The Only Constant is Change in Grocery Wars

Newman says consumers will have the final say on how and why warring grocers will succeed.

DALLAS—Grocery-anchored centers continued to be an attractive property type for investors in 2017, with sales volumes increasing by 5.3%. The asset class remained stable amid a period of low retail transaction volumes. But after grocery store expansions went bananas in 2016, the industry took a minute to digest the following year. Openings of new grocery stores reached 13.4 million square feet of space, which is a decrease of 28.8% year-over-year, according to JLL’s grocery tracker 2018 report.

“It’s not surprising that overall grocery store expansions fell in 2017, when compared to the boom in 2016. The largest grocery chains are feeling pressure from specialty grocers, discount grocers and wholesale clubs. But we are seeing strong local chains competing head to head, and winning. Locations within the trade area and in the right markets are key. More than one-third of new store openings were in just three states: California with 1.6 million square feet, and North Carolina and Virginia with growth of 2.7 million square feet across both states. Retail follows rooftops, so the states with strong population growth will continue to see an influx of grocers,” said James Cook, director of retail research, JLL.