Will grocery stores become the new mall anchors?

Discussion
Photo: Whole Foods
Aug 03, 2017
Matthew Stern

As shopping malls try to figure out how to return to relevance, more big names in grocery are starting to see mall space as a worthwhile investment.

Kroger recently purchased a former Macy’s location in at the Kingsdale Shopping Center in Ohio, according to Business Insider. Whole Foods announced plans to open its Millennial-targeted 365 concept in the College Mall in Bloomington, IN, slated to open some point in 2017. Wegmans announced that it would open a location inside a former J.C. Penney, the chain’s third in-mall location.

Other grocers have made similar moves. In Virginia Beach, VA., a Fresh Market opened in a portion of a space formerly occupied by Sears. (The Sears shrunk into a smaller concept.) And a main line Whole Foods location (not a 365) opened in a former Sears in Clearwater, FL.

City College Professor June Williamson predicted in the Business Insider article that in addition to grocery stores, food preparation facilities and even agricultural operations may appear in mall spaces.

But the world of grocery is changing as quickly as malls. There’s no telling how Amazon’s planned acquisition of Whole Foods or the advent of checkout-free grocery technology as seen in Amazon Go could impact in-mall grocery locations. Improvements in home delivery, auto-replenishment for staples and the like could draw traffic away from grocers, just as they’ve begun to set up shop in malls.

One might also question if grocery trips are conducive with typical mall shopping and if the traffic will spread to other mall tenants. Will shoppers want to walk the mall before or after they shop for groceries?

Malls have been experimenting with other types of non-traditional offerings in hopes of providing a new kind of draw. Earlier this year, The Mall of America announced plans to open in-mall movie theaters serving gourmet food and cocktails. Some malls have even taken to running outdoor events like carnivals and food truck festivals in their parking lots to attempt to draw traffic.

DISCUSSION QUESTIONS: Do you think grocery stores can help revive shopping malls? Will consumers limit their shopping to the grocery stores or will they shop elsewhere in the mall on their trips?

Braintrust
"Will grocery stores in malls generate traffic? Yes. Will grocery stores be successful in mall locations? That depends upon thinking outside of the box"
"Grocery stores will be great anchors — everything else is moving online, but in Grocery the online guys are coming offline..."
"The concept of one-stop shopping by mixing a mall and a supermarket is very new to the U.S. Time will tell..."

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23 Comments on "Will grocery stores become the new mall anchors?"

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Paula Rosenblum
BrainTrust

I don’t think grocery stores are going to make for great anchors. They tend to be in-and-out locations. I’m more bullish on electronics and home goods as anchors.

I mean, what happens to the frozen foods purchased?

Malls have to stop depending on anchors and invest in a more inclusive experience. They’ve got to earn their money.

Art Suriano
BrainTrust

I think there is an opportunity for grocery chains to be in malls but they would have to modify their business model for them to take full advantage. I can see the grocery chain adding an eat-in area as well as having kiosk pop-ups throughout the mall for customers to sample different food products as well as purchasing snack items. The kiosks located throughout the mall will help bring more awareness to the grocery store and help sell more product.

Jon Polin
BrainTrust
We Americans tend to be America-centric, but just maybe we, especially our grocery industry, can learn something from looking elsewhere. Not only is much of the developed world far ahead of the U.S. in penetration and usage of grocery e-commerce, but in Europe it’s common to see grocery stores located in malls. I don’t have data on how these stores do or on whether the shoppers tend to shop both grocery and other stores in the mall, but I do observe many shoppers heading out of the mall with their arms draped in bags from both the grocery stores and… Read more »
Dick Seesel
BrainTrust

Jon, interesting point about shopping habits outside of the U.S. However the European traditions of food halls and “High Street” shopping may not translate well to the car-centric lifestyle of Americans. My local Macy’s store just closed its fresh food department to make room for a Backstage off-price installation, if that’s a sign of the times.

Dick Seesel
BrainTrust
It’s ironic that we’re talking about food stores taking over vacant mall space today, after discussing excess square footage in the grocery business yesterday. There may be specific malls where it makes sense to add a small-footprint store like Fresh Market, but it’s hard to see how full-line mid-tier stores like Kroger can make this work on a large scale despite its test in Ohio. Presumably the grocery store would be the “last stop” on the shopping trip, if the shopper visits the rest of the mall at all. The entire issue comes down to mall developers and how they… Read more »
Chris Petersen, PhD.
BrainTrust
Will grocery stores in malls generate traffic? Yes. Will grocery stores be successful in mall locations? That depends upon thinking outside of the box. We’ve entered an age of retail where if you build it, they might not come. It is far less about the building/location and much more about fulfilling the customer’s rising expectations. To be successful in a mall location, grocery stores will need to consider: Growing customer preferences for being able to shop online; Very efficient click and collect options … especially with current mall parking configurations often requiring long walks; Options for home delivery. Currently, mall… Read more »
Max Goldberg
BrainTrust

Grocery stores are not going to save failing malls. In some situations they may fit, but they are not a panacea. Malls should instead focus on lifestyle experiences, which could include more restaurant offerings, food classes, theaters, etc. But adding grocery is not going to drive traffic to other stores in the mall.

Lyle Bunn (Ph.D. Hon)
BrainTrust

The “to” and “from” of all shopping is a pain and so minimizing this grief is a service to consumers. The frequency of food shopping opens opportunities for the mall operator and all its stores so enabling the one-stop park-and-shop makes sense for everyone involved.

Ed Rosenbaum
BrainTrust

I keep telling myself to think outside the box on this. No matter how I try I am having a problem walking through the visualization. What will happen to the items needing refrigeration while I am looking for socks somewhere else? What will happen to the frozen items while I am leisurely window shopping? The best I can come up with is to do my window shopping before the grocery shopping. I have always thought of a grocery store as an in-and-out place. That does not fit the mall model for me.

Michael La Kier
BrainTrust

The question of “if grocery trips are conducive with typical mall shopping” posed is perhaps better stated “can grocery stores positively impact the trajectory of declining mall shopping?” For these two to be symbiotic, convenience and value must be created for the shopper. The potential to take malls and create “living communities” where grocery, co-working or office space and new residential options come together could be transformative. But if it is just a grocery store becoming a new anchor tenant, it’s not so interesting.

John Dunsing
Guest

It may happen on occasion but more likely as a result of the increased mall traffic due to the success of adding large fitness centers like Lifetime Fitness inside of an old Sears. In addition, possibly some adaptive reuse of large shell space on one end of the mall for seniors, or just apartments, will also drive foot traffic to malls.

Richard Hernandez
Guest

Supermarkets used to be anchors in shopping centers in the ’50s and ’60s (here in this area at least). A lot of the issues raised in the above posts were valid then — customers did not necessarily want to shop and do their mall trip at the same time. Customer pickup was hit and miss then as well. I do not know if a return to this full bore will save malls in general unless it becomes like a food hall (like in Europe) where it then becomes a destination instead of a routine visit.

Mohamed Amer
BrainTrust
It is unlikely that the future mall model will be one anchored with grocery stores. Looking at this from a grocery lens, the real estate cost at a mall is higher than current options, directionally the square footage of grocery stores will go down and not up and the average sales per trip by a typical mall visitor will be lower than from a stand alone model. On the other hand, if my grocery format emphasizes eating in and my assortment was tuned to a mall location, then I would give it consideration. From a mall perspective, it’s about integrating… Read more »
Ryan Mathews
BrainTrust
I guess it all depends on the mall. In rural and/or certain inner city areas a great supermarket might act as a destination — maybe. But outside isolated scenarios such as food deserts or obscure bits of the countryside (which might not support a supermarket), who isn’t close to a store now and why would they go to a mall? On a more pragmatic note, if shoppers were coming to the supermarket as a destination, why would they shop for shoes as the ice cream melts? By the way, I know they’d shop in the reverse order … it’s a… Read more »
Steve Montgomery
BrainTrust

Can mall location work for grocery stores? That depends on a lot of factors including the mall, the grocery concept, the location of grocery alternatives, etc., etc. The concept of one-stop shopping by mixing a mall and a supermarket is very new to the U.S. Time will tell, but I expect it will be the exception rather than the rule.

Craig Sundstrom
Guest
I don’t see much to recommend in this idea; groceries were (often) a feature in early malls, and — almost without exception — they were closed. Why?? There’s a fundamental conflict between the traffic pattern of a mall (regional, long-term visitors) and a grocery store (local, short-term). The conflict manifested itself in how parking was allocated, and in a basic lack of synergy between the two “sides” of the operation. One might make the desperation argument that “it’s better than letting a building sit empty,” but with too much store space and in some areas, too little buildable land in… Read more »
Ralph Jacobson
BrainTrust

People haven’t slowed down shopping at grocery stores, regardless of what you may have heard, and won’t anytime soon. Why wouldn’t you put that draw in your withering malls? The ones I’ve seen so far are doing just fine as the anchors.

Kenneth Leung
BrainTrust

Grocery stores can absorb the space from previous anchor stores but as Paula said, grocery is an in/out business with frozen food and going omnichannel with home delivery. Personally, I think malls need to be rethought with food service/restaurant/live entertainment as anchors. Those are the things that can draw people to visit and linger and convert to shoppers.

William Hogben
BrainTrust

Grocery stores will be great anchors — everything else is moving online, but in Grocery the online guys are coming offline — food and especially fresh produce are the real draw to in person shopping.

That said, grocery stores will not be enough to save most struggling malls — their problems are too complex and in many cases, too far advanced. The problem for malls is an overall shift in shopping behavior, combined with the fact they can’t scale up and down.

Ken Morris
BrainTrust
Traditional mall anchors (department stores selling commodity products) are no longer driving traffic to malls as many of their customers are disintermediated by online shopping. Grocery stores may be the next new trend for mall anchors and it makes sense from two perspectives: shopping habits and frequency. Most grocery shoppers still prefer to purchase products in-store rather than online, especially for produce and meats. Groceries a frequently purchased category and grocery stores have more frequent shopping trips than department stores. Millennials are busy and appreciate convenience. Many shoppers will appreciate the ability to combine shopping into a one-stop experience. If… Read more »
Min-Jee Hwang
BrainTrust

While groceries stores may attract consumers, they may not make the greatest anchors. Shopping trips are errands that are intended to be quick and easy. Consumers may not be attracted to grocery stores inside malls as some find going to the mall a journey of its own. Additionally, consumers may not be attracted to shop elsewhere after purchasing their groceries.

Ricardo Belmar
BrainTrust
I’m not sure mall-based grocery stores make sense except for higher-end formats like the ones cited here — Whole Foods and Wegmans. Why? I think the eat-in prepared foods are going to be more of a draw in these mall environments. What will shoppers do with fresh meats, produce and frozen foods they buy at the grocery while walking through the mall? Maybe if the mall operators introduce new services to help address this, it will work (proper storage space so shoppers don’t need to carry a cart full of groceries throughout the mall, carry-out service to your car, and… Read more »
Phil Chang
BrainTrust
I think malls need to know how to re-take their role as a community anchor. Most malls are destinations that you plan to go to. While a grocery store fits this profile as a destination, the cost of being in a mall certainly doesn’t fit with a grocery store’s cost model, nor does it fit with a sense of convenience. Consumers that are on a grocery shop are going to get groceries, period. A full trip through a mall with ice cream, yogurt and a couple of cartons of milk is not the experience to bring a shopper back. Malls… Read more »
wpDiscuz
Braintrust
"Will grocery stores in malls generate traffic? Yes. Will grocery stores be successful in mall locations? That depends upon thinking outside of the box"
"Grocery stores will be great anchors — everything else is moving online, but in Grocery the online guys are coming offline..."
"The concept of one-stop shopping by mixing a mall and a supermarket is very new to the U.S. Time will tell..."

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