Thinking Outside The Whole Foods Box

Regency Centers is the only shopping center REIT that focuses almost exclusively on grocery-anchored shopping centers.

Summary

  • Most every retailer has been trying to perfect the e-commerce blueprint to compete with Amazon.
  • Amazon's resources will make Whole Foods the strongest grocery store chain and I would expect it would lead to a strong expansion by them.
  • While this is bad news for many grocery chains, it will be good news for landlords who have prime sites to accommodate this expansion.

Earlier this summer when I heard that Amazon (AMZN) was buying Whole Foods for $13.7 billion, it reminded me of the dominance of data mining and the powerful forces of e-commerce.

But it also served as a barometer for the real estate sector in which Amazon has finally realized that brick and mortar is a powerful and necessary component of brand awareness and local distribution.

Apple (AAPL) first demonstrated that physical stores, coupled with great products, can help increase sales geometrically and Amazon is now following suit.

Most every retailer has been trying to perfect the e-commerce blueprint to compete with Amazon, but nobody suspected that the Seattle giant would launch a radical assault by acquiring a brand-name high-end grocery chain with 456 stores in the U.S. (436), Canada (11), and the United Kingdom (9).

Floris van Dijkum, REIT analyst with Boenning and Scattergood, Inc., explains:

“AMZN proved what most REIT management teams have been saying for some time. Successful retailers have to pursue an Omni-channel strategy and real estate is key. The best quality real estate with the highest sales productivity should thrive as successful retailers want to drive sales and inventory turnover.
REITs generally own the best space with approximately 80% of the A malls in the U.S. owned by the public companies. We estimated the public strip companies own approximately 19% of the high quality open air space.”

Amazon's resources will make Whole Foods the strongest grocery store chain and I would expect it would lead to a strong expansion by them. While this is bad news for many grocery chains, it will be good news for landlords who have prime sites to accommodate this expansion.

The Premier Grocery-Anchored REIT

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