Grocery has moved from brand consolidation to growth. This is driving competition at a time when consumers have abundant options for purchasing groceries, from online giant Amazon, to Walmart and Target stores with full-scale grocery, to easy grab-and-go offerings at pharmacies, dollar and convenience stores. Amazon’s acquisition of Whole Foods – arguably the most high-profile example of online retailers getting into the bricks-and-mortar game – signals continued shifts within the sector, and an endorsement of the key role physical stores play in overall retail strategy. Convenience is key.
So while grocery is not a new topic for our industry, it is again rising as one of the most interesting. Grocers are working to distinguish themselves with enhancements like online ordering, in-store demonstrations, more proprietary and prepared foods, and café-style seating. Overall, they are working to provide better experiences for their customers.
Landlords, in turn, must exercise more flexibility. Shop-from-home ordering requires dedicated parking and in-store space. New size requirements may necessitate space reconfigurations. And, as always, curb appeal is paramount. To this end, our clients are investing more capital in property updates, and we are seeing increased demand for experienced third-party commercial real estate services providers, like LMC, that offer in-house construction along with traditional property management and leasing capabilities.
The takeaway? Buying food is changing, yet that change is bringing opportunity. Ultimately, bricks-and-mortar grocery remains on solid footing, and owners of grocery-anchored shopping centers – especially those focused on providing meticulous maintenance and functionality – are positioned to benefit.
Matthew Harding is President of Levin Management Corp., a commercial real estate services provider with a portfolio of 100 properties totaling 14 million square feet in Northeast and Mid-Atlantic states.