Contrary to popular belief, brick-and-mortar retail is “not dead,” says Walter Robb, former co-CEO of Whole Foods. In fact, it’s alive and well.
“Last year, actually, grocery sales were up, grocery store openings were up 30%,” he said, adding that stores expanded their square footage.
“The real narrative is there's winners and losers. Those that are winning are growing and you're seeing this expansion, by the way, in physical retail of many different types of formats. Hy-Vee store is doing one. 7-Eleven has six new concepts,” Robb said on Yahoo Finance’s “The First Trade.”
In 2018, investment in grocery real estate came up to $9.9 billion, increasing about 11 basis points from 2017, according to JLL’s Grocery Tracker 2019 report. And new grocery store openings were up 30% in 2018, with more than 17 million square feet of space added in the U.S.
Back in 2017, Amazon (AMZN) acquired Whole Foods in a $13.7 billion deal with the potential of turning the high-end organic grocer into a mass-market merchant.
At the time, the merger weighed heavily on shares of supermarket chains and food-selling retailers. And “they haven’t really recovered,” Robb said.
“No need to name names, but look at the stock prices. They really haven't moved in a couple of years,” he said. “So I think what it heralded is basically it was a proxy for the fact that integrated retailing is the future, which is to say the digital and the physical combined.”
Nonetheless, Amazon’s latest moves in the food industry have been mixed.
The e-commerce company announced Tuesday that after four years it is shutting down its restaurant delivery service Amazon Restaurants in the U.S. on June 24.
The company also opened up its second cashier-free Amazon Go store in New York early Tuesday morning. It’s the 13th Amazon Go location in the U.S.
For Robb, Amazon’s decision to get into brick and mortar is part of larger trend happening in the retail space.
“You've got this proliferation of choices for customers, everything from physical pop-up stores here in New York. You've got Hungryroot,” he said. “You've got these smaller format stores like the urban format store for Target. You've got every grocer trying different-sized stores and you've got all the [e-commerce] options from soup to nuts. So customers have more choices than they ever did.”