CBRE Report Shows Trends In Grocery Industry Converging on Convenience for Customers, Expanding Stores’ Offerings
San Diego CA— CBRE’s analysis of factors influencing the U.S. grocery industry points to a near-term future with a fully automated checkout process, a greater emphasis on prepared meals, a proliferation of smaller, convenience-store grocery outlets, and more collaboration between grocers and nontraditional partners such as fitness operators and restaurants.
A new report from CBRE, the second in its Food In Demand series this year, delivers 11 predictions for the U.S. grocery industry over the next decade. Grocery-anchored centers are favored by real estate investors due to the industry’s steady if slow sales growth and minimal e-commerce penetration relative to other categories. Still, US grocers face significant pressure to adapt to changing consumer preferences, new store formats, automation and delivery demand.
“Technology has created an opportunity for grocers to re-calibrate their brick-and-mortar stores by creating layouts that are fluid and adaptive to current customer preferences such as in-store dinner, pre-made meals and logistics areas for online orders,” said Matt LoPiccolo, first vice president in CBRE’s San Diego office. “San Diego is an exemplary market in that it features urban, suburban and rural areas that will greatly influence how operators cater to the various needs of its customers. Real estate fundamentals and technology will be critical components for grocery operators as they continue to define key locations that will complement the growing needs of its customer.”
Among CBRE’s predictions
The grocery checkout line will disappear within 10 years
A slew of technological advancements is converging to replace the traditional checkout line, including carts with built-in barcode scanners and credit-card swipers; mobile-payment apps; weight sensors and cameras; and merchandise-scanning robots. Technology also will allow shelves to keep track of inventory. The elimination of checkout lines will allow grocery operators to free up real estate for revenue-generating functions such as click-and-collect services.
Major grocery operators will expand further into convenience-store formats
The industry’s largest players are finding a strong growth opportunity in opening and operating smaller-format stores in dense, mostly urban markets. Many of these stores focus on convenience fare such as prepared meals. Already, big names have moved into the space, including Kroger Co. with its Express Mart format and Hy-Vee with Fast & Fresh.
Collaborations will expand grocers’ offerings
Grocers will seek to add higher-margin merchandise and services in their stores to counter the steep costs of last-mile delivery. That will include more prepared meals and in-store restaurants. It also will entail collaborations, such as grocer Hy-Vee’s arrangement to cross-promote Orangetheory Fitness’ exercise classes with Hy-Vee’s healthy food offerings.
Intensifying competition spurs reinvestment in stores
Various large grocery operators have announced sweeping remodeling and redesign plans for portions of their U.S. store base as competition increases from supercenters, wholesale clubs and small-format rivals. Some of this expenditure also is going to improving in-store technology and omnichannel services such as curbside pickup.
“The store will remain central to the grocery industry, but its format and function will be reshaped by multiple factors over the coming years,” said Melina Cordero, CBRE Global Head of Retail Research. “Grocery operators must diversify their offering to best compete, which will lead to varied store formats for different markets, nontraditional merchandise assortments and an even greater focus on customer convenience.”
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.