Grocery Stores Remain Relevant As Physical Retail Space Suffers During Pandemic

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This article originally appeared in the December edition of Presence Marketing’s Industry Newsletter

By Steven Hoffman

“We are clearly overretailed in America,” Byron Carlock, director of U.S. retail estate practice for London-based Pricewaterhouse Coopers (PwC), told Fast Company in November. “Suburban sprawl created a situation where we just believed that every time there was a new intersection with four corners we needed to put up four strip centers. We’re learning differently now,” he told Fast Company.

According to PwC, average retail space for countries including France, Germany, the U.K. and Japan is less than 5 square feet per person, vs. in the U.S., where physical retail spaces averages more than 23 square feet per person. In other larger countries like the U.S., retail space is higher: in Canada, average retail space is 16 square feet per person; in Australia it’s approximately 11 square feet per person, according to PwC.

As e-commerce sales continue to grow, analysts were already seeing brick and mortar retail space shrink and transform before then pandemic. Now, however, “some prognosticators think we’re not only overretailed, we’re underdemolished,” Carlock said. “There will be retail that will be demolished and repurposed, and then there will be retail that continues to support our lifestyles and is relevant and is useful and is important,” he told Fast Company.  

As the pandemic changes the face of retailing, PwC says that “necessity-based” retail, including grocery stores, pharmacies and other “neighborhood-oriented” retailers will remain relevant. Carlock estimated that physical retail space in the U.S. may ultimately looks more like Canada’s average 16 square feet, representing a 30% decrease in physical retail space in the U.S.

As retail rents drop – Fast Company reported that in New York alone, retail rents in major commercial areas have declined approximately 13% in the third quarter 2020 – the repurposing and reuse of former retail space in desirable areas may be on the rise. In addition, Carlock told Fast Company that the demolition of existing underused retail can make use for other residential or mixed use development.