Supermarkets and Grocery stores have long been one of the best anchor tenants you can find for a shopping center. And with good reason! Eating, water and sleep are the necessities every human needs. Since most food is perishable customers make at least one trip per week for food items intended for off premises or at home consumption. Those regular trips drive lots of traffic for the other tenants in a shopping center.
Supermarkets were included as anchor tenants for some of the original enclosed malls and now you will see grocers as an anchor tenant for Neighborhood Centers, Community Centers and even Power Centers. Having a grocery component is so important that Walmart started adding grocery selections 1988 and are now the world’s largest grocer. The originator of combining a discount department store and supermarket in the United States was Fred G. Meyer with his Fred Meyer stores in Portland, Oregon USA in the 1930s. They were the original superstore “hypermarket” in the United States. Meijer in Grand Rapids Michigan opened their first “Supercenter” in 1962. A large portion of Target’s sales are also now driven by their grocery component. Even Dollar Stores (Dollar Tree, Dollar General, Family Dollar, etc.) have added a substantial grocery section, including frozen foods. In many rural areas of the United States, Dollar Stores are the only close grocery option other than the local gas station/convenience store. Drugstores and Convenience stores also rely on selling staple grocery items to increase visits and sales. Stores ranging from TJ Maxx and Marshalls to bookstores have food, candy and drinks lined up at the check out as an impulse item. Food drives sales.
So you can see why having a supermarket in a shopping center would increase the value of a shopping center because of the traffic they create for the cotenants. The more trips you can create to the store or shopping center the more opportunities for customer purchases.
Well run Grocers/Supermarkets have been making moves to fend off online retailing by including delivery service on their own or partnering with Peapod and Instacart. Additionally, they have been combining delivery, online ordering for pick up and more prepared meals and foods. The newest threat to grocers is the Meal Kit Programs sold by the likes of: Blue Apron, Plated, Sun Basket, Martha & Marley Spoon and HelloFresh. Amazon, Publix, Walmart, Kroger and Fresh Market have struck back with Meal Kits that can be ordered online and picked up at their most conveniently located store for the customer. Plated was sold to Albertsons in September 2017.
Better grocery operators have private labels which create higher profits and also shopper loyalty. Grocers have also been competing on fresh and healthy food options along with gluten free, salad bars, olive bars and finer cheese selections.
Amazon bought Whole Foods for more options for its customers. It has also opened Amazon Go stores in Seattle, San Francisco and Chicago. Kroger cut a deal with Ocado, an online grocery company, to use its robots to pack online orders. Target acquired Shipt for same day delivery fulfillment. Walmart is the Borg of retailing! They will assimilate or crush competitors. Walmart acquired Parcel for same day deliveries, they acquired Jet.com for $3.3 Billion for online bulk sales and partnered with Alert Innovation to use automated carts to fulfill online grocery pickup orders at its stores. Walmart has an astounding 23% market share of the United States grocery business. Online sales for the retailing behemoth jumped 40% for the 2nd Quarter 208 results.
Supermarkets come in many different types including high-end, gourmet, organic, ethnic, warehouse, discount, specialty, membership clubs, hypermarkets, supercenters and convenience stores. Many stores blur the lines of a few categories at once. Walmart and Meijer have a supercenters with gas station convenience stores on an out parcel in the front parking lot.
Types of grocers include the following:
Convenience Store – A food retailer (sometimes with gasoline) carrying limited merchandise and prepared foods in store ranging from 1000 to 5000 square feet of gross leaseable area. Convenience stores focus on high volume, necessity items along with food products that cater to men. Well known examples of convenience stores are: 7-11, Wawa, Buc-ee’s, Pilot/Flying J, Shell/Union 76 (Motiva), Circle K, Cumberland Farms, Speedway, Love’s, Sheetz, Casey’s General Stores, Kum & Go, Holiday, SuperAmerica, Convenient Food Mart and Terrible Herbst.
Discount/Warehouse Store – A grocery retailer where the main selling proposition is low prices. The products may be displayed in shipping boxes and the customer may need to bag their own groceries or even bring their own bags for check out. Most warehouse stores concentrate on a core of dry grocery items and limit the amount of customer service available. Some examples of well known in this category are: Aldi, Lidl, Save-A-Lot, Food City, Food 4 Less, FoodMaxx, Cub Foods and Grocery Outlet.
Ethnic Grocery/Supermarket – A grocery/supermarket carrying specialty foods catering to a specific ethnic group or region of the world. For example, a Hispanic grocers main target market may be a large Mexican demographic living in the trade area but will also sell items that cater to other Central and South American nationalities. These stores also may stock standard grocery staples, fresh produce and specialty produce items. Some examples of well known in this category are: Food Market La Chiquita & Taqueria, Superior Grocers, Fiesta Mart, Northgate Markets, Sedano’s, Cardenas Markets, El Super Bodega Latina, Los Altos Ranch Market, Carnicerias Jimenez, Hmart, Seafood City, Mitsuwa Marketplace, 99 Ranch Market, Shun Fat Supermarket, Marukai Market, Koreana Plaza, Tawa Supermarkets, Asia Market, Moscow on the Hudson, Eurofresh Market, Hong Kong Supermarket, Patel Brothers, Nijiya Market, T & T Supermarket, Net Cost Market, Amigos, Mi Pueblo, Shop & Save Polish Markets and Vallarta Supermarkets.
Gourmet/Specialty Grocery – A grocery/supermarket carrying gourmet, hard-to-source specialty and high-end food products, along with standard grocery items and sometimes fresh produce with an emphasis on organic products. Many stores in this category have better customer service with more prepared fresh foods, take-out meals and catering. Some examples of well known retailers in this category are: Gourmet Garage, Gristedes, Eataly, Kalustyan’s, Dean & DeLuca, Balducci’s, Stew Leonard’s, Glen’s Garden Market, Standard Market, Whole Foods, Fresh Thyme, Sprouts, Gelsen’s Markets, D’Artagnan, Oliviers & Company, Stonewall Kitchen Di Bruno Bros.,Trader Joe’s, Zabar’s, Garden Gourmet Market, Foodsmart, Isabella Gourmet Foods, Bristol Farms, Draeger’s Market, Market Hall Foods, Lunds & Byerlys and The Fresh Market.
Health/Natural Food Store – A food retailer that primarily sells health foods, organic foods, local produce, and nutritional supplements. Whole Foods, Fresh Thyme and Sprouts fit into this category along with local chains like Fruitful Yield, Big Bear Natural Foods, Fairway Markets, Good Harvest Market, Bi-Rite Market, Kimberton Whole Foods, LifeSource Natural Foods, My Organic Grocery, Thrive Market, Erewhon Market, Good Earth Natural Foods, Natural Grocers, Yes! Organic Market Cleveland Park and PCC Community Markets.
Hypermarket/Supercenter/Combo Store – A combination supermarket and discount department store with a merchandise mix of at least 60% grocery and 40% general merchandise items. Some examples of retailers in this category are: Fred Meyers, Meijer, Walmart Supercenters and Super Target. The large French retailer Auchan tried to make a good of retailing in the US and pulled out in 2003.
Supermarket – A full-line grocer which includes: fresh produce, meat, poultry & fish, dairy products, frozen foods, canned foods, cereals, desert items, candy, soft drinks & bottled water, baking supplies, snacks, bakery items and/or bakery, household products, cleaning supplies, soap & healthcare products, sometimes selling stationary/office supplies and alcoholic beverages. Some examples of well known retailers in this category are: Kroger, Ralphs, Albertsons, Safeway, Publix, Piggly Wiggly, A&P, Stop & Shop, Hi-Vee, Wegmans, Mariano’s, HEB and Jewel-Osco.
Warehouse Club/Wholesale Stores – A combination supermarket and specialty discount store selling larger quantities for small businesses and restaurants. Examples of membership clubs are: Costco, Sam’s Clubs, Makro and BJ’s Wholesale Club (an interesting bit of retail history is that Zayre Discount Department stores started both BJ’s and TJ Maxx (now a part of TJX, Inc.). Gordon Food Service (GFS) stores are wholesale open to the public with no membership requirement.