Uncertainty of E-Commerce Sinking In for Grocery-Anchored Centers

Shopping centers and strip malls across America have become quite predictable. The question is whether a grocery store can save them from extinction.

National Real Estate Investor (NREI) spoke with Joseph McKeska, president and co-founder of Chicago-based Elkhorn Real Estate Partners, a division of New York-based A&G Realty Partners, which provides advisory and investment services to grocery-anchored landlords. He told them that the uncertainty of e-commerce has started to sink in for investors in grocery-anchored shopping centers.

“I think there’s certainly more unease in the marketplace today than there was two or three years ago, as investors have begun to realize there’s going to be more disruption in grocery retail than people realized," he said.

NREI wrote that McKeska says while the acquisition of Whole Foods by Amazon has some wondering whether grocery delivery or click-and-collect services will become the norm, there are some categories within the sector that will likely remain immune to such influence.

“If you’re talking about fresh foods, fresh-prepared foods in particular, you’re going to see a much smaller impact,” he said. 

The real estate investors NREI spoke with almost unanimously agree that e-commerce competition will not eat up significant market share in the grocery sector. Instead, they believe the focus has been on the rise of specialty and discount grocers, which has led to less store growth among traditional grocers. 

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McKeska said that disruption is happening through different channels, including the expansion of home meal kit solutions, as well as specialty retailers.  

What's stunning to read, however, is that none of these pundits actually talked about the shopper or the shopping experience, and that is what we believe is the issue and problem for shopping centers. Eataly and others have proven that if you can create a formidable food experience, people will come.