Grocery stores, once considered more immune to risks from online competition compared with its clothing and department store counterparts, may not be as resilient as many have long thought.
After Amazon dropped the recent bombshell news that it plans to buy Whole Foods Market Inc. for $13.2 billion, some investors and analysts in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are reassessing the prospect for e-commerce to make more rapid incursions into the food retail business.
This CoStar report in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
Other skirmishes between grocers and online retailers involved with U.S. and Philadelphia commercial real estate properties that have been growing over the past couple of years are now intensifying. National name-brand food product makers are redirecting millions of dollars into e-commerce efforts to boost sales directly to consumers.
This month, Campbell Soup Co. announced plans to accelerate the company’s digital and e-commerce capabilities by forming an e-commerce unit in North America and setting a goal in its U.S. and Philadelphia commercial real estate markets of generating $300 million per year in e-commerce sales over the next five years.
“E-Commerce is a significant growth opportunity for Campbell, and it represents the future of food commerce,” said Mark Alexander, President – Americas Simple Meals and Beverages, for Campbell Soup. “Only those who get there in a fast and smart way will win, and Campbell intends to do just that. We have an accelerated strategy to invest and grow in this space.”
The move is also seen as a response to slumping organic sales in the U.S. Campbell’s sales, which decreased 1 percent over the last nine months, which were driven by a 1 percent decline in organic sales, reflect higher promotional spending and lower volume in relation to its national and Philadelphia commercial real estate listings. In its Americas Simple Meals and Beverages division, the most recent sales numbers were down 2 percent.
In fact, equal weighted comparable grocery store sales growth within the industry is decreasing across the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space. Year-over year grocery sales were increasing a little more than 4 percent annually three years ago; that flattened to about 0.3 percent in fiscal year 2016, according to analysis by CoStar Portfolio Strategy.
Campbell’s goal to reach $300 million in e-commerce sales would represent 3.6 percent of the brand’s annual sales. Studies project online grocery spending related to U.S. and Philadelphia commercial real estate listings could grow during the 2016-2025 forecast period from 4.3 percent. Last year, online grocery sales were about $20.5 billion.
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