ECONOMY

This may look like an ordinary grocery store. But the only shoppers at this Getir warehouse in Istanbul, Turkey, are delivery workers. Photographer: Chris McGrath/Getty Images Europe

THE DARK SIDE OF 15-MINUTE GROCERY DELIVERY

BY: LEV KUSHNER & GREG LINDSAY
SITE: BLOOMBERG

Mini-warehouses dubbed “dark stores” are quietly taking over urban retail space. Left unregulated, the insatiable demand for faster delivery will only hasten the erosion of community life.

When we think of resource frontiers, it calls to mind the rugged, glamorous classics: oil booms, gold rushes, or, in the not-so-distant future, asteroid mining. But the latest is closer to home. Whether you live in Manhattan, Hollywood, or beyond, the storefronts and sidewalks in your city are being mined.

Over the last year, cities across the U.S. and Europe have seen a rapid rise in the number of dark stores — mini-warehouses stocked with groceries to be delivered in 15 minutes or less. Operated by well-funded startups such as Getir, Gopuff, Jokr and Gorillas, dark stores are quietly devouring retail spaces, transforming them into minimally staffed distribution centers closed to the public. In New York City, where seven of these services are currently competing for market share (including new entrant DoorDash), these companies have occupied dozens of storefronts since July, with expansion plans calling for hundreds more in that city alone.

With low or no delivery fees, the convenience is mind-bending. “Fifteen-minute delivery changes the way you shop,” JOKR’s Zachary Dennett explained to Grocery Dive. “Customers first try us out because they forgot an ingredient. Then they use us the next night for all their dinner ingredients.” Soon enough, they never have to wear pants again.

Laugh all we want, it’s exactly this addictive convenience that threatens to transform downtowns into dark cities, where the everyday commerce that gives streets their vitality has evaporated from view and been reconstituted on an app.

On the surface, the idea of 15-minute delivery has much in common with another model of urban commerce that has recently risen in popularity: the 15-minute city, where essential services are easily accessible on foot or by bike. Both visions bring goods and services closer to home, but while one harnesses consumption to seed and bolster community, a delivery-based world devours community.

Cities need to delineate the increasingly fuzzy boundary between stealth micro-fulfillment outposts and the traditional commerce of bodegas. If not, our post-pandemic urban future is less likely to be one where we’re on a first-name basis with the neighborhood baker than one where the streets are filled with workers ferrying cilantro for impromptu tacos. In fact, given the ambitions of DoorDash and others to vertically integrate their operations — to stop delivering meals and groceries from local stores and start running their own — it’s a future where bodegas and restaurants are unequivocally in the crosshairs.

The turbulence transforming retail is driven by familiar trends and turbo-charged by venture capital. E-commerce and on-demand delivery undermine the need for brick-and-mortar retail, resulting in empty storefronts. In turn, surviving retailers adopt new tactics to lure shoppers, such as experiential retail and their own dispatch services. Through lockdowns and the safety concerns of Covid-19, the pandemic has only accelerated these trends. The demand for convenience is seemingly bottomless, but no city has yet found a way to balance the short-term benefit of personal convenience against the long-term costs of eroding community life through decreased social interaction.

We’ve seen this before with ride-hailing services, when VC-backed entrepreneurs arbitraged the urban realm at the expense of public transportation and traffic congestion. One can’t blame customers for seeking convenience then or now, but public officials should be savvier this time. They need to think clearly and proactively about tradeoffs, since the rise of dark stores will directly harm three aspects of urban life: sidewalk life, congestion and equality.

Sidewalk life is already suffering. While a glut of vacant storefronts plagued American cities even before the pandemic, dark stores reinforce those holes in the urban fabric by plugging them with services that move the point of sale from the street to the doorstep, discouraging the hustle and bustle that defines cities.

For decades, planners have mandated street-level retail zoning to enliven public spaces specifically because it enables the in-person transfer of goods and services. But as the proliferation of 15-minute delivery demonstrates, the question of what defines retail isn’t so easily answered. Does it require the space to be open to customers? Traditionally, industrial uses such as logistics have been kept out of sight to support retail — not compete with it.

Wherever cities decide to draw the line between dark stores and retail, it’s now painfully clear the silver bullet of zoning is losing its effectiveness. Rather than trying to club the disruptors with aggressive enforcement of existing, flawed zoning — as Manhattan Borough President Gale Brewer aims to do — public officials should embrace this crisis as an opportunity to clarify the boundary between industrial and retail, or perhaps even create a new category entirely.

A good first step would be to greatly simplify retail permitting, which would expand access to the retail playing field and promote the temporary activation of vacant commercial spaces by small businesses along the lines of Australian nonprofit Renew Newcastle. Open the floodgates and let entrepreneurial and artistic spirit drive a renaissance in street life.

Longer-term, one model to follow is Singapore’s plan to revitalize its historic high street Orchard Road by incentivizing landlords and developers to convert aging Central Business District propertiesto a broader range of uses — from housing and hotels to cultural and educational sites. Patch the urban fabric rather than tearing further holes in it.

No city has yet found a way to balance the short-term benefit of personal convenience against the long-term costs of eroding community life.

A delivery-based economy will also clog our already-taxed transportation infrastructure, crowding our streets and sidewalks with mopeds, scooters, bikes and robots. This, too, exacerbates a pre-existing problem that can be addressed with policy. Funding reallocation is long overdue to create a robust citywide transportation network accommodating diverse forms of transportation. Cornell Tech’s proposed “new mobility lanes,” wide enough for small vehicles to pass each other while physically protected from auto traffic, are just one good example of how to implement such a policy. Such lanes don’t care if you’re a delivery worker, a commuter or out for a Sunday ride.

Finally, and most importantly, the rise of dark stores expands a delivery economy that commodifies our neighbors, transforming some of them into gig workers who are at others’ beck and call. As the e-commerce consultant and investor Web Smith describes this new class divide, “Either your life allows you to command from the comfort of your home or hybrid office, or you are being told where to be within 15 to 60 minutes.”

While many of these new delivery companies have avoided some employment issues by hiring workers full-time, they haven’t escaped unscathed. Philadelphia-based Gopuff reportedly slashed the pay of its gig workers below minimum wage this summer less than a month after its latest round of VC funding. Several hundred of its drivers across the country staged a one-day strike in late November demanding a $20 minimum wage, a guaranteed number of working hours and protection from unfair termination. Whether or not workers like these are legally considered full-time employees or contract workers — a point of ongoing legal dispute in California — this tension is a perfect example of how cities need to balance the benefits of increased convenience for those who can afford it against larger societal costs.

Despite the growing pains of players in this new economy, there is almost certainly a place in our urban future for a delivery ecosystem. The skyrocketing market for these services reflects its upside for urban dwellers: City living is hard, and much like the remote work revolution, this is something that makes it more attractive for those who can afford it. Perhaps it’s better to have a 15-minute dark city that can offer delivery to hundreds of thousands of urban residents by electric bicycle than a suburb of a few thousand in which “street life” consists of picking up one’s groceries at the curb.

These are undoubtedly hard choices. But cities need to start thinking seriously, now, about how residents’ personal choices, and the businesses that respond to those demands, can unintentionally transform our cities and communities. It is government’s job to keep the two in equilibrium. We may not get everything we want, but that’s always been the attraction of city life: Instead, it gives us what we didn’t even know we needed.

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