Walmart is trying out a novel concept known as a “dark store” in Dallas, Texas. This initiative is a strategic move on the part of the retailer as it is striving to enhance its delivery operations online.
The term “dark store” suggests that these stores, while similar in appearance to traditional Walmart stores, are not open for public use. They exist with a single purpose that is designed solely for the purpose of filling online orders, something other than the traditional distribution centers for both stores and customers.
From the reports, the buildings are actually distribution centers, but specially designed to fulfill online orders. The niche approach is meant to make it easier to deliver products to customers who shop online.
The concept is being tested as a means of improving the quality and speed of Walmart’s online delivery service. By dedicating whole stores to this purpose, the retailer hopes to optimize operations behind the scenes.
A Walmart representative confirmed that the dark stores are being employed for testing purposes as well as for fulfilling orders. The retailer cited its commitment to testing new tools, features, and capabilities.
The goal outlined by the representative is to engage and serve customers closer, regardless of whatever shopping channel they employ. The larger vision remains one and the same: to deliver a fast, seamless, and compelling customer experience.
This move into piloting dark stores follows on the heels of strong success for Walmart within its e-commerce segment. The retailer achieved profitability in its U.S. e-commerce business for the first time this year within the first quarter.
That profitability was accompanied by a 21% increase in e-commerce sales in the same first quarter. The retailer appears to be leveraging this momentum by continuing to make investments in its fulfillment infrastructure.
Those dark stores are being seen as a means through which Walmart is going to further boost its online profitability potentially. The investment is a demonstration of confidence in the growth of online shopping in the future.
Unlike the common process that sees customers enter into a shop to buy products, the dark store concept has a different process designed to reduce waiting time for customers ordering for online delivery. It is a store type not designed for public access.
Walmart’s dark stores are extensions of its enormous physical footprint, which already includes over 4,800 physical locations in the United States. Its initial dark store is operational in Dallas.
A second dark store would be opened in Bentonville, Arkansas, Walmart’s home state. This would suggest potential expansion of the concept to other locations beyond the initial test site.
The name “dark” is also derived from the fact that there is no standard retail signage designed to attract customers, as the media reports. The reason being that the stores are explicitly not open to public shopping or browsing.
Although there are no consumer-facing retail elements, the interior layout of such dark stores is said to resemble the interior of the average stores frequented by millions of shoppers on a daily basis. The comparability of design can facilitate efficient picking and packing process.
The dark stores will stock some of the chain’s best-selling items and products. But those products are available only for use in fulfilling orders on the web and can’t be bought on-site.
Douglas McMillon, CEO of Walmart, made a delivery speed comment during an earnings call in May. He said that “Delivery speed continues to help drive our business.”
McMillon also provided figures on the progress of the company in terms of delivery time. He added that Walmart could potentially cover 95% of the U.S. population within a reasonable amount of time with three-hour-or-less delivery options.
McMillon cited an impressive increase in fast deliveries for Walmart U.S., noting that “the number of deliveries in less than three hours grew by 91% for Q1 versus a year ago.”
Expansion of Drone Delivery
Dark stores are not the only steps being taken to reduce delivery time. Walmart has also expanded its drone-based delivery.
Recent developments have seen 100 new locations added to its drone delivery. With this, Walmart was the first retailer to offer such services in five states.
In a statement provided to Food & Wine, Walmart reiterated its ongoing experimentation with new abilities and tools, as previous spokespersons have indicated.
The company reiterated its goal of serving customers wherever and however they desire to shop. The focus remains on building a fast, frictionless, and interactive customer experience on all platforms.
Convenience and Competitive Advantage Enhancement
Greg Cathey, senior vice president of transformation and innovation at Walmart U.S., released a statement on the company’s continued drive for convenience. He emphasized the goal of “pushing the boundaries of convenience to better serve our customers, making shopping faster and easier than ever before.”
Walmart’s move into dark stores is also seen as a move to strengthen its position against rivals that are known for quick delivery, such as Amazon.
The dark store model of order fulfillment for online grocery shopping is not new. Industry history suggests that there were such models decades ago, and Walmart has been following them to some degree throughout the years.
Order Fulfillment Complexity and Innovation
Having 4,650 locations in the U.S. and 90% of Americans living within 10 miles of one does not make online grocery order fulfillment a simple or cheap endeavor.
With the dark store tests, Walmart is trying to determine whether the specialized stores can pick orders faster and more inexpensively than the company’s existing stores. The tests include new technology and picking techniques tailored to the dark store environment.
If the trials are successful, the improvements can be rolled out to the entire retail chain and enhance Walmart’s overall fulfillment process.
Industry Viewpoint: Fulfillment Models Insights from Experts
Brittain Ladd, a former Amazon executive turned supply chain consultant, provided his take on Walmart’s strategy. He described the dark stores as an attempt to compete with Amazon on quick delivery times.
Ladd referred to Walmart’s investments in its grocery business in the shape of Walmart+, drone delivery, and alliances such as Instacart.
He also mentioned that Walmart is using automated technology in some locations for order filling—further evidence of its overall attempt to accelerate delivery.
But Ladd also offered a glimpse into the future: greater adoption of FSD (full self-driving) trucks in grocery delivery. He speculated that consumers would use their own autonomous cars—primarily Teslas—to deliver grocery orders, potentially disrupting current fulfillment models.
He suggested that this model would be a “Personal Autonomous Courier” system where individuals use their FSD vehicles to collect orders for themselves and others for a fee.
Other Models and Retail Technology Trends
Ladd likened the dark store model to the possibility of Amazon opening hundreds of robotic micro-fulfillment centers (MFCs), on their own platforms for ambient, refrigerated, and frozen products.
He believes retailers like Walmart and Amazon need to prepare for wide-scale adoption of autonomous pickup and consider partnerships with Tesla or entities like Blue Yonder, OpenAI, Uber, or Waymo.
One of the participants, Autolane, has been reported to have developed a platform for managing autonomous vehicles arriving to pick up orders, setting itself up for eventual acquisition.
The expert commentary reflects a shifting landscape in last-mile delivery, with fresh opportunities and fresh challenges to precede established models like dark stores.
RTIH Innovation Awards Reflect Industry-Wide Trends
The broader retail shift is seen in events like the RTIH Innovation Awards. Grocery delivery will be the focus of attention at the 2025 awards ceremony.
These recognitions emphasize technology innovation in retail, helping to drive Walmart’s efforts to pilot and deploy new technologies that improve efficiency and enhance customer experience.
At the 2024 awards held in Central London, RTIH Founder Scott Thompson noted the increase in the event and competitiveness of entries. He praised the finalists, noting the need to properly bring innovation into day-to-day business.
Emerging technology on display at the event included checkout-free stores, autonomous supply chains, experiential retailing, next-generation loyalty programs, sustainable solutions, and on-demand delivery platforms.
Thompson’s observations on the impact of applied innovation are directly pertinent to Walmart’s experiment with dark stores. Profitability and efficiency, core goals of Walmart’s e-commerce strategy, can be achieved through success in technology leveraging.
