2019 Q2 Retail Index – Grocery & General Merchandise
Author: Ethan Chernofsky
For many, there is nothing more important to the health of a shopping center than the quality of the anchor. And few anchors are as sought after as the leaders in grocery and general merchandise.
We analyzed a basket of the top grocery and general merchandise companies in the US to dig into the trends that defined Q2 2019 and to understand the trajectory of the wider sector.
Overall Visits Trended Up
Nine of the ten retailers analyzed saw visits increase from Q1, with Walmart seeing growth to Supercenters reach 14.1%. Target saw growth of 8.5% and Safeway saw an increase of 7.2%, with Aldi coming in as the only brand to see a decrease on Q1 of 2.8%.
H-E-B Leads the Way in Loyalty
Of the brands analyzed, H-E-B had an astoundingly high visit rate of 8.5 visits per visitors over Q2. This is a rate that even surpassed the king of the category – Walmart Supercenter which saw 7.9 visits per visitor over the quarter. Kroger was the next up with 6.8 visits per visitor with Publix following close behind with 6.4 visits per visitor.
The King of Retail
Yet, for all the growing strength, there is simply not a retailer in the US with the same power as Walmart. Comparing all ten retailers, Walmart Supercenters took in 47.3% of the overall traffic, with Target coming in a clear second at 14.8%. However, the most impressive number may come from Costco, which saw 8.2% of traffic for the group. Costco has a visit rate of only 4.3 visits per visitor which makes sense considering shoppers to the wholesale giant tend to buy in bulk. Yet, the combination of expectedly lower repeat visit rates for the category alongside an extremely high number of visits is exceptional. This helps to demonstrate the growing dominance of Costco within the Grocery and General Merchandise world.
The Other Walmart – Neighborhood Markets
Amid a highly discussed announcement of a large series of closures, the Neighborhood Market brand still saw a strong quarter with 4.0% growth on Q1. The visit strength provides an important lens from which to view the Walmart decision among several other key announcements the brand has made in 2019. From bringing Jet into the fold to better integrate online and offline efforts to taking steps to optimize their offline footprint, Walmart is clearly building a coherent strategy to continue leading the retail sector. Continued closings of Neighborhood Market locations could indicate an attempt to integrate these offerings under other existing assets.
The Grocery and General Merchandise sector is among the most important in retail with these brands serving as critical offline anchors. Q2 saw a strong performance for the ten analyzed companies indicating the growing strength of the top players in the space. But can this trend sustain itself?