Nashville grocery wars intensify with new stores on the way

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Nasbrd 07 26 2017 Sumnertmc 1 M007 2017 07 20 Img 635821684340757191 F 1 1 Ulj1u02j L1066257764 Img … – File/Gallatin News ExaminerJs09 Coupon 0030 – File / The Jackson Sun636340790817714031-js07-Wine-0004.jpg – FileNas Grocery 06 – Larry McCormack / The Tennessean

Slide 1 of 15: Kroger has 61 stores in Middle Tennessee. Here, Gallatin Kroger Marketplace ClickList associate Jonish Moore loads groceries Tuesday ordered online through the company’s website.

Grocery stores big and small are expanding, remodeling and building new stores as they battle for market share in booming Nashville.

At least five new grocery stores are in the works in Music City — including multiple Publix stores, Whole Foods, Trader Joe’s and Turnip Truck — as other grocery brands circle the market for available real estate. For many Nashville residents, this grocery boom will mean more shopping options, closer to home.

Take downtown, where residents have long lamented the lack of grocery options that serve the fast-growing urban core. The downtown population doubled from 2010 to 2017, surpassing 10,000 residents and 6,400 housing units, according to the Nashville Downtown Partnership.

By the end of this year, 12,200 residents are projected to live downtown.

Addressing ‘pent up demand for grocers’

Grocery shopping options have remained sparse in the densifying downtown, with only a few corner stores and local grocer Turnip Truck’s urban market, which is one-fifth the size of a typical Publix store.

That’s about to change drastically.

Whole Foods is building a roughly 42,000-square-foot store at 12th and Broadway, just four blocks from Turnip Truck’s existing 9,000-square-foot natural foods market. A half-mile north of the Whole Foods site, Publix is planning a smaller-format, 26,000-square-foot market at the corner of Charlotte Avenue and 11th Avenue North.

“Downtown has a lot of pent up demand for grocers because we’ve had thousands of residential units come into downtown and still no new grocery stores open, to date,” said Austin Benedict of commercial real estate firm CBRE in Nashville. “Grocers follow new rooftops, which historically took new grocery stores to Nashville suburban areas. But with the growth moving downtown, grocers are now aggressively adapting their models to serve urban areas."

Elsewhere in Nashville, Publix plans to open a 39,000-square-foot store at 2223 8th Ave. S. just down the street from an existing Kroger. Publix is also rumored to be looking at a site on Gallatin Road in East Nashville, although the company has not confirmed plans for the east side and will only comment on confirmed leases.

Meanwhile, Turnip Truck is working on a roughly 15,000-square-foot store at 5001 Charlotte Ave. in Sylvan Park, and Trader Joe’s is pursuing a store at 90 White Bridge Pike on the west side.

Amid growing competition, grocery giant Kroger has poured more than $122 million into the Middle Tennessee market in the last three years to renovate, expand or open 36 stores, said Kroger spokeswoman Melissa Eads. Expansions are underway at the Eastland Kroger in East Nashville and Providence Kroger in Mt. Juliet for a combined investment of $25 million.

Grocery disruption

Nashville’s grocery boom comes during a time of contraction in the broader retail industry. Department stores and big-box chains are facing bankruptcy and closing stores across the U.S., but the $800 billion food retail industry follows its own set of trends.

“The first thing that drives growth (in the grocery sector) is rooftops — population growth,” said Garrick Brown, a national retail real estate analyst with Cushman & Wakefield.

The Nashville region grew by an average of 83 people a day between July 2017 and July 2018 — down from 94 the year before, according to Census population estimates.

It’s still one of the fastest growing metro areas in the U.S.

Brown said grocers are attracted to the city’s rapid population growth, job growth in high paying industries, rising median income and the elusive “cool factor.”

Although grocers have fared better than apparel retailers, the grocery industry is still experiencing upheaval as companies adapt to changing consumer habits. Most notably, home grocery delivery and buy online/pick up in-store services are becoming popular ways to shop, particularly among Millennials.

The number of shoppers who report using online grocery retailers at least sometimes has nearly doubled over the last three years, from 16% in 2015 to 28% in 2018, according to the Food Marketing Institute.

Grocers are in a race to make shopping convenient, with 69% of food retailers experimenting with e-commerce strategy, according to FMI.

Nashville is no stranger to this emerging technology.

Kroger has added its online ordering service Pickup (formerly ClickList) to 52 stores in Middle Tennessee since fall 2015, Eads said. Walmart offers grocery pickup and delivery at 26 stores in Middle Tennessee, with plans to add delivery to 22 stores and pickup to 31 stores in Tennessee this year, according to the company.

Amazon launched its ultra-fast Whole Foods grocery delivery service in Nashville last year. Instacart and Shipt deliver groceries from Publix, Target, Kroger, Costco and more straight to Nashvillians’ doors.

But grocery real estate is still hugely valuable since many grocers are relying on bricks-and-mortar stores, rather than distribution centers, to fulfill online grocery orders.

“Unlike online apparel, which is driving so many of our bricks and mortar apparel stores to bankruptcy, e-groceries isn’t going to result in a lot of high vacancies out there for shopping centers,” Brown said. “If anything, it’s probably going to drive more growth.”

In Nashville, grocers including Whole Foods, Publix and Dollar General, are thinking beyond the traditional suburban store with a sea of parking in front and adapting to smaller urban sites where customers can walk to-and-from the store.

The Publix store under construction at Capitol View will be smaller than other Publix stores in the Nashville market, but it will still have traditional bakery, deli, produce, meat, seafood, frozen food, pharmacy and grocery departments, said Publix spokeswoman Brenda Reid.

“As in-town living takes form, we want to be the supermarket of choice for those moving into and around the city,” Reid said.

Local real estate experts say additional grocers are circling the Nashville market and it’s likely even more stores are on the way. German discounters Aldi and Lidl are two stores to watch, as both companies have aggressive U.S. expansion plans.

Aldi, which has several Nashville stores, is in the middle of a five-year, $5.3 billion expansion plan to build and upgrade hundreds of U.S. stores. Aldi competitor Lidl doesn’t have a Nashville location, but the company has rapidly expanded across the east coast in recent years.

One thing is clear: The grocery boom shows no signs of slowing down with Nashville still growing at lightning speed.

“Every grocer would like to capture their share of the market growth, but there will still be underserved areas, like Midtown near Vanderbilt, which has seen 3,900 new housing units delivered since 2014,” Benedict said.

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Reach Lizzy Alfs at lalfs@tennessean.com or 615-726-5948 and on Twitter @lizzyalfs.

This article originally appeared on Nashville Tennessean: Nashville grocery wars intensify with new stores on the way

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