As department stores move out of malls, groceries are moving in
- As department stores like Macy's and J.C. Penney close down their suburban mall locations, grocers like Kroger and Wegmans are claiming these vacant spaces, according to Business Insider.
- Kroger is building a $10.5 million store in a former Macy’s in Upper Arlington, Ohio while Whole Foods will open a 365 store at the College Mall in Bloomington, Indiana later this year. Wegmans plans to open a large store in Boston's Natick Mall next year, in a space formerly occupied by J.C. Penney.
- Malls are often located near residential housing, have lots of parking, and are accessible by public transit. But many malls have struggled with foot traffic, particularly as more consumers shop online. “There are too many malls,” June Williamson, an architecture professor at the City College of New York, told Business Insider.
For mall operators, the benefits of having a grocery store in their lineup is clear. Supermarkets bring in steady traffic and are seen as a safe bet at a time when so many other retailers are seeing their sales upended by e-commerce. With their aisles of produce, bakery items and prepared meals, grocers also have a halo of freshness that can extend to other stores.
According to a recent Washington Post report, a Kroger Marketplace store can bring in $50 million annually whereas a Macy's or J.C. Penney might only bring in $10 to $15 million.
The question is, are malls good for supermarkets? Industry statistics paint a grim picture. Between 2010 and 2013, mall traffic declined by 50%, and has declined every year since, according to research firm Cushman and Wakefield. In that same time period, Amazon’s annual sales rose from $16 billion to more than $100 billion.
However, not all malls are suffering. Those located near residential centers, tourist hotspots and other favorable economic centers have thrived. Among industry experts, the consensus seems to be not that malls are dying, but that there are too many of them. According to research firm Cowen and Company, malls grew at twice the rate of the country’s population between 1970 and 2015. Nationwide, the U.S. has 1,200 malls, and by some estimates that number will reduce to around 900 in the coming years.
Grocers, who certainly know a thing or two about operating in an over-stored industry, are being careful to evaluate mall sites using the same criteria they use for any potential location. Discussing its forthcoming Natick Mall location, Wegmans spokeswoman Valerie Fox told Business Insider, "While we don't specifically seek out shopping malls, we consider them if they meet the things we're looking for.”
With good retail locations at a premium nationwide, mall vacancies offer a real avenue for supermarket growth. For grocers like Wegmans that know how to operate large, high-volume stores, the right mall location can be a sales boon.
Mall operators, meanwhile, are finding that supermarkets can get people out of their homes and into retail stores.
- Business Insider Grocery stores could save dying suburban shopping malls
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