Grocery anchors drive more visits to suburban shopping centers

What this means: Retailers have embraced suburban retail locations, both to build off-mall fleets, but also to meet the changing demands of consumers. With convenience a key factor for consumers in making a purchasing decision, placing general merchandise retail strategically near grocery and other essential retail spaces creates an easy shopping experience for consumers. Suburban shopping environments also allow retailers to test larger format locations and optimize in-store experiences for local communities. Grocery-anchored shopping centers are experiencing stronger year-over-three-year (Yo3Y) visit recovery than open-air lifestyle centers, and several shopping centers with grocery stores also seem to see a larger share of repeat monthly shoppers, Placer.ai found. Grocery-anchored shopping centers likely benefit from their suburban orientation, the foot-traffic insights company reported, but the ability to draw regular visits represents an ongoing strength for these centers. Grocery anchors aren’t just driving visits to shopping centers — they’re also increasing visit frequency, Placer.ai reported. For example, analyzing February 2023 data, Placer.ai found the share of repeat visitors was significantly higher for four leading grocery-anchored shopping centers than for the wider open-air lifestyle center sector. The larger share of repeat visitors could be attributed to consumers visiting these centers on routine grocery runs and stopping by additional stores or dining venues in the center along the way, Placer.ai stated. Rise of the suburbs Along with strong visits in the overall grocery category, shifting consumer patterns have also contributed to grocery-anchored shopping centers successful performance. Nearly 80 million U.S. workers work remotely one or more days per week, with 29.3 million working remotely five days a week, according to a 2022 McKinsey survey, posing a direct impact on commutes. Hybrid models of working rose in the U.S. rose between 2019 and 2022, according to survey data from Gallup. In the fourth quarter of 2022, 53% of U.S. workers reported working in a hybrid manner and another 26% worked completely remote. Since the emergence of the COVID-19 pandemic, many workers have adopted new ways of balancing their home and working lives, deciding a hybrid work model was more flexible than being required to work on-site daily, Statista reported. “The shift of urban to suburban retail environments was probably just a shift because people are migrating out,” said Elizabeth Lafontaine, chief retail analyst for Retail Leader Pro in a recent Placer.ai webinar. “They're also migrating their purchases out. But it still remains to be seen what suburban environments can do for the retail industry. But there is a way to drive incremental demand there, because you're dealing with people who now have more space and they are in a car potentially more than they ever were before.” From a retail perspective, suburban consumers are now able to drive to more places. “A lot of those people might not have used options, like BOPIS or curbside pickup before,” Lafontaine said. “Figuring out ways to drive incremental demand when the consumer is making a suburban shopping trip is going to be key for the industry going forward.” Flexible work schedules, coupled with suburban relocation, offers interesting opportunities, in particular, for suburban grocery-anchored shopping centers which were already well-positioned because of their proximity to customers. “As hybrid work models have emerged due to shifting post-pandemic patterns, these centers have only grown stronger,” Ward Kampf, president, Northwood Retail, told Retail Leader Pro. “The last mile is the hardest to penetrate. More and more, shoppers want immediacy, convenience, options and easy access. During work-from-home days, these grocery-anchored and service-oriented centers allow patrons to layer their days with varied offerings – from yoga and coffee in the morning to lunch and to wine, groceries and dinner.” Benefits of grocery As shopping centers evolve to appeal to post-COVID-19 pandemic consumers, this has opened the door for grocery stores to fill the void of unconventional shopping center occupants and help drive traffic, Placer.ai reported. For example, the Westfield Oakridge shopping center in San Jose, California, opened 99 Ranch market, one of the largest Asian supermarket chains. Some shoppers reported that the addition of the grocery store had turned Westfield Oakridge into their one-stop-shop, and Placer.ai reports Yo3Y visits were up by 10.1% in July 2022. Grocery-anchored shopping centers have continued to draw visits after benefiting from their anchor's “essential business” status and from the pandemic grocery boom. Grocery stores as mall anchors are not new, but the trend has accelerated, due in part to the strength of the grocery category during the past couple of years. While Yo3Y visit gaps for all four shopping center segments – grocery-anchored shopping centers, open-air lifestyle centers, indoor malls and outlet malls – have narrowed below 10%, grocery-anchored shopping centers have seen Yo3Y visit growth, while outlet malls saw visit gaps in both Yo3Y and YoY growth, according to Placer.ai. Indoor malls and open-air lifestyle centers, meanwhile, saw positive YoY visit trends coupled with Yo3Y dips. The relative strength, especially in the face of significant economic headwinds is noteworthy and acts as the latest sign of the growing power of top performers in these venues, Placer.ai noted. What’s next: As retailers try and perfect their approaches to unified retail, or the seamless integration of physical and digital assets, using suburban markets as testing locations could provide key insights into how and when consumers want to shop with retailers by channels. The luxury of space and car traffic also can aid in testing fulfillment strategies for consumers on the go.

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