In light of new post-pandemic era shopping trends, the concept of purchasing essentials via convenience stores and grocery stores is experiencing a shake-up. Expect new trends to arise in grocery and convenience stores that cater to contactless purchasing options, whether through tech-enabled in-store shopping, drive-thru concepts or delivery-based stores. Conversely, as the public begins venturing out more thanks to post-vaccine confidence and post-lockdown fatigue, look for new niche grocery concepts that offer more upscale fresh/organic food items, frequently with dine-in restaurants located in the store. These new versions of the traditional grocery and convenience stores hope to differentiate themselves from the segment’s expansion leaders, such as ALDI and Lidl. Look for Amazon Fresh, Jokr, Choice Market, Farm Stores, 7-Eleven, Wawa, The Fresh Market, Foxtrot and Schnucks to expand, while also pushing the envelope with new store concepts.
Tech-Driven Trends
Amazon announced 28 new Amazon Fresh stores in the works this year, but the number may be closer to 80 to 100 new locations by early- to mid-2022. Expect further aggressive growth at the rate of about 65 to 80 new stores per year over the next 10 years. Immediate growth is confirmed in the suburbs outside of Los Angeles, Chicago, Seattle and New York City, especially in New Jersey. New units are expected in suburban neighborhoods outside of Minneapolis/St. Paul, Orlando, Fla., Washington, D.C., and Philadelphia. Rumors are circulating that other cities Amazon is eying for further Amazon Fresh growth will be the suburbs of Houston, Nashville, Tenn., Indianapolis, Sacramento, Calif., Santa Clara, Calif., and San Diego. Amazon Fresh seeks space in the 25,000- to 45,000-s.f. range, in densely populated mid- to upper-middle class communities with a high concentration of multifamily developments in the area. Favored sites include end cap or standalone units in neighborhood power centers, with co-tenants such as Costco, Target and Kohl’s, as well as ground-floor space of mixed-use developments in areas with a high number of millennials. Amazon Fresh has been especially keen to overtake vacant big-box space, including former Toys ‘R’ Us, JCPenney, Orchard Supply Hardware and Haggen grocery stores. In its Northridge, Calif., store which opened in November of 2020, Amazon rebranded its Whole Foods Market location to an Amazon Fresh.
With lower price point merchandise, as well as its own private label food brand, called Aplenty, expect Amazon Fresh to compete with other lower priced grocers such as Lidl and ALDI. Amazon Fresh stores are also tech savvy, featuring the “dash carts” option in which items are automatically scanned without requiring customers to wait in a checkout line. In addition, the Amazon Fresh location in Naperville, Ill., is testing a new “Just Walk Out” cashier-less technology that does not require having a downloaded app.
Though not a traditional brick-and-mortar grocer/convenience store, Jokr, a delivery service that promises to deliver essential items in a 15-minute time frame through its app, is currently seeking 2,500- to 5,000-s.f. retail space in New York City to house its fulfillment center, with items such as groceries, electronics and cosmetics. The company is focused on Union Square, the Lower East Side, Tribeca and the Williamsburg neighborhoods, and intends to take advantage of available retail due to COVID-19 related closures. Jokr is not looking at main and main high-traffic storefront units, but rather side street spaces in high-density neighborhoods. Due to its quick-service guarantees with no minimum order requirements, Jokr is bullish on its growth and expects to open up to 100 units in the city before then seeking space in nearby New Jersey. Backed by HV Capital, SoftBank Group and Tiger Global, Jokr is already up and running in select cities in Central America and South America. Expect future metro U.S. cities to see growth of new Jokr units
Choice Market, which currently only has a presence in Colorado, anticipates opening approximately eight to 10 new units per year over the next five years. The quick-service natural grocery store/fast-casual restaurant concept is eying growth in new states such as Washington, California and Texas, and other potential markets in the West. The brand is open to both urban and suburban communities, especially within growing tech-boom cities, and seeks space in the 2,500- to 5,000-s.f. range. Choice Market is especially keen to take retail space in ground-floor Class A apartment complexes in high-density neighborhoods that have a dearth of grocery options in the vicinity, such as its 5,000-s.f. unit that opened in February on the ground-floor of Greystar’s Parq on Speer apartment building in south central Denver. The building, noted for its “smart technology,” is an especially good fit for Choice Market’s store that utilizes its proprietary “Choice: NOW” technology, which uses in-store cameras to track and scan shoppers and their selected items for a cashier-less checkout experience. In January, Choice Market raised capital from a Series B funding round led by its partner, venture capital firm M3 Ventures, that will help fuel its real estate growth. Choice Market, which is known for its health-focused groceries and scratch kitchen meals, also offers delivery services within 45 minutes via its own fleet of electric-powered bikes and vehicles.
Drive-Thrus Dominate
Farm Stores, which has been a drive-thru-only grocery store staple in Florida for 64 years, is expected to open at least 50 to 75 new units per year over the next five years. Expansion is already underway in Texas, starting with the Houston market, and the brand is also anticipating growth in southern Arizona, centered near Tempe, for the immediate future. The Northeast is also targeted, with units popping up in New Jersey and Pennsylvania, and sites are sought after in Long Island, N.Y., and Connecticut. Also, look for more growth into Georgia, Kentucky and Louisiana. Farm Stores can be very flexible with space requirements, but its average units are 560-to 750-s.f., and the brand ideally looks for standalone pads in family-centered suburban neighborhood areas near schools, with co-tenants such as Planet Fitness, Dollar Tree and The Home Depot. Two years ago,Farm Stores introduced its quick set-up construction concept of utilizing repurposed shipping containers that can be melded together and painted in the grocer’s signature red and white colors, which allow for quick and easy development. Farm Stores can also repurpose standalone banks and small local grocery units. The brand is known for its quick convenient drive-up service, in which an attendant approaches the driver’s car and can then provide grocery staples, as well as fresh meals to go.
In March, 7-Eleven opened its first Laredo Taco Company restaurant drive-thru, attached to one of its 6,400-s.f. new construction “evolution” format stores in Dallas, in a former Flash Mart space. 7-Eleven owns the Laredo Taco Company restaurant brand after it acquired the Stripes brand of convenience stores in 2018, which had the restaurant in the majority of its stores. The drive-thru will offer not only the Laredo Taco Company menu items, but also popular 7-Eleven drinks, including Slurpees. If the drive-thru restaurant concept proves to be popular, expect to see more in the future. 7-Eleven currently has seven evolution stores in the U.S., which are larger in size at approximately 6,000 to 10,000 s.f., whereas a standard 7-Eleven is approximately 2,000 s.f. The evolution format, which premiered in 2019, prominently features the Laredo Taco Company in its interior, including sit-down seating and frozen margaritas on tap, plus self-serve coffee/espresso drinks, artisan craft alcoholic drinks and self-service/touch-screen ordering. These stores are geared to attract more millennials and are popping up in urban and secondary markets near colleges and mixed-use developments. Up to 10 new 7-Eleven evolution stores are expected to open in Oklahoma City by mid-2021, in addition to two in regionsjust outside of Los Angeles by mid-year, as well as 12 more throughout Florida by the end of the year.
In January, Wawa opened its very first standalone drive-thru only storefront in Morrisville, Pa., an 1,800-s.f. unit on one-third of an acre that solely sells the brand’s popular fresh food and beverage items, such as sandwiches, hoagies, coffees and express salads, as well as burgers and fries after 4 p.m. This is a departure from its usual stores that average around 5,900 s.f. and comes on the heels of the store’s first ever drive-thru window, attached to a standard Wawa, that opened in December in Mount Holly, N.J. Both drive-thru configurations will be testing grounds for the brand to determine future expansion goals of the concepts, and Wawa hinted that up to 10 new drive-thrus are on the horizon over the next 18 months. Look for potential future standalone sites in areas where there is already a strong Wawa presence. If either drive-thru concept proves popular over the next year and a half, Wawa is prepared to accelerate drive-thru growth to up to 100 units. Look for Delaware, Virginia, Washington, D.C., Florida and Maryland to see future drive-thrus. Wawa will also continue to open its traditional-sized convenience stores, anticipating approximately 60 new units per year over the next two years.
Specialty Grocer Concepts
The Fresh Market, which is a high-end European-style grocery store, expects to add approximately six to 10 new stores per year over the next three years. Look for the brand to focus on adding new units in existing markets west of the Mississippi, namely Oklahoma, Louisiana and Arkansas. The Fresh Market seeks a 24,000-s.f. space in neighborhood shopping centers, as well as multi-level mixed-used developments in dense urban areas. All types of co-tenants are considered, with the exception of discount retailers, which Fresh Market shies away from. Ideal demographics for this brand are a minimum population of 110,000 in the trade area, with 45% of the population having a bachelor’s degree or higher. Minimum per capita income should be $45K per year.
In March, The Fresh Market hired the former real estate executive from Sprouts Famers Market, who will oversee the brand’s new store growth. The future direction for the specialty gourmet supermarket will be to provide high-quality meal solutions for its customers that can be taken home and prepared easily. The Fresh Market, with its in-store bakery, fish market, butcher shop and local-grown produce, is a boutique grocer that also sells international gourmet foods.
Foxtrot, a digitally-native delivery convenience store brand, expects to open about six to eight new stores this year, and by next year hopes to open closer to 10 to 15 new units, with 2023 potentially seeing up to 20 new locations. Immediate growth will be in markets where the brand already has a presence, including throughout Chicago, Washington, D.C., and Dallas. Beyond that, Foxtrot hopes the penetrate new regions such as Houston and Austin, in addition to more Northwest territories, possibly Boston and New York City. The convenience store retailer seeks space in the 2,500- to 3,700-s.f. range in high-density urban neighborhoods with strong foot traffic, including mixed-use office and residential buildings, ideally on main streets near major transportation hubs, and preferably end cap corner sites. The brand is especially eager to take advantage of vacant storefronts, including empty restaurant spaces, such as its store expected to open later this year in Chicago’s Wicker Park neighborhood in a former restaurant corner lot unit in a mixed-use building. Foxtrot is also open to smaller lobby-style units in the 150- to 1,000-s.f. range, provided that there is access to a water supply and electricity. The retailer’s preferred demographic base consists of students, professionals and young families in the 25- to 45-year-old range. Foxtrot, which has long-term goals of expanding nationwide, raised $42M in Series B funding in February from investors such as the venture capital firm Almanac Insights and Monogram Capital Partners. The upscale convenience store/café features its own branded items, as well as local brands specific to the region. The retailer has a 60-minute delivery guarantee — via its proprietary website and app — for its carefully curated selection of organic wines, coffee, ice cream, prepared meals and other essential items.
Schnucks will debut a new store format this summer in Jasper, Ind., titled “Schnucks Fresh,” in a 17,827-s.f. former Cash Saver spot, and it will be much smaller than the brand’s usual 60,000-s.f. grocery stores. The concept will feature a fresh artisan selection of baked goods, gourmet meats and seafood, and is aimed to be a more convenient and quickly accessible format than its usual large units. The store will be located in an inline space within a neighborhood power center with co-tenants such as Kohl’s, TJ Maxx and Harbor Freight Tools in a suburban community with an average household income of $54K within a three-mile radius. Schnucks has closed some of its underperforming larger stores, and has been experimenting with new formats lately, such as its 42,000-s.f. “EatWell” store that debuted in Columbia, Mo., in June of 2020 and focuses on natural/organic health food options. If popular, expect to see more Schnucks Fresh and EatWell brands to pop up in underserved markets in Iowa, Indiana, Wisconsin and Illinois.
