Interesting piece in the Los Angeles Times this weekend positing that grocery stores may end up being a lifeline for troubled shopping malls that have been losing tenants and customers over the past few years; it was a trend that predated the pandemic, but that gained traction as Covid-19 caused dramatic shifts in shopper behavior.
Case in point:
"When the Westfield Oakridge mall in San Jose opened the popular Asian grocery store chain 99 Ranch Market in March, its debut saw lines snaking out the door. Since then, the mall’s foot traffic has jumped, with customer visits up more than 10% in July compared with pre-pandemic levels, according to traffic analytics firm Placer.ai.
"In addition to grocery store staples such as produce and meat, the supermarket has also attracted shoppers with its dining hall and tea bar. What’s surprising is 99 Ranch took up residence in one of the mall’s anchor spots, which had typically gone to massive chains like Target Corp. or Macy’s Inc. It’s the supermarket’s first location inside a megamall."
The test, the Times writes, isn't just attracting traffic to food stores. It also is attracting new tenants to these malls, and providing them with sufficient traffic and sales to make their business viable.
Ethan Chernofsky, Placer.ai’s vice president of marketing, says that based on the numbers he is seeing, this seems to be happening, albeit on a small sample: “The result has been a rise in other tenant types that could have a waterfall effect, driving even more mall tenant diversity and new opportunities for less traditional mall tenants. While they are still not an indoor mall staple, there is ample reason to believe that their role within this segment will increase."
- KC's View:
One interesting thing about the trend, the story points out, is that "roughly half of grocery stores at shopping malls are located in what industry experts call a 'Class B' mall — not the gold-standard Class A mall that is more likely to house luxury goods. Class B malls, which are more likely to attract middle-class clientele, have struggled more than their wealthier cousins. As a result, they’ve been forced to think more creatively when it comes to finding tenants. More than 300 malls in the U.S. are categorized as B-tier malls."
That's a lot of opportunity and a lot of available real estate. (And probably a lot of incentives for retailers … mall owners should pay them to open stores there.). And I think it is better for these malls if supermarkets go in, as opposed to Amazon fulfillment centers.