Dive Brief:
- Last week, German grocer Aldi opened a new, extra-large store in Philadelphia, part of the brand's more than $5 billion investment nationwide to open hundreds of new stores and remodel thousands of existing locations. Through its aggressive expansion plans, Aldi is on pace to become the third-largest U.S. grocery retailer by store count by the end of 2022, according to the company.
- The store, which features a 15,000-square-foot selling floor across six aisles, occupies the ground floor of a 14-story residential building — Aldi's first store in a mixed-use development in the city, reflecting the premium many Americans place on having easy access to a grocery store where they live.
- Aldi has been on a tear in the United States and now operates more than 2,000 stores across the country. The company’s new store in Philadelphia is among more than 70 U.S. stores the retailer intends to inaugurate by the end of this year.
Dive Insight:
Aldi’s decision to place a supermarket within a residential project reflects a trend among real estate developers in recent years to include food retailers within mixed-use projects with residential components. The fact that the new store will be among the chain’s largest locations only underscores the importance grocers and neighborhood planners are placing on offering people the convenience of having a full-fledged supermarket just steps from where they live.
Apartment-dwellers have shown a willingness to pay extra to be able to walk from their homes to a food retailer. According to a study by RCLCO Real Estate Advisors, apartment buildings that contain a Whole Foods or Trader Joe’s bring in a 5.8% rental premium compared with other multifamily communities located close by. Although including a grocery store in a building can bring added construction costs, the developers have calculated that the extra rent they can collect by offering such an amenity to tenants is likely to compensate for the higher initial expenses.
Other examples of grocery stores within developments with substantial residential space that have opened recently include a Giant Food supermarket in Fairfax, Virginia and a Safeway in the Capitol Hill neighborhood of Washington, D.C. Aldi plans to open another 25,000-square-foot store in the Washington, D.C., area in 2022. It has also built stores abroad that are as small as 6,000 square feet, underscoring the company's focus on flexibility.
The median size of a U.S. supermarket was 41,651 square feet in 2018, statistics compiled by the Food Industry Association show.
