The amount of retail square footage devoted to food has never been as high—and that spells trouble for the industry
By NACS Online
Americans have a plethora of grocery stores from which to purchase food—and those stores have gobbled up a lot of retail square footage. After retailers expanded quickly during the recent recession, consumers started changing shopping habits from one-time weekly trips to more to-go meals, snacking and visits to a variety of grocers, the Wall Street Journal reports.
The commercial square footage of retail food space per capita clocked in at 4.15 square feet of food retail per person in 2016—nearly 30 times the amount of space major grocery chains had in 1950, according to the CoStar Group. The increase in supermarkets comes at a time when dollar stores, drug stores, club stores and convenience stores have upped their fresh food options to grab customers and sales. Fresh competition from Amazon.com, Aldi and Lidl are also squeezing the grocery business.
Same-store sales at food retailers were flat last year, and will likely remain so this year too. As a result, supermarket chains have begun to slow new store openings and are focusing on smaller formats. For example, Kroger will only build 55 new stores, down from 100 in previous years. In fiscal year 2018, Walmart will open 55 smaller stores and supercenters, down from 132 from the previous fiscal year.
Food retailers also have a smaller number of shoppers, as baby boomers and millennials—the two biggest demographic groups—aren’t at the peak of food buying. Also, consumers have flocked to nontraditional retailers for food options, such as convenience stores, which saw prepared foods and beverages rake in $73 billion last year, up 72% since 2010, according to NACS data.
