The Future of Food Chains

The rapid rise of online retailing during the pandemic also had a substantial impact the role of food stores, resulting in increasing deliberation around sales area configurations and the most efficient use of space – with many supermarkets already adapted to self checkouts, scan and go. Many operators were forced during this time to utilise their stores to fulfil online orders, reconfiguring space to serve bumper online volumes whilst simultaneously trying to reduce impact on customer experience. As a result of a rapid need to fulfil online orders, a range of solutions have been employed by supermarkets, all with varying levels of automation, and implications for real estate.

More recently real estate has served as a critical tool for Supermarket operators in aiding liquidity through sale and leasebacks, during economic downturns and challenging macroeconomic conditions, as a result institutional investors have acquired food chain assets, often for low yields, owed to the perceived strength of the sector and its covenants, and the long-term relatively secure and fairly priced rental income. Whilst shopping habits have begun to normalise to pre-pandemic levels, some larger format stores have repurposed excess space for non-food retailing. Significant emphasis is now being placed on maximising the value per sq ft, and as a result retaillers are beginning to reposition previous sales space.

CONCESSIONS

PARTNERSHIPS

Increasingly Supermarkets are sub leasing sales space within the store in order to diversify the value proposition, and drive footfall.

Supermarkets have launched a series of partnerships both in terms operational tasks, but also in terms of product ranges.

RE-POSITIONING

DRIVING VALUE THROUGH THE ESTATE

Hypermarkets in particular with large car parking areas are increasingly open to a range of income diversifying activities, including parcel lockers, modular retail space for public uses such as hair dressing, and haberdashery. Increasingly value is being driven through EV charging points, and PV generation on site.

Supermarkets have increasingly re-positioned space, in some cases doing away with butcher and deli counters, and in others reducing the footprint of non-food products to facilitate greater sales area for food goods. In some cases space has been partitioned and sublet for other uses.

55 FUTURE OF FOOD CHAIN |