According to NBC news, 2016 grocery sales dropped 1.3% in 2016, the first decline since 1967. This statistic seems to illustrate to me the theme of commercial real estate this past year and the general confusion about the state of retail. Ecommerce companies like Amazon have shaken up the retail sector with retailers and brokers alike trying to learn how to pivot to keep up with consumers.
Since my last post on the Amazon Effect, there has been another shake-up in the retail world: Amazon’s acquisition of the high end grocery store, Whole Foods. For many years, grocery stores have seemed immune to the advent of ecommerce and the online presence other retailers have had to find for themselves. However, more recently, it has become clear that is not the case.
“…grocery stores have seemed immune to the advent of ecommerce and the online presence other retailers have had to find for themselves.“
The advent of the merging of ecommerce and grocery stores was online shopping with curbside pickup. This continues to be the most common form of omni-channel retail, in which there is a focus on the convergence of brick and mortar and online presence, in the grocery sector. What is interesting is that although this has changed the consumer’s experience, it has not disrupted grocers’ real estate needs. According to Bisnow.com, industry players are not expanding their current sites, nor are they investing in larger plots when they open new stores. Alternatively, they are adopting other grocery retail trends and making better use of their existing locations- adapting parking lot space for curbside pickup, converting portions of their stores into spaces for storing pickup orders, and, in some more extreme cases, transforming parking lot spaces into a grocery drive-thru. As many chains embrace the merging with ecommerce, they are finding that instead of requiring more square footage, they are requiring more manpower to fulfill these orders.
As ecommerce has continued to grow in the retail sector, and as giants like Amazon ‘test the water’ of grocery, it is becoming apparent that curbside pickup is not the end for grocers’ foray into ecommerce; curbside pickup has now ballooned into home delivery services. As home delivery meal services like Blue Apron and Hello Fresh have emerged, consumers have become much more comfortable with the idea of shopping online for their food and are relying less on the brick and mortar experience.
Consumers and grocers have found that online ordering and home delivery provides not only convenience, but also often is ultimately cheaper for both the retailer and the customer. Hopefully the fierce competition among grocery stores will continue to lead to innovation and ultimately a better customer experience, as this seems to indicate.