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There are few things more central to the traditional idea of the American family than a home-cooked meal, and there are few childhood experiences that evoke more of an authentic response than memories of trips to the supermarket with mom or dad. Mealtimes at home represent essential quality time spent with family, as well as an opportunity to eat “healthy”. For almost as long as there have been food markets, the invariable presence of the food store and the central place that the grocery store has occupied in our national culture has made it a natural focal point for peripheral development. For some developers, the grocery anchor has long been the integral beating heart around which many small-to-mid-sized community centers were constructed. From a developer’s perspective, the universal appeal and the relatively recession-proof nature of the grocery anchor was an attractive combination.

Over the last decade or so, however, grocery-anchored development has been somewhat overlooked in the lifestyle shuffle, with downtown urban retail centers and mixed-use projects dominating the headlines. More and more, newer developments that featured a grocery component had turned to specialty markets, gourmet grocers and other niche tenants. Mainstream grocery has not gone away, but the steady glow of dependable grocery-anchored development has been somewhat obscured by the bright flashing lights of the lifestyle center trend. While most of the developers that have always seen grocery-anchored centers as their focus have continued to design, build, lease and manage the same reliable projects, some have been lured towards projects featuring entertainment components, upscale retail and trendy food concepts.

The recent economic slowdown, however, has turned back the clock and once again focused the industry’s attention on the steady success of the grocery anchor. The appeal of grocery-anchored projects is clear once again, and the trend is driven by a very simple fact that has not changed: people need food! Grocery stores have proven their worth as a reliable way to drive traffic, no matter what challenges are taking place in the larger economic landscape. It is no different today than it was 50 years ago: a family might or might not go out to eat at a restaurant, but they will always need to go to the grocery store. In fact, some changes in consumer behavior during leaner economic times—smaller purchases but more frequent trips, for example—may even provide more of a boost by increasing exposure and creating additional foot traffic to a project. For consumers and developers alike, the current financial belt-tightening has motivated a resurgence of a back-to-the-basics mentality. Increasingly, “meat and potatoes” is more than just a menu item, it is an appealing philosophy adopted by owners and developers who find themselves faced with a suddenly struggling portfolio and a stagnant credit market, particularly when lenders have shown confidence in grocery-anchored retail.

Developers embracing or re-embracing the grocery-anchored community center formula are discovering what those developers who have remained true to the format already know: while some of the details have certainly evolved over the years, the fundamental dynamics of a grocery-anchored center remain the same. The fact that sales numbers at low-and-medium-end grocers are steady and perhaps even inching up, coupled with the popularity of the “superstores,” is further evidence that consumers are “trading down” in product type and destination from higher-end grocers and specialty selections.

Among the many ironies that have become apparent in the recent economic downturn is the way in which social and cultural changes can actually trickle up the economic ladder to the typically unscathed luxury projects and have an enormous impact on broader industry trends. While unrest in the real estate sector may have been a bellwether indicator of things to come, for many retailers and consumers alike, changing patterns of consumer behavior and overall lower levels of consumer spending marked the true beginning of this recessionary cycle. As market conditions evolve, developers will certainly continue to evolve as well, but the grocery-anchored format will remain a steadfast retail format, as it always has been. Grocery-anchored neighborhood centers have emerged as a real success story; one of the few bright spots in a challenging time. As a result, for many owners and developers, the idea of a “market-based” economy has taken on a whole new meaning.

Paster is president of Paster Enterprises, a St. Paul, MN-based shopping center developer. Opinions are the author’s own.

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