by Kristen Cloud/staff writer
As goes the population, so goes the grocery business; their growth generally runs parallel. That’s according to John Fleming, communications director for the Florida Retail Federation (FRF).
“In general, Florida is growing at a healthy pace,” Fleming tells The Shelby Report. “In Florida, specifically, population growth is a big driver of our economy and that has been strengthening, so we’re expecting annual growth to be anywhere between 1 and 1.5 percent annually for the next three or four years. That’s generally good for the grocery industry, which depends a lot on the population growth as a driver.”
The state’s total population currently boasts approximately 19.3 million, according to the latest census data. From April 1, 2010, to July 1, 2012, the Sunshine State’s population increased 2.7 percent.
South Florida is leading the state in overall growth, not only in terms of population but also in employment and other areas.
“…In markets like South Florida, southwest Florida…you’ve seen the employment growth recover a little bit quicker,” Fleming says.
As a whole, however, the state’s unemployment rate of 8.0 percent is running alongside the national rate and is the lowest unemployment has been in Florida since 2008.
“(The economy in Florida has) been improving now for at least three years,” Fleming says. “It might not feel like it to everybody, but when we look back at gross sales in Florida, it’s been up for three years in a row now. We’re not roaring back, but I think it’s a well-established, sustainable growth trend now. And that’s allowing retailers and grocers to plan for growth now because they are reasonably confident that the growth is going to be there.”
Trader Joe’s well received, Whole Foods continues to expand in Florida
A nod to the strength of the ever-improving Florida economy, Fleming reveals, is the expansion of both Trader Joe’s and Whole Foods Market.
“Those are two specialty grocers who are expanding in Florida, and I think that’s a good sign in that they see some strength in the state, which is leading to their investment and additional stores here,” he says.
Trader Joe’s debuted its first Florida store last year in Naples. Since then it’s opened stores in Sarasota and Gainesville. The Monrovia, Calif.-based grocer has announced it will open a 13,500-s.f. store in Pinecrest, in Miami-Dade County, later this year. It will be Trader Joe’s first store on the Atlantic side of Florida and be located at 9205 S. Dixie Hwy.
Whole Foods, another specialty grocer known for its natural and organic selections, is making inroads in South Florida.
The Austin, Texas-based chain, with 11 South Florida locations, plans to open its 12th store in Pompano Beach in 2014. The 40,000-s.f. store will be located at the intersection of North Federal Highway and Copans Road in a former Kmart space.
Whole Foods’ current South Florida stores are in Aventura, Boca Raton, Coral Gables, Coral Springs, Fort Lauderdale, Palm Beach Gardens, Pembroke Pines, Pinecrest, Plantation, South Beach and Wellington.
“They are (opening in more affluent neighborhoods),” Fleming says of Trader Joe’s and Whole Foods. “The fact that there’s an appetite for that, for that higher-end kind of specialty grocer, I think speaks well to the strength of our economy.”
These successful chains also attract competition from like-minded retailers.
Coral Springs-based Tunie’s Natural Grocery & Vitamin Supercenter, for example, was expected to open a 15,000-s.f. store at the LA Fitness Center Plaza in Palm Beach Gardens at the corner of PGA Boulevard and Florida’s Turnpike in February, bringing about 40 new jobs to the area. The store offers approximately 30,000 health food products.
The company, owned by Taylor Hamilton, opened its first store in Coral Springs in 1993. Hamilton told the Palm Beach Post in January that the proximity of the Whole Foods Market in Palm Beach Gardens, about three miles east, was one of the reasons Tunie’s decided to open in Gardens.
“Whole Foods has attracted the health food market in Gardens,” he said. “The demand is already there.”
Tunie’s is about half the size of the nearby Whole Foods. The aisles are narrower and the food stacked higher, according to Hamilton.
Competition from big-box and discount grows, too
South Florida, especially Miami-Dade County, has long been the land of missed opportunity for Walmart, according to The Miami Herald.
While the Bentonville-Ark.-based retailer may be the world’s largest grocer, in South Florida the company is a distant No. 3 when it comes to market share—behind Publix and the second place Winn-Dixie. Walmart doesn’t have a single store in the city of Miami, the newspaper reports.
Walmart, however, wants to change that. It’s trying, the Herald says, to move into the heart of the city. In fact, Walmart expects to invest $380 million in South Florida over the next two years. This investment is part of the company’s largest expansion in the tri-county area in about seven years, with 12 new stores planned plus the expansion or relocation of seven existing stores that will be adding groceries. All Miami-Dade stores already have groceries, and Walmart will finish adding groceries in Broward in 2014.
“Walmart is growing along with the economy and is announcing the expansions of facilities and opening new stores,” Fleming says. “They are ready to respond to the pickup and the economic activity.
“A lot of grocers pulled back and were very cautious about expansion a few years back at the bottom of the recession, which was about 2009 or so, and as the growth has taken hold in the economy for the past couple of years (Walmart is) seeing that consistent year-over-year increase and they’re expanding to meet the demand.”
Additionally, the Herald notes that Walmart is still looking for expansion opportunities for both traditional Supercenters and its smaller grocery-oriented Neighborhood Market.
The move to urban areas is part of a larger trend for big-box retail. Walmart’s South Florida growth, for instance, coincides with its moves nationally to expand its presence in the country’s largest urban markets. Walmart, as the Herald reports, has typically lagged behind its major competitor Target on urban expansion in these markets.
“There have definitely been a few markets in Florida where what you think of as the traditional big-box stores are looking at store models that cater more to urban markets,” Fleming says. “So that, again, is driven a lot by shifting population patterns.
“A lot of cities are actively encouraging infill. They are doing some things on the public policy side that make it more attractive to retailers to build in the city—pre-permitting sites, expediting permit processes. They are really trying to encourage investment in the cities.
“Population is coming back into a lot of urban centers, whereas for decades the pattern was for people to move out to the suburbs, which sort of created and cultivated the big-box model. People are now moving back into cities and they’re doing less driving; retailers are going to go where the customers are so you’ve seen grocers in particular creating smaller stores that will fit into more urban settings.
“Walmart is one that has actively sought out urban locations, so there’s a number of locations in Florida where they are moving into a smaller Neighborhood location.”
Discount grocer Aldi, with nine stores in South Florida, plans for expansion in this portion of the state as well.
The German company with U.S. headquarters in Illinois is slated to open a distribution center and regional headquarters in Royal Palm Beach this year. The Palm Beach Post reports that the 821,000-s.f. warehouse is scheduled to open on 72 acres along State Road 7 and create about 100 permanent jobs.
Aldi, the Post says, plans to open about 60 stores throughout South Florida in the near future. The company entered the Florida market in late 2010.
Traditional formats still dominate
Publix and Winn-Dixie, the No. 1 and 2 players, respectively, in South Florida when it comes to market share, seemingly have no intention in giving up the top spots.
Late last year, Publix affiliates bought two shopping centers in South Florida, according to the South Florida Business Journal.
Plantation Towne Square is a 108,111-s.f. retail center at 6905-6989 West Broward Blvd. in Plantation. Built in 2001, the center is 98.6 percent leased to various tenants including Publix and Publix Liquors, Starbucks and Verizon. The building is on 10.6 acres in the city of Plantation.
Colonial Shopping Center is located on a six-acre site at 9510-9698 SW 160th St. adjacent to South Dixie Highway in Miami. Developed in 1997 and expanded in 2007, the 67,351-s.f. property is 95.8 percent leased to tenants including Publix, Family Dollar, FootLocker and Space Coast Credit Union.
Lakeland-based Publix opened a store in Delray Beach, in Palm Beach County, on Jan. 17. The 45,600-s.f. Delray Marketplace store is located at 9239 Atlantic Ave.
Winn-Dixie, headquartered in Jacksonville, reopened its store at 6600 Hypoluxo Rd. in Lake Worth in September. It’s a sign, the Post says, that the BI-LO-owned grocery chain’s trimming may be at an end in South Florida.
The reopening marked the first Winn-Dixie to open in Palm Beach County in at least eight years. Except for a reformatted store in Margate that opened in June 2010, it’s the only new opening in about the same stretch for all of South Florida, the Post reports. That was a month before Winn-Dixie announced it was closing nine area stores in one fell swoop and part of the scaling back that cut its presence in half since the recession.