Spike In Eating-At-Home Fueling Grocer Expansion
With consumers eating at home more often during the coronavirus pandemic, some grocery chains are taking advantage of the jump in demand by expanding, anchoring new shopping centers.
Publix Super Markets is anchoring two new centers and is in talks for two other locations in Metro Atlanta — all of which would be at developments owned by Branch Properties — as the grocer pushes forward on expansion, Branch Chief Investment Officer Jesse Shannon said.
Publix and other grocery chains' quest for new locations is being spurred on by the pandemic, which, during its peak, forced consumers to eat at home under widespread shelter-in-place orders across the country. That has produced new habits, ones that will be hard to break even as restaurants reopen but to lower capacity, some experts say.
“Even a slight shift, between eating out four times a week to eating out three times a week, is enough to see grocery store sales [rise],” Shannon said.
The two new Publix stores are coming to Branch developments in Dunwoody and Tucker.
At the Dunwoody center, a more-than-64K SF development on 10 acres off Ashford-Dunwoody Road, Branch will tear down a series of restaurants, including the former Brio Tuscan Grille and PF Chang's China Bistro, as well as fill in an existing pond. Publix has signed a lease for 25K SF.
Branch also is developing a more-than-80K SF shopping center, anchored by a 48K SF Publix, off Hugh Howell Road and Mountain Industrial Boulevard in Tucker, replacing an older nearby Publix.
Publix, with more than 150 stores in Georgia, is among a cadre of grocery chains that are expanding in the Atlanta area. German discount grocer Lidl is expected to open its 99th U.S. store in Peachtree Corners later this month. Another discount grocer, Aldi, is looking to grow in Georgia, as is Sprouts, Shannon said.
“The truth is that the most secure retail investment you can make these days … is a grocery-anchored shopping center,” The Shopping Center Group partner Marc Weinberg said. “Everybody needs to go to the grocery store. Everybody uses a grocery store, whether they have it delivered by Instacart ... or they go there themselves. Everybody goes to the grocery store.”
Grocers have been a rare beneficiary during the economic fallout of the pandemic. The Kroger Co. reported same-store sales in March jumped 30%. Albertsons reported same-store sales skyrocketing 47% during the first weeks of the pandemic.
Seven of the country's largest grocery chains — Albertsons, Publix, Kroger, Trader Joe's, Wegmans, Whole Foods and Safeway — all reported an increase in customer visits in March to their stores, according to the consumer foot traffic tracking firm Placer.ai. Discount retailers like Dollar General and Dollar Tree also are embarking on expansion plans across the U.S., banking that hard economic times will lead to more demand for cheap goods.
On the other side of the coin, restaurant performance has plummeted, with many still closed. Even in Atlanta, where shelter-in-place orders have been lifted, restaurants are operating at reduced capacity and enforcing social distancing, crimping the amount of business they can do.
“If you're running at 50% of capacity, you're just not going to be doing the same volumes,” Shannon said.
In 2019, consumers' appetites focused on restaurants. Sales at eating and drinking establishments in the U.S. were up by more than 4% to more than $860B. Those sales surpassed the growth in grocery sales by a full percent.
Some view this change as a longer-term trend that will only benefit grocery stores. Carol Spieckerman, the founder of the national retail strategy consulting firm Spieckerman Retail, said social distancing measures in restaurants are hampering comfortable atmospheres and the convenience of eating out. That could discourage people from eating in restaurants as frequently as they did pre-coronavirus.
“The restaurant business is going to be a really slow comeback,” Spieckerman said. “Will eating out be enjoyable under those circumstances? Or will it have more consumers just saying, 'I'd just as soon stay home'? I just don't see things going back to fully normal until there is [a vaccine].”
Shannon said the new shopping centers are taking into account the idea of social distancing. Branch is shifting away from developing spaces for larger retailers and instead will focus on smaller shops and restaurant space. That will include more drive-thru locations, more curbside spaces and expanded patios and green spaces for consumers to eat outside.
“We've really tried to gear our site plans … to that demand. We're going to be reducing the amount of parking in these centers in exchange for more patio spaces,” Shannon said. “Our demand right now is coming from drugstores, urgent care facilities … and, believe it or not, parcel delivery.”
Weinberg said those design elements are what retailers — at least those that are still expanding — are seeking in new shopping centers. For instance, Chipotle Mexican Grill is now focusing on new retail locations that have drive-thrus, he said. Plus, consumers just want more places to roam and gather in centers outside of confined restaurants.
“Communities want gathering places and town center-like places, even in grocery centers, because it's more community-friendly,” Weinberg said.