During a panel discussion last week at the International Council of Shopping Centers Open Air conference in Miami, Elkhorn Real Estate Partners president Joe McKeska said US grocers must change the way they do business or risk falling prey to disruptive competition.
McKeska, who previously headed real estate operations for Southeastern Grocers and Supervalu, spoke to a landlord-heavy audience.
“Shoppers in coming years will think nothing of using voice-activated devices like Amazon’s Echo to restock their kitchens,” he said. “They’ll habitually cook meals with ingredients delivered by the likes of Blue Apron, or drive to kiosk outside of the neighborhood store to pick up groceries after work. We’re already seeing this kind of channel fragmentation and disintermediation across the industry, and it will only accelerate.”
Also on the panel were Jeff Chamberlain, senior vice president of real estate for Publix, and Ted Frumkin, CDO or Sprouts Farmers Market. The panelists stress the need for grocers and their landlords to prepare for these major shifts.
“In this disruptive environment, owners of grocery-anchored centers are going to need to find ways to both strengthen good-performing assets and deal with problem assets far in advance of critical events," McKeska said. "In some cases, that might mean identifying opportunities to work with retailers to restructure leases and help them reposition certain stores. In others, landlords might work with retailers to recapitalize assets and co-invest to improve the operating performance of both the retail store and shopping center. The key is to avoid passivity. To compete effectively in the future, you have to get ahead of the curve."
McKeska recently formed Elkhorn Real Estate Partners, along with New York-based real estate firm A&G Realty Partners, aiming to help retailers and investors maximize their real estate portfolio performance in alignment with broader business strategies.