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Will Grocery Stores Need More Warehouse Space in 2020?


How Will the Grocery Industry Be Impacted by market conditions in 2020? The world as we once knew it has changes. It’s impossible to ignore the new ways that people are now behaving and how shutdowns have affected how people will shop for goods and groceries going forward. Numerous people have remarked their new norm for purchasing groceries involve e-commerce and this isn’t just for the Milennials. From 18 to 80, we’ve seen what may be a seismic shift in the way people purchase groceries.

What will this change mean for grocery stores and the need for warehouse space? Some predict we could see an increase demand for grocery distribution centers with a focus on the last mile. Accordingly, we could also see an increased demand for refrigerated warehouse space and grocers seek to expand.

Citizens all over the world are changing the ways that they went about their everyday lives as lock downs have introduced new normal that are upending traditional models everywhere.

One such arena that is currently being reconfigured is grocers. New trends in grocery services are sparking a domino effect that’s impacting everything from shoppers, grocery brands, and even commercial real estate.

There’s no turning back now, and the best thing we all can do is stay informed and plan accordingly to all the upcoming trends hitting the grocery scene this year and beyond.

The New Normal for Grocers

Thanks to the lockdowns, grocery shopping broke into the modern era and even the most old-fashioned shoppers have realized that groceries can be done with the click of a button. As more consumers skip out on the trip, grocery stores need to adjust their business flows to support these changes – now and into the future.

Digital Solutions to Physical Problems

Technology is revolutionizing the grocery scene as we speak. Expect consumers to continue using remote shopping apps and services even after the threats have winded down. The data gathered during this time points to an upwards surge in online shopping services, especially for essentials such as food.

This solution is easy, convenient, and just as effective as traditional shopping – making it a win-win scenario.

Potential Long Term Implications for Commercial Real Estate

As BOPIS and at-home delivery trends dominate the grocery market, commercial real estate’s tenants are going to need to rethink the way they’re using their square footage.

Online Order Storage Space

Space will need to be allocated to store the packed and ready grocery orders that are awaiting curbside pickup or their designated delivery window. This storage-type area will resemble a refrigerated warehouse, where each order is organized, labeled, and flowing through a logistics method to keep everything organized.

Many stores have already closed their sit-down table areas and converted them into a packed and ready order station. But, if the scales continue to tip towards more online orders, that space will likely need to expand.

Adopting Warehouses For Grocery Sales

It might be in the best interest of brands, shoppers, and online order fulfillers to create a grocery inventory space just for remote shoppers. This way, it’s easier to keep an accurate catalog of what is and isn’t available. Plus, it alleviates some of the traffic within the general shopping grounds.

A larger order-storage area coupled with expanded aisles equals a larger grocery store, so expect tenants to look for larger spaces to house their brands.

Completely Redesign Aisles

Increasing the space between each aisle will make social distancing easier, and redesigning the customer experience to seamlessly accommodate one-way aisles is needed. Many people find the makeshift ‘one-way’ signs on the floor a poor solution for the long term changes hitting the grocery scene. It’s a bit awkward because, after all, the store wasn’t designed to flow like that.

Brands need to hit the drawing board once again to come up with a lasting proposal that will overcome the challenges brought forth by the lockdowns – and all of these solutions involve CRE.

About US

We are a real estate investment services company specializing in off-market real estate in Pennsylvania, Delaware, Maryland, New Jersey, North Carolina, and Florida.

None of the content on this blog should be considered investment advice. Always due your own due diligence.

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