Isaac Marcushamer, Chief Innovation Partner and partner in the Business Reorganization practice group at Berger Singerman

MIAMI— Amazon acquiring Whole Foods will no doubt have an effect on neighborhood grocery stores, as well as national grocery brands like Albertson's and Winn Dixie. But it may not stop there.

There are thousands of strip shopping centers in the US where grocery chains currently serve as anchors. If Amazon runs these grocery chains out of business, will there be a domino effect on the other stores at these strip centers? Will property owners struggle to try to fill store vacancies eventually? Will this acquisition lead to a major problem for commercial real estate?

GlobeSt.com caught up with Isaac Marcushamer, Chief Innovation Partner and partner in the Business Reorganization practice group at Berger Singerman, to get his take in this exclusive interview.

GlobeSt.com: How will Amazon's purchase of Whole Foods impact the commercial real estate market?

Marcushamer: The impact will likely be different depending on the horizon one uses. In the short term, it is unlikely to have a direct measurable impact.

In the longer range, I think we can expect to see some of the trends experienced by retail in general to begin to apply, i.e. reduction of physical brick and mortar locations. We will likely see yet another tenant class come under pressure from the continued online growth of consumer behavior.

At this point, commercial real estate owners may see some headwinds. Moreover, there may be some uncertainty in the near term when lenders are considering the strength of tenants as part of the refinancing evaluations.

GlobeSt.com: Should grocery chains like Publix be concerned?

Marcushamer: Anytime a new entrant with the resources and experience of Amazon enters your domain, you should be concerned. Stores that were unconcerned about Walmart opening in their town years ago likely suffered disastrous consequences. I think that the entire grocery sector should looking at how they are now going to compete with a company that has resources and talent for disruption in any industry.

GlobeSt.com: What can grocery chains do to compete with Amazon?

Marcushamer: Innovate, improve their customer experience and develop a clear value proposition.

GlobeSt.com: When do you expect the commercial real estate market will start feeling the effects of Amazon?

Marcushamer: It is hard to say. It depends on what Amazon does and how long it takes them to do it.

Most of the time, effect of a new entrant with an intent to disrupt a market takes time to make a significant impact. It took about five to 10 years for us to see the real retail effects of Walmart entering the market. It will almost certainly take Amazon less time than that because of advancements that have been made.

Some retailers are thriving despite the Amazon effect. Find out why. Also get insight into why big boxes are becoming smaller boxes.

Berger Singerman

Instant Insights /

Will Amazon Dominate the Grocery Market?

Related Stories

Recommended For You