically rent out these buildings to dark store operators on a monthly basis, with a 9–12 months lock-in period and a lease term of 2–3 years. The security deposit usually ranges from 4 to 6 months of monthly rent. Tenants are responsible for maintaining the premises and paying the actual electricity and water tariffs.

Leasing Activity 

During the pandemic, online shopping for daily needs increased significantly. Buyers adopted this mode of shopping because of the quick delivery, wide availability of essentials, and overall convenience. As a result, leasing activity for dark stores has surged in densely populated urban areas, particularly in Bengaluru, Chennai, Mumbai, Pune, and Delhi NCR. However, dark store operators are facing several challenges including traffic congestion, lack of availability of space that comply with regulations such as fire NOC and approved plans, limited availability of supply and proper infrastructure.

Driven by a surge in online shopping for daily needs and a demand for quick, convenient delivery, “Quick Commerce” is rapidly growing. The demand from consumers for the ease of shopping from home with extensive availability of essentials is catching up with business enterprises too. Today, it’s not just B2C; even B2B is seeking quick, just-in-time (JIT) orders to be delivered to their doorsteps. This shift has significantly boosted leasing activity for dark stores in densely populated urban centers, particularly in CBD and SBD areas of metropolitan areas. This trend extends to Tier-II and Tier-III cities as well. Quality, compliant spaces that meet operational and location requirements will be critical to addressing the growing demand. The focus will be on securing buildings that adhere to modern standards and effectively support the evolving needs of urban logistics in quick commerce.