When was the last time a new Walmart opened near you? Or a new Target, Kroger, Albertsons or Safeway? It’s probably been a while. But it seems that new Dollar General and ALDI stores are popping up all over.
For foodies and frugal shoppers alike, there’s nothing like the grand opening of a brand new neighborhood grocery store, with all its exciting new bells and whistles. But a new report says those events are becoming fewer and further between. And new stores that are opening, are much different than they used to be.
Commercial real estate firm JLL has released its 2018 “U.S. Grocery Tracker” report. It found that new grocery store openings were down a noteworthy 28.8% last year, as grocers slowed down or halted their expansion plans.
With some grocers going bankrupt, and most others trying to figure out how to compete against Amazon and other online grocery sellers, now is just not the time to be opening splashy new stores.
Instead, the new grocery stores that are opening these days, are anything but splashy. Instead, think no-frills and thrifty.
Among states that did see new grocery openings, California saw the most, with 1.6 million square feet of new store space last year. But nearly half of that total was due to just two retailers – Sprouts, the low-priced natural foods grocer, and Grocery Outlet, the deep discounter. Both have been expanding rapidly, offering affordable alternatives to more traditional grocers.
In addition, discount grocer ALDI is in the midst of a plan to build 900 new stores over the next few years. And Dollar General is on pace this year to open an average of three new stores every single day.
So if you think your local grocery store is too expensive, just wait – a low-priced alternative could be showing up near you any day now.
Small and affordable isn’t a guarantee of success, however. ALDI competitor Lidl accounted for much of the grocery store growth in Virginia and North Carolina, which were second and third to California in the number of new store openings last year. But Lidl’s U.S. launch has faltered, leading it to rethink its strategy of opening hundreds of new stores in its first few years.
Lidl’s growing pains, and the challenges of expanding too quickly in markets that already have plenty of grocery options, are serving as something of a cautionary tale for existing grocers. Instead of opening new stores, many are turning their attention to modernizing and adding online ordering capabilities in their existing stores.
JLL’s report concludes by declaring the top “trend to watch” this year to be “smaller and more focused stores”. While “some brands will continue expanding footprints, traditional and legacy grocers may begin focusing on existing inventory and investing in improving the shopper experience.”
So if you’re a fan of big, new grocery stores with a huge selection and lots of services you didn’t even know you needed, you may not find any in the coming year. But if you’re a fan of saving money at discount stores, or having a better shopping experience at your current grocery store – the latest trends in the grocery industry may be just what you need.
