Shopping Center Business

MAY 2018

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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GROCERS May 2018 • SHOPPING CENTER BUSINESS • 261 eas, we'll be able to deliver fresh, quality groceries to the doorsteps of 40 percent of U.S. households." Blakeman emphasizes that Walmart is utilizing its considerable existing infra- structure — roughly 4,700 stores across the country — which can serve as fulfill- ment centers. The company has built an app and website and trained associates to fulfill orders. It is utilizing third-party delivery providers as well, including In- stacart, which can lend expertise to the process. Currently, Walmart's online cus- tomers must order at least $30 worth of goods and pay an additional delivery fee of $9.95 per purchase. Walmart is also adding 1,000 more online grocery pickup points this year in addition to the 1,200 it already has. "Just like anything Walmart does, we work to find efficiencies and leverage our size and scale to provide the best service possible," Blakeman says. Meanwhile, Instacart is in an interest- ing position. Whole Foods had invested in the same-day grocery delivery service provider prior to its acquisition by Ama- zon, though Conwell notes that the com- pany's stake in Instacart is a "very small one." But Instacart is now becoming a delivery competitor of Amazon when it comes to groceries, linking up with sev- eral competing chains including Kroger and Aldi. Following Amazon's acquisition of Whole Foods, other leading grocery companies quickly began showing great- er interest in Instacart. The service has now signed deals with the top five U.S. grocers, expanded its relationship with Costco, and partnered with Loblaw, the largest grocery chain in Canada. Earlier this year, Instacart raised another $200 million in funding. "Instacart had been the prime service for both in-store pick-up order prep and delivery at Whole Foods, only to find that customer and investor acquired by the leading online operator," says Conwell. "No question that Instacart continues to grow aggressively through entering new markets and adding retailers it serves. The space it operates in is a white hot one with many providers seeking to build enough scale to avoid losing money on each order." FUTURE MOVES Should retailers find success with their e-grocery pickup and delivery platforms, a related question is how it could affect neighboring retailers in grocery-anchored centers. Emil Gullia, vice president of Bir- mingham, Alabama-based Retail Special- ists, doesn't predict much of a change in the immediate future. "Grocery-anchored retail is the sexiest thing in retail real estate right now and will remain so through 2020," says Gullia. "This product will remain highly sought after by developers and banks alike." Another retail expert, Levin Manage- ment Corp. President Matthew Harding, says increased competition will further separate the grocery sector's leaders from its laggards. "Landlords and lenders are taking a look at properties and understanding that in the near-term there's not going to be as much space occupied by retailers as in the past," Harding says. "Not all gro- cery-anchored shopping centers are the same. Increasingly, landlords are looking to land the top grocers at their centers. There's a bigger gap now between a re- tail center anchored by a leading volume grocer as compared to one that's third- or fourth-tier." A modest side effect of online deliv- ery growth could be a slight reduction in parking requirements as more customers stop only for a few minutes to have gro- ceries placed into their cars, or simply have groceries delivered. Harding says the traditional standard of five parking spots per 1,000 square feet of floor space could creep down to four spots per 1,000 or lower over time. "For customers, the trip to the shop- ping center still serves the same function," Harding says. "Either way, they're driving to the store and picking up groceries. Then they're driving home afterward with groceries in the car." SCB Some Walmart stores are adding drive through lanes with electronic check-in for customers to pick up groceries that they ordered online. Credit: Walmart Credit: Walmart

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