JLL: Grocery Retailers Slow Expansions, Speed Up Technology Investment
Grocery-anchored retail centers remain attractive to investors, JLL reported. Investment into grocery-anchored centers increased more than 5 percent last year.
“Grocery-anchored centers remain a safe bet for investors as overall transaction volumes for retail have been down, indicating that the asset remains a stable sector,” said JLL Retail Research Director James Cook. “It was one of the only retail sectors to see growth in a year of low transaction volume.”
But the grocery store market is changing quickly, Cook said in the firm’s Grocery Tracker report. Grocery expansions slowed significantly last year as brands took a step back to examine existing footprints and reevaluate company strategies. “Grocers that performed well in 2017 focused on healthy foods, affordable offerings, private labels and improving digital platforms.” Cook said.
In addition, smaller-sized stores are growing in popularity, the report said: “Smaller footprints have more opportunities in urban locations and in mixed-use projects. Grocers like Aldi and Trader Joe’s benefit from the flexibility to take smaller spaces in vertically integrated projects. HyVee recently announced that while traditional-sized stores will still be rolled out, smaller-format stores of 10,000 square feet will be a focus.”
Some brands will continue expanding their footprints, but traditional and legacy grocers may begin focusing on their existing inventory and on improving the shopper experience, the report said. For example, Kroger’s most recent strategy, Restock Kroger, will tailor stores to the shoppers that frequent it by customizing shelf displays, store layouts, offered products and operations based on the preferences of local shoppers.
“Kroger has shown serious digital commitment in recent years and recently announced Kroger Edge, which communicates with smartphones’ shopping lists to help guide customers to desired products,” Cook said. “The high-tech shelf display will also display pricing and nutritional information and is anticipated to be in 200 stores by the end of 2018.”
And grocers with rapid checkout technologies will continue to roll out those programs across the country, joining Kroger, Walmart and Amazon, which have all been testing checkout-free concepts. Walmart announced plans to expand its Scan & Go mobile checkout to 100 more stores and Kroger’s Scan, Bag and Go will be in 400 stores by the end of the year, the report said. AmazonGo–a partially automated grocery store that allows customers to purchase products without ever seeing a cashier or visiting checkout station–opened to the public in January.
“Grocers are focusing on online shopping, grocery delivery and click-and-collect digital platforms to appeal to shopper’s desire for convenience and multi-channel shopping options,” Cook said.
