Lone Star State Top Destination for Grocery Expansion

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March 29, 2017

By: Simmi Jaggi, senior vice president

grocery expansion

More than 440 grocery stores opened in the U.S. in 2016. The Lone Star State was home to the most new grocery store openings with 3.04 million square feet or 16.13 percent of new grocery space leased. Much of this expansion was driven by Kroger and H-E-B in and around the Houston and Dallas metro areas.

Kroger opened approximately 35 percent of all new stores in Texas in 2016. Those stores mostly focused in the suburbs of major metros, but also clustered in urban cores. Not surprisingly, regional grocer H-E-B continued to expand across the state.

Grocery operators capitalized on Texas’ continued population growth, especially in Houston. 2016 data revealed the Houston market experienced record single-family sales for the second time in three years and is second in annual new home starts behind Dallas.

With historically high grocery sales and increasing urbanization, Houston is fertile ground for grocers looking to both expand and try new concepts. Among those concepts are smaller footprints and vertical layouts that are more amenable to mixed-use projects in urban cores, as well as creative solutions for maximizing convenience as grocers strive to keep up with shifting demand.

An example is the evolution of more and more traditional grocery brands into a hybrid concept of restaurant and grocery store. Dubbed “grocerants” these stores have expansive prepared foods sections that offer a wide selection of options ready for customers to pick up and carry out.

Grocers are also employing technology to simplify the customer’s experience and reduce operating costs. One major supercenter is piloting a new ‘scan and go’ app that aims to make the checkout process easier by allowing shoppers to bypass the line completely, while other grocers are installing iPads to streamline the process of ordering prepared foods.

Looking forward, the number of new grocery stores opening their doors may be slightly less than last year, but we can expect retailers to continue to focus on cities like Houston and Dallas with smaller store concepts and creative layouts. And while you may not see iPads replace people in every grocery store in 2017, expect more and more grocers to experiment with mobile ordering technologies that link to curbside pickup or deliveries.

To learn more about the trends coming to a grocery store near you, download our Grocery Tracker 2017.

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Jaggi_SimmiAbout the Author

Simmi Jaggi is a Senior Vice President and leads JLL Houston’s Land Brokerage Services group. With more than 25 years of experience, Simmi specializes in retail land acquisitions and dispositions for owners, developers and end users while providing advisory and transaction management for national and local retailers’ acquisitions, relocations, expansions and renewals.

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