2017 Grocery ‘War’ Predictions From Retail Experts
The Texas Department of State Health Services predicts DFW will be home to 7.9 million people by 2020. That’s a lot more mouths that need groceries, The Weitzman Group EVP David Palmer says. What do the next year or so hold for grocery stores in North Texas? Here’s what a few insiders had to say.
US-380 Could Be The New TX-121 For Explosive Growth
The growth of TX-121 as an employment center is causing housing north of US-380 to accelerate, David tell us. Developers looking for properties in Prosper, Celina and nearby towns will have to budget for hefty land prices. Price tags for lots north of 380 far exceed land prices around 121 compared to a similar time in its growth cycle, David says.
Nothing In The Fundamentals Cause Concern
Job growth: good. Retail occupancy: good. Residential absorption: good. In-migration of residents: good. Weitzman Group CEO Marshall Mills (above) says he doesn’t want to assert that 2017 retail numbers will be off the charts, but he wouldn’t be surprised if that happened. With little, if any, overbuilding, somewhat conservative lenders and developers, and slight increases in interest rates (which a strong market like DFW can support), Marshall feels good about next year.
But Affordability's Still A Hot Topic
The cost of concrete, labor and land make construction expensive, SRS EVP and market leader Mark Reeder (second from right, skeet shooting with buddies) says. So far, retailers have protected enough sales to survive, but Mark and many others still keep a close eye on prices. Consumer prices weigh on Marshall’s mind. “We haven’t seen wage increases, prices are starting to uptick and I’m a little concerned about inflation,” he tells us. And in an industry like grocery stores where profit margins are so low, products have a finite price threshold.
Specialty Grocers Are Coming
SRS repped Dean & Deluca for its first Texas lease in Legacy West. “We continue to look at opportunities for Dean & Deluca,” Mark says. Weitzman’s food anchor eatZi’s in West Plano Village is doing very well, according to Marshall and David. 365 by Whole Foods will open a couple of Texas locations (none in DFW) and Central Market will open two more Dallas locations in 2017. Mark thinks specialty grocer success will depend on the brand. Some will come in and excel (like Trader Joe’s), others (like Fresh Market) will not enjoy the success they anticipated and shrink back, he says.
… And Traditional Markets Will Up Their Game To Compete
WinCo sells sushi. Kroger has those extensive olive bars. Walmart has expanded offerings of fresh products. Traditional grocers will continue to add new and creative selections to compete with specialty stores, David (above) says.
New Players Keep Coming
Marshall, David and Mark are all watching Germany-based Lidl’s expansion into North Texas. Weitzman has worked with WinCo for two of its nine stores in North Texas, including one opening in Carrollton in 2017. Rumors about H-E-B’s land sites still swirl.
The War Will Rage On, And That’s Good For Customers
In a market like DFW, the consumer wins the “war,” David says. Every consumer will have his own preference and grocers will have to deliver on convenience, quality of product and services to create brand loyalty. There won’t be a clear winner in 2017, or perhaps ever, Marshall says. Ultimately, the competition forces lower prices, and that’s how shoppers come out on top.