Hey - It's me, your friendly supermarket supply chain guy! (I now consult on this stuff)
Picking in store has a huge number of cost base efficiencies compared to using a 'dark store'. These are as follows:
* Reduced property costs and property overhead.
* Having 5 vans in 300 locations is better than having 300 vans in 5 locations from a transport perspective (you get much closer to the customer, or have to tranship through hubs).
* Depending on locale, store workers may have more relaxed terms and conditions and unionisation than industrial warehouse workers, which 'warehouse' workers may get dependent on setup.
* Every darkstore you have needs to be fully stocked. This isn't so much of an issue with long-life products, but is an issue with fresh products that need to be sold before their expiry. A darkstore has a 'minimum viable size' with these fresh products dependent on the range you want to offer. Bigger darkstore with more customers means a bigger range - but you are also further away from the customer so either you have a bigger stem distance or need to do trunking to hubs and tranship from there.
So it's not about getting wise, trust me we think about these things and will model what is the most optimum way to deliver, at least in the UK :) An incredibly rough rule-of-thumb of logistics in the UK is that 1/3 of your money is spent on transport, 1/3 is spent on warehouse labour and 1/3 is spent on fixed costs (building, rent, utilities, equipment) - so your saving on labour has to be significant to pull back the fixed cost benefit of running out of an existing retail estate.
This is in the UK - most supermarkets have their own in-store pickers and will deliver with vans in the back. We have one company (Occado) that has a few large DC's and will tranship to outbases with vans. Some supermarkets have these dedicated 'darkstore' facilities in super-dense areas (e.g. Tesco, Asda), but they don't work in most areas of the country and in most cases are actually more expensive to run than in-store picking operations (they are done for capacity reasons rather than cost reasons).
The advantages of the centralised approach tend actually to be about service. If I can centralise to a big enough warehouse, I can offer a better range and offer things like visibility of expiry dates.
Picking in store has a huge number of cost base efficiencies compared to using a 'dark store'. These are as follows:
* Reduced property costs and property overhead.
* Having 5 vans in 300 locations is better than having 300 vans in 5 locations from a transport perspective (you get much closer to the customer, or have to tranship through hubs).
* Depending on locale, store workers may have more relaxed terms and conditions and unionisation than industrial warehouse workers, which 'warehouse' workers may get dependent on setup.
* Every darkstore you have needs to be fully stocked. This isn't so much of an issue with long-life products, but is an issue with fresh products that need to be sold before their expiry. A darkstore has a 'minimum viable size' with these fresh products dependent on the range you want to offer. Bigger darkstore with more customers means a bigger range - but you are also further away from the customer so either you have a bigger stem distance or need to do trunking to hubs and tranship from there.
So it's not about getting wise, trust me we think about these things and will model what is the most optimum way to deliver, at least in the UK :) An incredibly rough rule-of-thumb of logistics in the UK is that 1/3 of your money is spent on transport, 1/3 is spent on warehouse labour and 1/3 is spent on fixed costs (building, rent, utilities, equipment) - so your saving on labour has to be significant to pull back the fixed cost benefit of running out of an existing retail estate.
This is in the UK - most supermarkets have their own in-store pickers and will deliver with vans in the back. We have one company (Occado) that has a few large DC's and will tranship to outbases with vans. Some supermarkets have these dedicated 'darkstore' facilities in super-dense areas (e.g. Tesco, Asda), but they don't work in most areas of the country and in most cases are actually more expensive to run than in-store picking operations (they are done for capacity reasons rather than cost reasons).
The advantages of the centralised approach tend actually to be about service. If I can centralise to a big enough warehouse, I can offer a better range and offer things like visibility of expiry dates.