Adapting a grocery chain to the «darkstore + retail» format

Aim

To adapt the existing network of urban-scale grocery stores to the demand of the market and to transform it into a hybrid darkstore format while maintaining the trading function of existing stores.

Context:

Within the framework of the new development strategy, the local network of grocery stores in the Russian "million-person city" has provided a technical task for the construction of a mixed-type retail network that combines warehouse and retail functions. Against the background of the annually growing popularity of food delivery services, the network decided to capture its market share and independently serve regular customers who switch to remote orders of products.

Solution

The ML team traditionally started the project with an analysis of the existing network, the needs of the city, current and potential demand, and market capacity. Given the complex format, which implies both warehouse and retail functions, we calculated the effectiveness of the modules: darkstore and retail. We built the network using the Geonet network management platform, which has both a modular principle and already" embedded " scenario options.

In fact, initially two autonomous networks were created with an ideal structure and geography: the warehouse network assumes fast and maximally comprehensive delivery from the point of view of the territory, takes into account population density, well-being, competitive environment, distances, road infrastructure, public transport, and average travel time. According to the conditions stipulated by the market, delivery to the most remote point of coverage should not exceed 1 hour.

For a chain of stores, we focused on similar parameters, but their weight changed, plus we included scenarios for calculating retail space, focused on the assortment matrix of the network and modified the list of competitors.

Result

Marketing Logic products and joint team work with network experts allowed us to build a new hybrid format network as part of a new strategy to enter the delivery market. The network that existed at the time of the transformation made it possible to significantly reduce investment, and geoanalysis made it possible to maximize its potential.

"It was interesting for us to participate in this project: firstly, the non-trivial task of reformatting the network is interesting in itself, and, secondly, it is potentially a very promising direction. We have already shared open data in DP.ru: in 2018, food delivery grew by about 45% year-on-year and reached more than 20 billion rubles, in 2019, the growth accelerated and the market volume was already more than 40 billion rubles, by the end of 2020, we believe, there will be an increase to 135-140 billion rubles», - Dmitry Galkin, Managing partner of Marketing Logic, talks about participating in the project.