LOS ANGELES—Long the refuge for retail investors concerned about the impact of e-commerce, grocery anchors are finding new opportunities by branching into…e-commerce. Joe Dykstra, CEO of Westwood Financial, explains why this move just might work out in this guest column for GlobeSt.com.

The views expressed are the author's own.

There is a common misconception that the retail sector is headed toward a retail apocalypse–one where consumers will inevitably shop almost exclusively online, storefronts will close, and retail space will be obsolete. There is also the illusion that grocers will be spared from this encompassing retail chaos and be allowed to continue operating as they have for the past 20 years.

These are both naïve depictions of the retail and grocery sectors. Somewhere in between these assumptions lies an environment with ample opportunity for landlords and retailers, including grocers, to capitalize on dynamically shifting consumer habits and a reinvigorated retail landscape.

While brick-and-mortar currently accounts for 97% of all grocery sales, online sales have grown 21% annually since 2013. However, despite the growth, online grocery sales still only constitute about $20 billion of the $800 billion grocery market.

Experienced landlords and retailers understand that customers want to have options for how they shop–both in-store and online. Successful grocery anchors are transitioning to an omni-channel approach. For example, Kroger has rolled out ClickList, a service that allows shoppers to order groceries online for pick-up. In 2017, the grocer expanded ClickList to more than 1,000 locations and grew ClickList sales by 90%. Kroger has found that households who engage with both their digital platform and physical store spend more per week than households who choose only one medium. Top grocers are also using Instacart, which allows the customer to order online from local grocers and have their goods delivered directly to their door. Furthermore, to allow omnichannel to flourish, thriving grocers are incorporating smaller storefronts and utilizing the back house as distribution centers. Strong performers, such as Publix, Albertsons, and Kroger are all adopting omni-channel strategies, allowing them to capture both the in-store and online shopper.

These are the types of grocers that Westwood embraces. Over 70% of our centers are grocery-anchored, with Kroger ranking as the largest tenant, totaling 14% of our total occupied square footage.

Location today is more important than ever, as commanding the superior location within a trade area positions the center to serve the daily needs of the community in the most convenient fashion. Westwood believes there will be strong and continued demand for exceptionally well-located retail centers in densely-populated, in-fill areas with quality demographics that serve as the local neighborhood grocery store, as well as a “last mile” delivery distribution hub. These are the type of centers that will continue to perform and be in high-demand from grocers across the country in the years to come, and more importantly, the type of centers that will remain as the core investment strategy for Westwood's future growth.

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Joe Dykstra is CEO of Westwood Financial, a retail investment company that owns over 70 community shopping centers, primarily-anchored by top-tier grocers, across 26 U.S. markets including Dallas, Phoenix, Atlanta, and Charlotte. Headquartered in Los Angeles, Westwood Financial maintains regional offices in Scottsdale, Arizona; Dallas, Texas; and Atlanta, Georgia.

Instant Insights /

Will the Next Omni-Channel Success Story Be Grocery Anchors?

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