Coming Soon to Grocery Stores: Smaller Formats, Automated Checkout
Grocery stores–long a staple of strip-center retail–are changing, and many are shrinking and becoming more automated, said CBRE, Los Angeles.
The CBRE Food in Demand: Grocery report predicted many grocery stores will soon have a fully automated checkout process, which will free up space for more merchandise, and more emphasis on prepared meals. And many will be smaller, convenience-oriented grocery outlets.
Grocery-anchored centers are favored by real estate investors due to the industry’s steady, albeit slow, sales growth and minimal e-commerce competition compared to other retail categories. But U.S. grocers face “significant pressure” to adapt to changing consumer preferences, new store formats, automation and delivery demand, the report said.
“The store will remain central to the grocery industry, but its format and function will be reshaped by multiple factors over the coming years,” said CBRE Global Head of Retail Research Melina Cordero. “Grocery operators must diversify their offering to best compete, which will lead to varied store formats for different markets, non-traditional merchandise assortments and an even greater focus on customer convenience.”
Some of the sector’s largest players have found an opportunity to grow in operating smaller-format stores in dense, mostly urban markets. “Many of these stores focus on convenience fare such as prepared meals,” the report said. “Already, big names have moved into the space, including Kroger Co. with its Express Mart format and Hy-Vee with Fast & Fresh.”
CBRE predicted the grocery checkout line will disappear within a decade. “A slew of technological advancements is converging to replace the traditional checkout line, including carts with built-in barcode scanners and credit-card swipers, mobile-payment apps, weight sensors and cameras and merchandise-scanning robots,” the report said. “Technology also will allow shelves to keep track of inventory. The elimination of checkout lines will allow grocery operators to free up real estate for revenue-generating functions such as click-and-collect services.”
As competition intensifies, grocery retailers are reinvesting in their stores, CBRE said. Several large grocery operators have announced “sweeping” remodeling and redesign plans for portions of their U.S. store base as competition increases from supercenters, wholesale clubs and small-format rivals, the report said. Some of this expenditure is going to improving in-store technology and services such as online ordering with curbside pickup.
