Northmarq's Top 100: Tenant Expansion Trends report in GlobeSt.: 'These Consumer Trends are Driving Retail'
Originally published in GlobeSt.
There are multiple signs a landlord of retail property might look at to decide whether a potential tenant is suitable: credit strength, industry trends, type of offering, national versus individual entity status, pre-existing financial results and more.
However, Northmarq’s Top 100: Tenant Expansion Trends report offered insights into three major things consumers look for in retailers. While these aren’t a list of the only considerations when considering a tenant, they are characteristics that make financial success with customers — the ultimate goal for a steady and dependable occupier — more likely.
First up, U.S. consumers love a bargain. Inflation and rising prices have put a bit into consumer wallets, seeing them cut back on discretionary spending. “Not surprisingly, retailers that cater to the cost-conscious consumer are some of the brands growing the fastest,” Northmarq wrote.
Dollar General plans an additional 800 stores this fiscal year to the 20,000 it already had. ALDI is adding 800 locations this year through the acquisition of Southeastern Grocers. Target is adding a fee-based membership program in an attempt to rival Amazon Prime and Walmart+, and they’re continuing with large-format stores, unlike the move toward smaller locations by many companies. And Five Below will open 235 new stores this year as it moves toward the company goal of 3,500 total stores by 2030.
Next, convenience. Consumers want things to be easy in multiple ways, including “ease of access, swift service and helpful technology.” As Northmarq wrote, “From one-stop shopping destinations to grab-and-go offerings, retailers that promise a speedy and efficient experience are gaining market share as brand loyalty rises.”
Sheetz & Wawa are planning a thousand additional locations in the long term. Take 5 Oil Change says stay in your car while the work is done. They now have more than 1,000 locations and plan on 150 new ones per years. Aspen Denter offers “appointments and locations that are more convenient” for many patients. And both Chipotle and Chick-fil-A have embraced drive-through and mobile apps.
Third, consumers are focused on personal wellness. That has become a “driver of growth for retail brands offering health-centric goods and experiences.” Fitness centers, grocery stores and restaurants that offer healthy food alternatives, exercise outlets and more gain tailwinds. Planet Fitness plans to add 600 global locations in the next three years to hit 5,000 total. Academy Sports + Outdoors looks for significant expansion to better compete. Sprouts Farmers Market looks to add 35 stores this year.
The story was written by Erik Sherman and appeared on GlobeSt.com on April 1, 2024. © 2024 ALM Global Properties, LLC. All rights reserved.
View Northmarq's Top 100: Tenant Expansion Trends report here.