Is the Grocery Anchor Still Relevant?

Perhaps, the grocery anchor is more relevant now than ever. Every mall smattered across the U.S. is anchored by one big name store that is expected to be the biggest draw – the other stores are there to sop up the traffic going to the anchor. Retailers are attracted to new mall developments based on how strong a draw they think the anchor will be.

Department stores like J.C. Penney and Sears used to anchor many malls across the country. But now that these stores are closing, will the tried and true grocery anchor still be relevant? Now that Amazon is jumping into the grocery market plus with all of the food delivery options out there can grocery stores as anchors still draw in the traffic?

Grocery Anchors are Still Going Up

We say yes and the numbers bear that out. Just recently, Kroger bought out an entire shopping center in a suburb of Columbus, Ohio that was once anchored by Macy’s. The same report highlighted a new Wegman’s going up where a J.C. Penney once stood and an old Sears in Virginia Beach is now a Fresh Market.

These are just a few of the examples of investors banking on the power of grocery stores to continue to draw foot traffic even while big box stores and malls close. In fact, grocery operations are actually expanding. Some of these locations are not just going to use grocery stores as an anchor but also plan to move their food preparation and agricultural operations within those same centers, replacing failing retail stores.

People Will Always Need Groceries

The fact of the matter is, grocery will always be important to brick-and-mortar retail and shopping centers are proving to be a big part of the sector’s next evolution. People will always need food and by far prefer to shop for things like fresh produce in person. Despite so many household name businesses closing recently, grocery anchor stores have proven to be extraordinarily resilient.

Shoppers tend to stop by their local grocery store at least once a week. If there happens to be a hardware store or a clothing store or even a restaurant in the same shopping center, it is more likely to get the overflow traffic from the grocery store, attracting more investor dollars for grocery anchored centers.

Top 3 Trends in Grocery to Watch

At first, grocers trembled at the thought of competing with online giants on their turf. Now they are proving to be able to withstand the onslaught coming from online retailers in the brick-and-mortar space by playing on e-commerce’s turf.

One of the top trends we are seeing in the grocery sector is a move to more online services from traditional grocers. For instance, both Kroger and Walmart are offering delivery and BOPIS options to customers. Here are 3 other top trends

#1: Steady Numbers for Grocery Anchors

People buy a lot of things online but when it comes to groceries, those sales account for less than 10% of all online sales. Cap rates and valuations have been steady over the last couple of years and despite some headwinds from e-commerce, prospects for the future look bright for grocery anchors.

#2: Local Growers Connecting with Local Grocers

Opportunities abound for local grocers to seize on demographic trends that prefer farm fresh and organic foods. Teaming up with local growers is providing an edge for those stores that do.

#3: Food and Dining Replace Retail Centers

Clothing stores and nail shops are being replaced by unique restaurants and dining experiences in shopping malls with grocery anchors. Shoppers in the mood for food have a lot of different dining options and with the grocery store right there, anything on the grocery list that was missed is conveniently located in the same center as the restaurant.