Why food anchors are a must at Ukrainian shopping centers

Why food anchors are a must at Ukrainian shopping centers

16.11.2021

The global clash of digitalization and the pandemic is shaping the economic development of the 20s of this century. It has also led to profound structural changes of historic proportions. The consequences for retail and its accompanying services are equally dynamic and controversial. Food purchases at brick-and-mortar stores increased by 10 percent or more across Europe in 2020 as a result of the pandemic. At the same time, purchases of consumer durables, such as clothing, home electronics, home accessories, toys, sports, and leisure items increasingly shifted from offline to online retail.

Vitalii Boiko, CEO NAI Ukraine.

WHAT ECONOMIC BENEFITS DOES A SHOPPING CENTER GAIN FROM A TENANT MIX WITH A STRONG FOOD ANCHOR?

Food retail has been, and remains, one of the most important anchors at shopping centers. When the first shopping and entertainment centers began to appear, in many post-soviet countries, the share of spending on food and FMCGs (Fast Moving Consumer Goods) was about 50% of the monthly income. Another important factor is the emergence of hypermarkets. They contained 60% of non-food items, which were in short supply at that time. When the first Metro Cash and Carry was opened in Luhansk (Ukraine), laptops became the best-selling item.

Today, in our country, food operators are an essential anchor element at shopping and entertainment centers. With respect to the economic effect: Firstly, there is a high flow of visitors (1,000 to 15,000 people per day at hypermarkets); secondly, rental rates for food anchors in Ukraine vary from 100 to 300 euros per square meter per year; thirdly, by having FMCGs, supermarkets are sometimes the main generators of traffic on weekdays, which allows other tenants to have more balanced sales throughout the week.

WHAT, IN RETURN, DO SUPERMARKET CHAINS GAIN FROM THEIR PRESENCE IN SHOPPING CENTERS, COMPARED TO STAND-ALONE LOCATIONS?

Supermarkets gain the same benefits within shopping malls as other tenants: synergy. A standardized supermarket could bring in 3,000 to 5,000 people, and a hypermarket could bring in 10,000 to 15,000 people. Footfall at regional shopping malls in Kyiv is up to 50,000 to 70,000 people per day, so there is an expanding audience for supermarket chains.

There is one other matter: Shopping centers are almost always the priority choice for weekend shopping. Not being part of a shopping center results in the loss of extremely high weekend spending, and, thus, less commercial effectiveness.

WHERE CAN WE SEE CONCRETE EXAMPLES OF INNOVATIVE CONCEPTS FOR THE COOPERATION OF SHOPPING CENTERS AND FOOD ANCHORS IN THE CONTEXT OF DIGITALIZATION AND SUSTAINABILITY?

A striking example of the implementation of sustainable developments is the “Lavka Tradicii” project run by Silpo (a Ukrainian grocery chain retailer). The project encourages the development of sustainable tourism, local culture, and local production. Today, 142 small producers are represented in the project, which sells their goods at more than 100 Silpo supermarkets.

WHAT ARE THE MAIN PROBLEM AREAS THAT COULD AGGRAVATE THE CONSTRUCTIVE COOPERATION BETWEEN SHOPPING CENTERS AND FOOD ANCHORS?

Supermarkets are striving to occupy a more profitable and convenient location, for example, on the ground floor. Large supermarkets are also keen to keep other large grocery tenants or specialty grocery stores out of a given facility. There may also be measures aimed at limiting the number of cafes and food courts due to competition; such challenges are being faced by operators.

There are a few potential problems for supermarkets: Shopping centers do not always take into account the requirements of retail operators in terms of the shape or size of the areas allocated for a supermarket, as well as the necessary communication channels between the utilities, the technological premises, and the sales area.

Source: Across

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