On Devonshire Street in the Financial District, a cryptic sign hangs outside a blacked-out storefront that used to be a Weight Watchers: “Fridge No More.” A few blocks over on Franklin Street, the windows of a former mattress store are plastered with stickers that keep passersby from peering inside.
Walk around Boston, and you’ll find storefronts that emptied during the pandemic taking on new lives. Former sleep stores or diet clinics are being converted to mini-warehouses for a wave of “instant delivery” startups aiming to dominate the “last mile” of last mile delivery, and fueled by deep pockets of cash to do so.
Promising to shuttle bananas or ice cream to your apartment in 15 minutes, these companies are renting storefronts and turning them into packing centers, then employing couriers on e-bike or scooter to make deliveries within a mile or two. They’re wildly popular in Europe, South America, and Asia. Scores have opened in New York City.
Now they’re coming to Boston, where a half-dozen of these companies — with names like Getir, BUYK (pronounced “bike”), and JOKR — have opened or announced plans to in recent months, taking storefronts in Downtown Crossing, the South End, and Cambridge.
In a sense, instant delivery companies are a perfect reflection of our times.
Amazon primed us to expect deliveries within two days, or faster. Early-pandemic isolation trained consumers to order groceries online. Takeout became essential, sparking a wave of “ghost kitchens” that only serve meals for delivery. And many traditional retailers vanished — especially in downtown areas — leaving a glut of empty stores that landlords are eager to fill.
But some worry about what these companies might mean for Boston, and the streets they occupy. There’s a big difference between a traditional store you can walk into and a warehouse with covered-over windows and a stream of e-bikes coming out the door.
“This is essentially just as bad as a vacant storefront for the commercial district or main street,” said Jonathan Berk, principal and creative director at Bench Consulting, an urban planning firm in Boston. “You have no foot traffic coming into and out of the store aside from hourly workers and you’re actively discouraging trips from area residents to pick things up in their neighborhoods, eliminating the potential of spending money at other nearby business.”
Greg Lindsay, senior fellow at MIT’s Future Urban Collectives Lab, put it another way: “It’s stealing the energy of the city.”
Still, these “dark stores,” as some call them, are coming, powered by huge sums of venture capital investment — $5.8 billion in the first nine months of 2021, according to research firm CB Insights, on top of $496 million last year and $1.1 billion in 2019.
Take Gopuff, which offers snack, alcohol, and food deliveries in about 30 minutes. The Philadelphia-based company has been ahead of the pack, operating in Boston since 2014, and has three facilities in the city, plus more in Newton, Lowell, Worcester, and Waltham. This spring it forged an alliance with UberEats. In the fall it expanded to New York. And now, with $3.5 billion in hand from investors like SoftBank, Gopuff is scooping up delivery companies in the United States and abroad to the point where it’s opening an average of one or two new storefronts daily.
Then there’s JOKR, whose Boston hub is the former mattress store on Franklin Street downtown. Founded in Germany in March of this year, it’s now operating in eight countries, mostly in Latin America and Europe. It has opened a dozen warehouses in New York City since June. This month, it announced it raised an additional $260 million and is now valued at $1.2 billion. Boston will be JOKR’s second US market — its ads were emblazoned on kiosks throughout Downtown Crossing as it began making deliveries this month.
“We are building an Amazon on steroids,” JOKR’s founder Ralf Wenzel said at the company’s launch. “It’s not just convenience on demand, but a new generation of retail.”
JOKR sees big opportunity in groceries, an enormous sector where online sales have doubled since 2019, to an anticipated $112 billion this year. That figure could double or triple again over the next five years, said Tyler Trerotola, the company’s US cofounder.
To serve that market, a former cellphone or shoe store could easily become a micro-warehouse, he said. And by building partnerships with well-known local brands in each city — in Boston JOKR will deliver J.P. Licks ice cream and pastries from Flour Bakery — JOKR can provide what its customers crave, instantly.
“They want what they want,” Trerotola shrugged over a video call. “Where we see a huge improvement in e-commerce is to make a more reliable, more local, and a more personalized curated assortment. At the same time make that faster.”
To Slava Bocharov, the cofounder and chief executive of Buyk, which is currently hiring in Boston, on-demand grocery delivery isn’t just a retail play, it’s an extension of the home.
“You have everything in your apartment that you need,” Bocharov said through Russian translation software. “If you want water you just open the tap and you get a glass of water. If you need lights you just hit the light switch and you have light.”
There’s one thing, he said, that home is still missing: food. Bocharov describes his emerging industry as a new “consumer goods pipeline” that will soon make food delivery feel (almost) as instant as utilities. Brick and mortar grocery stores with their limited delivery time slots won’t cut it, he said.
“Imagine if you opened a tap of water and you would hear, ‘Thank you so much for coming to us, we value you as a customer, tomorrow from 4 to 8 p.m. we will pour you a glass of water,’ ” he said.
Rivals — and some cities — are wary
But is this model sustainable?
That’s a real question, said Andrey Podgornov, chief executive of QVALON, which helps retail businesses manage daily operations. Some of these concepts are launching with little understanding of the challenges entailed in running a grocery business: keeping products fresh, training and keeping staff, and maintaining reliable quality.
“They need to keep the same standards like the normal store, like Target, and that’s a huge problem for them,” he said. “They’re growing like crazy, but it’s hard for them to educate their personnel and enable standardization.”
Convenience stores are understandably wary too. Just this month week a group of bodega owners in New York petitioned the city to limit further expansion of the instant-delivery industry there, pointing to another VC-fueled juggernaut that exploded into cities a few years back.
“We don’t want these companies to be like Uber, which showed up and destroyed the local industry,” Francisco Marte, the founder of the Bodega and Small Business Association, told Bushwick Daily. Should bodegas be forced out of business, it will only mean more vacant spaces for these stores to scoop up. “We have to prevent that so that the bodega industry doesn’t disappear.”
Manhattan’s borough president Gale Brewer has asked the city to investigate and regulate the industry, and has argued that many dark stores are improperly zoned. While things aren’t as far along in Boston, Mayor Michelle Wu is “monitoring the situation and its implications for small businesses,” a Wu spokesperson said.
But rather than putting small businesses at risk, some hope instant delivery could push the convenience store industry forward.
“Evolve or die. That’s what’s going to have to happen,” said Jon Shaer, executive director of New England Convenience Stores and Energy Marketers Association. Shaer said he doesn’t see instant delivery as a threat so much as an impetus to adapt, and he’s urged his members to start deliveries or find partners to better compete.
“If you’re not using your store as a micro-fulfillment center and working with low-cost partners to remain competitive, then yeah, I think you’re a dinosaur,” Shaer said.
Hany Gad, owner of Lambert’s Marketplace on Tremont Street, is less keen on the idea. He said he turns on his Uber Eats and DoorDash apps when the store’s deli is open, but he doesn’t offer delivery for grab-and-go items, such as Ben & Jerry’s or Gatorade. That would be unsustainable, he said; delivery companies take nearly a third of the revenue on orders.
Tourists and office workers used to make up half of Gad’s daily foot traffic, and he feels their absence. He also watches with chagrin the bags of goods from Whole Foods and Stop & Shop delivered to the apartment buildings nearby.
“We always look for the remote control, even though we could get up and press the buttons on the television,” he said. “People like the easy way.”
Still, on a recent evening, customers stopped in to Lambert’s to buy chips and salsa, a six-pack of Budweiser, a Diet Coke. For now, Gad isn’t ready to turn his store dark.
Filling a need? Or flaming out?
Beyond the fate of your favorite 7-Eleven, there are big questions about what, exactly, it means to give over so many storefronts — which bring vibrancy and foot traffic — to instant delivery companies. Yes people will come and go, but only couriers, not familiar faces invested in the life of the street.
But Alex Barnes, the head of real estate and expansion at Fridge No More, pushes back against the “dark store” moniker and the argument his company will upend street life. For one thing, Fridge No More’s windows will be transparent once they open here, he said, allowing people to see inside. And, he argued, instant delivery companies are stepping in to fill gaps along the street.
“We’re not pushing people out. We’re bringing additional positive business to the community,” said Barnes, whose company has 23 locations in New York City and three planned in Boston and Cambridge. “Otherwise, it’s completely vacant storefronts.”
Yet it’s not even clear how long they’ll last.
Amid the rush of startups, a few have already folded — instant delivery startup 1520 said this month it was shutting down in New York City. And more-established operators such as supermarket chain Kroger and takeout app DoorDash are launching competing platforms of their own.
Some analysts warn this whole industry could amount to a flash in the pan, pumped up by investors chasing the next big idea and winding up not so different from the business it aimed to disrupt — just as their startup ancestors, Uber or WeWork, did.
“It’s the next VC money pit, is what it really is,” said Sucharita Kodali, a retail analyst at Forrester.
And that’s why it’s so important to pay attention now, Lindsay said, to create clear rules and not let what very well may be a short-term fad inflict long-term damage on cities that are already struggling to recover from the pandemic.
“They’re going to do this and do irreparable harm to cities,” he said. “And then they may very well likely flame out.”