In just a few months, residents in Sonoma County, Calif., will have a new place to shop for fresh and organic foods — a Whole Foods Market. That, in and of itself, isn't unusual. After all, Whole Foods is opening about 20 stores a year. But what is noteworthy is that unlike most Whole Foods, which open in neighborhood or lifestyle centers, this 49,000-square-foot store will be the newest addition to the 857,000-square-foot Coddingtown Mall, one of the oldest and largest regional malls in the state.
Whole Foods will join more conventional anchors Macy's, JCPenney and Gottschalks, at the center. The organic market is expected to open early next year as part of a multimillion dollar renovation of the 1960s-era center, which is 50 percent owned by Simon Property Group.
The addition of Whole Foods to Coddingtown illustrates the growing trend among regional mall anchors. Gourmet grocers and organic markets are popping up at enclosed malls and open-air centers across the nation. In Honolulu, for example, a Whole Foods Market will open in Kahala Mall this summer. The organic grocer will backfill an empty anchor space in the 425,000-square-foot mall, which is located in the heart of Waikiki. The center is also anchored by Longs Drugs, Macy's, Barnes & Noble and a theater.
“The idea of putting a grocery store or gourmet market in a shopping center is very big in Europe, and we're starting to see that here in the U.S.,” notes Michael Glimcher, CEO of Cleveland-based Glimcher Realty Trust. “They can be great anchors because they give people a reason to come to the center almost every day.”
No longer inconvenient
Although few in the retail industry remember, many of the first regional malls to be built in the U.S. during the 1950s and 1960s were anchored by grocery stores. A video on YouTube from 1957 called “Shopping Can Be Fun,” gives a virtual tour of the 1957 Hillsdale Shopping Center in California including a “farmer's market.”
But grocery stores struggled in regional malls for several reasons. The first wave of regional malls rose too far from the urban core to make it practical to visit multiple times per week, recalls John Bemis, executive vice president and director of leasing for Jones Lang LaSalle's retail group. At the same time, grocery-anchored neighborhood centers entered the scene with sales at supermarkets in those settings far outpacing their brethren located in regional malls.
Today, most malls are situated in some of the densest suburbs in the nation. That means malls are no longer inconvenient and shoppers are more than willing to go more than once a week.
Parking for grocery stores is another issue that mall owners have had to tackle. Historically, parking for grocery stores at malls created problems for shoppers — they weren't able to park close to the stores for quick in-and-out trips. Today, many mall owners have established dedicated parking for grocery shoppers, or they've situated the grocer in the part of the center where it won't compete as much with retailers for parking.
Still, these efforts haven't solved the parking problem. Many experts point out that shoppers expect to spend more time at gourmet markets and organic grocers, and therefore don't expect the quick in-and-out provided by traditional grocery stores.
But, the growing popularity of gourmet grocers and organic markets as anchors also reflects a change in the attitudes of mall owners. Over the past 20 years or more, mall owners and developers had focused on separating uses, specifically soft goods, Glimcher notes. Today, however, owners are trying to give shoppers a reason to come to their centers more often. “The more uses we can offer shoppers in one location, the more frequent and lengthy their visits will be,” he contends.
Bemis also sees a natural synergy between mall shopping and gourmet and organic food stores. While most people visit a typical grocery store two to three times per week, shoppers usually visit organic and gourmet stores only four to fives times per month — a frequency that dovetails with how often shoppers typically visit malls.
Americans buy organic
More and more Americans are interested in organic food offerings: Organic food sales have grown a whopping 132 percent since 2002, while organic beverage sales nearly doubled during the same period. Together, the organic food and beverage markets now make up a $6 billion dollar a year industry, according to the Chicago-based research firm Mintel.
Mintel's research shows that 52 percent of Americans purchased organic foods in the past year, and nearly a third of adults now report purchasing organic products “as often as possible.” The firm expects strong, consistent growth for the organic food and beverage market, with organic food sales forecast to rise 59 percent by 2012, while the organic beverage market is projected to grow by 65 percent in that time.
The organic markets and gourmet grocers that are anchoring malls and open-air centers today are not just drawing shoppers from a two-mile radius — these stores are regional draws, says Ray Uttenhove, executive vice president and managing principal of Staubach Retail's office in Atlanta. Even more important, they typically bring in a well-heeled consumer — one who can spend $4 for a loaf of 12-grain bread and $12 on a jar of imported olives.
Uttenhove also points out that gourmet grocers and organic markets often do double duty as restaurants and attract a fair amount of daily foot traffic. The downside to these stores is that shoppers might not be inclined to visit other stores because they often have perishables that could spoil if they sit in the car. But, that's a problem that is easily solved by shopping the rest of the mall first and making the grocery store the last stop.