sector: six myths
Just the facts about the health of Florida’s grocery sector
On the heels of Lucky’s Market and Earth Fare having announced closures in the Sunshine State, speculation abounds about the health of Florida’s grocery sector. But investors’ appetite for grocery product remains strong—and for good reason. Our experts debunked the biggest myths about Florida’s grocery market to empower you with just the facts.
Myth 1: Grocery stores are opening everywhere.
The pace of new grocery store openings dropped 21 percent from 2018 to 2019 nationally. Yet, Florida was the second highest growth market in the country, charting a 10.7 percent increase in grocery store openings in 2019.
Myth 2: High-end, organic grocery stores like Sprouts, Whole Foods and Lucky’s are the only kind of grocers opening.
In 2018, Aldi accounted for 46 percent of all grocery stores that opened in the United States, signaling consumers also have a penchant for shopping at discount groceries.
Myth 3: We don’t need more grocers in Florida.
The state of Florida is projected to add 332,637 new residents in 2020. A grocery store generally supports +/-10,000 people, so Florida would need to open an additional 33 stores for the newcomers alone.
Myth 4: Grocery stores are getting smaller; no one wants to shop in a big old-fashioned grocer anymore.
While average grocery store size has shrunk by 18 percent since 2017, this is driven by Aldi. If you remove Aldi and Lidl (not in Florida) the average store size has remained the same:
- Publix: 50,275 s.f.
- While Foods: 41,774 s.f.
Myth 5: Traditional grocers are going to die off and be replaced by organic grocers and Amazon.
Warren Buffet’s Berkshire Hathaway bought +/-2.4 percent of Kroger in February. Our experts aren’t fortune tellers, but the $550 million show of support from the ‘Oracle of Omaha’ sure feels good.
Myth 6: People don’t want grocery delivery; they want to go to the store to pick things out.
Online Grocery sales have risen from $23.9 billion in 2018 to an estimated $34.42 billion in 2020 (a 31 percent increase) and are projected to nearly double to $59.5 billion in 2023.