Wednesday, May 15, 2013

Competitive grocery industry added 1,000 supermarkets in 2012, remains busy

National brands like Walmart, Whole Foods, Trader Joe's and Aldi are adding stores, as are regional brands Giant, ShopRite and Wegmans. Last year saw the addition of approximately 1,000 supermarkets.

"The grocery segment is always busy," said Supermarket Site Analyst David J. Livingston in an interview with Shopping Centers Today. "Good, well-run grocers are immune to recessions."

In today's retail world, many big box tenants are struggling, partly due to e-commerce, but grocery chains remain in demand, as they are relatively immune to e-commerce and still have the ability to occupy large spaces. Landlords like that, and investors do as well.

Grocers have also become smarter over time. They used to build stores in anticipation of residential growth, but now prefer to open in areas where the population base already exists. In many cases that means moving into second hand urban space and shrinking their footprint. For instance, Walmart Neighborhood Markets run approximately 30,000 square feet, with their Express stores at about 15,000 square feet.

Generally speaking, the industry didn't suffer too much during the recession, and now that the economy is improving, they are trying to distinguish themselves from their competition. Supermarkets now offer prepared or organic foods, value-priced house brands, in-store cafe's or ethnic products in an effort to lure customers and profits. One thing is clear; selling on price alone isn't necessarily enough.

On the other hand, many unionized local and regional chains have struggled due to higher costs. With healthy competitors ramping up their offerings, controlling costs, keeping prices relatively low, and generally being "immune to recessions," many fear that old-fashioned grocers with inefficient cost structures may be immune to success. 

1 comment:

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