Why your mall is putting in a grocery store (2024)

For many years, the mall was where you would go to browse through racks of clothes, see a blockbuster movie or stop by the food court for a snack.

Now you can also pick up a bunch of bananas, a gallon of milk or even a cellophane-wrapped steak for dinner.

There’s a new trend of supermarkets setting up shop in malls, and it’s changing our retail landscape. Grocery stores from Jimbo’s Naturally to Trader Joe’s are starting to move in. And Target is already a familiar mall presence with its recently expanded grocery sections.

These supermarkets are being welcomed — in some cases, even courted — by malls who have lost anchor stores such as Borders and Mervyns. They’re betting that fresh food will help re-energize their properties and bring customers back regularly.

“The economic downturn hitting in 2008 had a big impact on mall traffic as consumers pulled back on discretionary shopping,” said Mike Moser, senior vice president with CBRE in San Diego. “Daily needs such as grocery-type uses and gyms bring shoppers on a more regular basis, which is a trend seen across the country as it brings shoppers back to the mall more frequently.”

U.S. adults shop for food an average of 2.2 times a week, according to the Food Marketing Institute, so an in-house grocery store can drive up sales at nearby stores, analysts say.

“From a mall standpoint, a grocery store is attractive because you get the additional foot traffic,” said Phil Lempert, a Santa Monica-based consumer-behavior expert known as the Supermarket Guru. “From a supermarket standpoint, there are so many vacancies that they can get excellent deals. It’s very logical — it makes sense for everybody.”

The timing appears to be right for supermarkets to move in. The departure of some retail chains — and the prospect of Sears closing some stores — means there’s an opportunity to fit major grocery stores in large, vacant spaces. The cost of leasing space in major San Diego malls is about $23 per square foot per year, compared with nearly $30 at the height of the market in 2008, according to CoStar.

Target paved the way as a “transitional” retailer with expanded grocery sections, and Walmart is a close competitor. Now upscale and specialty grocers are reserving space. Here are a few food-focused markets coming soon:

• Jimbo’s Naturally: Taking over the Mervyns space at Westfield Horton Plaza

• Trader Joe’s: Retrofitting the Borders building at Westfield Mission Valley

• Whole Foods: Replacing an old cinema at Flower Hill Promenade in north San Diego near Del Mar.

Westfield, which owns seven of the region’s major malls, has been a leader in this strategy, and also has a Target store going into its North County mall. Tom Tierney, a senior vice present for Westfield in San Diego, has said that the Australian mall owner wants its malls to be “one-stop shopping destinations.”

The supermarket-mall trend is happening mainly in the major markets such as San Diego, San Francisco, Washington, D.C., New York City, said Garrick Brown, national retail research director at Terranomics/ChainLinks in the Sacramento area.

“These are all the top markets around the U.S. where retail performance is highest, where the chains want to expand,” Brown said. “I think it will spread when you look at who is closing down stores … There is a lot of space available; you’re going to see a lot of landlords looking to fill it.”

The concept of locating a grocery store in a mall is not new. Years ago, Grossmont Center and Westfield Horton Plaza both had grocery stores.

Grossmont Center, which now has a busy Target and a Walmart, benefits from having food as part of the mix, said general manager Mike Hansen. Both stores have expanded their grocery sections within the past five years. “I think it’s a good addition to any center,” Hansen said.

The Target store in Westfield Plaza Bonita expanded its grocery offerings in 2010. It carries the most commonly purchased items, such as family packs of chicken breasts, bagged organic spinach salad and bananas. There are also seasonal items, such as hot dogs for summer and stone fruit like peaches and plums. The Plaza Bonita store also caters to the Latino market with brands such as Takis snack chips.

“It’s a good assortment, and it’s the assortment that sells the best. It’s the high velocity items that we stock,” said Kristin Hales, food business partner for Target, during a recent walk-through. “We don’t have the store volume to carry everything, so we have to be very strategic with the core items.”

There can be challenges when you stick a supermarket in a mall built for department stores and boutiques. Usually, there’s a need for additional investment in tenant improvements to ensure that the space can provide adequate water and refrigeration. Another challenge: shopping carts in malls, especially in multi-level stores.

So far, mall owners seem willing to chip in. Westfield is footing the bill for millions of dollars in improvements at Horton Plaza to make way for the Jimbo’s with new escalators, elevators and a “Vermaport,” which is an escalator for shopping carts.

At Flower Hill Promenade, there’s no need to retrofit a building. The Whole Foods is new construction replacing a rundown theater.

Parking and traffic are always concerns, particularly in Mission Valley. Shoppers are worried about how the new Trader Joe’s will affect the already tight parking lot in the busy center between a Gordon Biersch restaurant and an Old Navy.

“Can a grocery store function in the holiday season in a mall?” said Brown of Terranomics. “Do you really want to brave mall traffic just to pick up a head of lettuce? But I think more and more people will start to roll the dice on it.”

Fortunately, grocery stores tend to be open for longer hours than stores, noted Rose Jabin, general manager of Flower Hill Promenade. Its retail stores tend to close at 6 p.m. but Whole Foods will probably stay open until 9 p.m. or 10 p.m. And the benefits outweigh the risks, she said.

“Having some big anchors like this really draws people,” she said. “It provides stability for the center, brings people in on a more regular basis — and it provides a convenience to them to have these other uses.”