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As a 15-minute delivery service uncovers its windows for business amid newly-proposed city regulations, local politicians still insist that “dark stores” — otherwise known as micro-fulfillment centers — are bad news for small businesses and corner bodegas.
This week, GoPuff — one of several online fulfillment centers that grew like weeds in the proliferation of pandemic-related commercial vacancies — seem to have altered their W57th Street location (between 8/9th Avenue), adding what appear to be shelves semi-filled with the odd box of Red Bull, cold storage, and a checkout counter in front of a closed-off warehouse of inventory. The store has also removed the paper that previously obscured its interior. W42ST reached out to GoPuff to confirm the opening of their Midtown West location and has not received a reply.
The creation of space for consumers to see merchandise from the street, enter the store, and buy items in-person comes amid pressure from local city leadership to regulate what constitutes a proper store and what is a warehouse in disguise. Former Manhattan Borough President and current City Council Member Gale Brewer has led the charge against dark stores taking over significant city retail space.
A spokesperson from Brewer’s office told W42ST: “Point blank, we will never accept these stores in commercial areas. Their structure clearly outlines a warehouse — they are still micro-fulfillment centers.”
Brewer’s team surveyed Manhattan’s micro-fulfillment center locations, visiting stores undercover as “customers” and creating a comprehensive map of centers where they were unable to purchase items in-person or enter the store. After reaching out to the city with their concerns over zoning violations, the Department of Buildings (DOB) responded with a proposed series of regulations that would delineate stores from micro-fulfilment centers and from warehouses, thereby limiting the areas in which each is allowed to operate.
“Last year, the Department received a letter from the Manhattan Borough President’s Office asking us to investigate whether several quick-service grocery fulfillment centers in Manhattan complied with local zoning and other applicable regulations,” said Andrew Rudansky, press secretary at the DOB. “These quick-service fulfillment centers are a new type of business in New York City, and not specifically mentioned in existing city zoning regulations. For the last several months we have been working with the Department of City Planning to explore the appropriate Zoning Districts for these types of establishments.”
In the proposed regulations — which were distributed to stakeholders earlier this month and are still in the process of being finalized — the DOB outlines three key delineations in zoning for retail centers. All three would be required to keep at least 50 percent of their storefront glass transparent, one of the major issues cited by Brewer team in reference to the centers’ effect on local commerce.
In a statement, the DOB also appeared to align with the need to create welcoming retail blocks instead of vacant-looking warehouses: “The district regulations are designed to promote convenient shopping and the stability of retail development by encouraging continuous retail frontage and by prohibiting local service and manufacturing establishments which tend to break such continuity.”
The changes would signal a noteworthy development in the city’s relationship to dark stores, which previously took over large blocks of Manhattan without adherence to standard retail regulations. Initially experiencing a surge in popularity from customers stuck at home during the first phases of the COVID-19 quarantine, the apps have faltered in recent months as consumers returned to in-person purchases and several companies with Russian financial ties were sanctioned.
Previously popular brands Fridge No More and Buyk have since gone under and GoPuff — started in 2013 by two Drexel grads and previously generating almost $2 million in revenue — recently announced layoffs across all levels of the business. Its NYC locations are still open and appear to be preparing for a new era of public-facing retail.
Brewer’s office is skeptical. “We see that they’re trying to conform to anchor stores in existence, but we do not believe that they are in compliance or can be in compliance” with these new regulations, they said. “There has to be consistency in the way these spaces are operated — do they always allow customers, do they always allow cash sales?”
Rudansky said: “We looked at the various businesses as separate entities, because not all these businesses were operating the same way. Some were a lot bigger than others, some of them already had allowed people to go inside, some of them did not. We couldn’t have just looped them all into one group and said they’re all warehouses, because some of them are not operating as such.”
While the enforcement of regulations on fulfillment centers is yet to be implemented, city officials stressed that this was the first step of evaluating the new industry’s place in New York’s landscape. A spokesperson from the Mayor’s office told W42ST: “The Adams administration is committed to fostering innovation and protecting quality of life as part of a robust and inclusive economic recovery for our city, and we expect the final version of this technical analysis will do just that. We are still in the midst of this process, and we look forward to continued engagement with elected officials, advocates, and community partners to ensure we get this right.”
“We’re happy to see the city making progress and we’re happy to see them making changes,” said the spokesperson from Council Member Brewer’s office. “But there is still much more work to be done to protect our small businesses, anchor stores, and neighborhood bodegas.”