O, Supermarkets
When we think of our neighbors to the north in Canada, there are plenty of iconic symbols and traditions that come to mind: hockey, moose and the Mounties to name a few. When it comes to retail real estate in Canada, something else that could be considered “iconic” would be the fact that many regional malls there often have supermarkets as their major anchor.
What’s interesting to me is that mall supermarkets have been a reality in Canada for 40 or 50 years, yet here in the states, you rarely -- if ever -- see a supermarket at the regional mall. It’s amazing when you think about how dramatically different the shopping center development model in Canada is from the U.S. model. I’ve been asking myself lately, “Why haven’t supermarkets caught on in regional malls here like they have in Canada?”
To start with, I think the U.S. mall concept has always been a bit more rigidly defined compared with the Canadian model. We tend to look at our regional shopping centers in very black and white terms: as destination retail environments. To a certain extent, I think we might be stuck in tradition; we as consumers expect our supermarkets to be at the local strip malls and neighborhood centers, so they are. I also think there’s always been this feeling that the retail mechanics of supermarkets don’t promote cross-shopping, which is very much expected from our mall tenants, especially the anchors. Anyone who has tried to do a little leisurely window-shopping with a bag full of frozen groceries in their arms understands what I’m talking about. There’s also the fact that most supermarkets, even a small or specialty grocer, requires a fairly large parking allotment, which can be hard to achieve at a regional mall.
From my perspective, grocery owners/operators aren’t necessarily averse to exploring mall locations, it’s more that developers have had a hard time really seeing how it could work. But, I think developers around the country are realizing that, in order to have a truly successful regional mall, you need neighborhood components that can help establish a diverse and engaging mix of uses. Even without an optimal cross-shopping dynamic, these “necessity-based” tenants do bring people in, creating tremendous exposure for the center.
As an industry, I think we need to start getting away from our inflexible mall definitions. Going forward, I see centers becoming more “hybrid,” with a mix of traditional and non-traditional uses. In some ways, the emergence of lifestyle centers and other mixed-use venues has already started to break down traditional definitions of what a mall should look like. And, with discounters like Costco starting to move into regional shopping centers around the country, we’re already witnessing the beginnings of a change. Even Aldi recently made its U.S. mall debut with a 20,000-square-foot store in Westfield Chicago Ridge (Chicago Ridge, Illinois).
Things definitely won’t change overnight. I think it will probably be more like a 20-year process, so you won’t have to start dodging grocery carts … yet. I do think, though, the Canadians clearly know something we don’t. After all, it’s been working for them for decades now.
What do you think? Is this the beginning of a more grocery-centric American mallscape? Can you think of other examples that show we’re heading in this direction? Email me at [email protected].
Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.