Mind the Store

Retail industry news you can use

Malls... featuring Grocery Stores?

Brian Ash, Director of Customer Strategy

“Where have all the anchors gone? Long time passing…”

The retail landscape is in an arc of change, especially as it applies to big box stores and mall anchors. Sears, once the giant of mall tenants, closed 142 stores in 2018. Kmart, Macy’s and JC Penney have also seen high numbers of closed locations, leaving some shopping malls looking like the ghosts of Christmas shopping past.

Research from Reis, a real estate marking firm, shows that the vacancy rate at regional and super-regional malls was 9 percent in the fourth quarter of 2018. While that is down from the seven-year zenith of 9.1% that hit in the 3rd quarter of 2018, it’s a dramatic uptick from the end of 2017 which showed an overall vacancy rate of 8.3 percent. How will this trend impact other retailers?

One trend is that grocery stores, not generally in or around traditional shopping malls, are looking at the anchor spaces that are sitting empty and deciding if supermarkets can utilize spaces that are larger, have more parking, and have a ready supply of foot traffic and shoppers, literally on the doorstep. Anchor stores in malls traditionally are the main draw for customers, so mall managers usually price the rent at significantly lower rates per square foot than other stores. Malls also have the advantage of being seen as “destination shopping” where buyers might need to pick up socks, or home goods, or appliances, but also plan to stop at the food court or restaurants for a bite to eat. Grocery stores, on the other hand, tend to be viewed as a chore by shoppers, something that has to be gotten out of the way. Selling a trip to the grocery store as a positive experience is difficult, but perhaps the lure of other shops and activities could take some of the drudgery out of it. 

Whole Foods has embraced the trend since they are expected to expand and grow now that Amazon owns them. The company has been actively investigating the suitability of about 110 Sears stores at malls. Another chain, Wegmans has taken the mall plunge in Natick Mass., opening a location at the upscale Natick Mall. It’s a two-story superstore that took over a spot that JC Penny was anchoring. It includes a burger spot, a Mexican restaurant and carries more than 70,000 products, including a mind-boggling selection of wines and beers from almost everywhere.

Timing matters as well. During the winter holiday shopping season, many people won’t go near the frenzy of a mall. There is also the problem of what to do with what shoppers buy. This is where brands can make a difference in the in-store experience. Brand reps or store associates can make sure they know about weekly specials at a grocery store that is part of or adjacent to their mall location and tailor coupons, gifts with purchase or other incentives to those offerings. A pick-up service or “food check” where grocery purchases can be held for until the customer is ready to leave is another option for a brand pop up or store within a store. If stores within the mall partner with a grocery store, the shared data can be a huge boon to marketing efforts. Customers who routinely purchase sports drinks or vitamins at the supermarket can be offered incentives from a sporting goods store in the same venue. Brand reps for diapers, baby food, or pet supplies that are in the grocery space can offer deals on any of their hard or soft goods that are available in the mall. An informed and dedicated field force can make a huge difference in making the most of mall vacancy and the declining number of retail stores in other areas.

Adapting to the changing landscape of one-stop shopping locations like malls, and increased store closings won’t be a task just for grocery brands. Maximizing opportunities to advance your product’s optics and awareness in the changing retail environment is a critical part of gaining sales and brand fans. 

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