Tag: food logistics

• Amazon Fresh raises its threshold for free grocery delivery

  Amazon Fresh has just announced that, effective February 28, it will be raising the threshold for free grocery delivery. Orders under $50 will be charged a $9.95 fee. Orders between $50 and $100 will be charged a $6.95 fee. And orders between $100 and $150 will be charged a $3.95 fee. Orders above $150 will be free. Previously, the threshold for free delivery was $35.

  This is likely an indication of two things. It speaks to our current tech headwinds (see “The Four Horsemen of the Tech Recession“) and it speaks to the fact that grocery is unique. It requires a whole separate logistics chain, compared to all of the other things that Amazon will deliver to you. Food goes bad. It bruises. And it may require refrigeration.

  This makes online grocery delivery more challenging and more costly.

  2023.02.07

• People like TikTok and grocery stores

  Dan Frommer has just just released his latest Consumer Trends report (2023). If you’d like to download a free copy, you can do that over here. It is amazing to see how big of a deal Tik Tok has become. In Q3 2022, the average Android user spent 98 minutes per day in the app. That is a lot, and it’s roughly 2x what Facebook and Instagram each saw (though if you combine these two apps, I guess they’re pretty similar). Either way, this is where people’s attention is now being spent. For those of us in real estate, the report also has some interesting slides on grocery stores. The key message here is that physical stores remain hugely important.

  The year-over-year change in online grocery spending is now flat to a little negative:

  

  No matter which generation you ask, more people prefer shopping for groceries in-store, versus online:

  

  And even when people do shop for groceries “online”, they still tend to pick them up from their local store or have that local store deliver it to them (so the store matters):

  

  For the full report, click here.

  2022.12.02

• Grocery-anchored real estate as food logistics

  Blair Welch, co-founder of Slate Asset Management, was recently on Institutional Real Estate’s podcast talking about grocery-anchored real estate. In it, he talks about the role that this asset class plays in last-mile food logistics, why ecommerce might actually be strengthening its importance, and why it needs to be considered as being distinct from other kinds of retailing. This is a topic that we have covered a few times before on the blog and I think many of you might find it interesting. To have a listen, click here.

  2021.11.16

• Essential food logistics

  Blair Welch, co-founding partner of Slate Asset Management, was recently interviewed by Don Wilcox of RENX about the company’s recent acquisition of the Commercial Real Estate Business of New York-based Annaly Capital Management. As part of the deal, we also acquired $0.4 billion of grocery-anchored real estate assets across the US. These were purchased by Slate Grocery REIT (TSX: SGR.UN). What some of you maybe don’t know, though, is how we as a company view these kinds of assets as being essential food infrastructure, more so than as being retail assets. So here are a few excerpts from the article and quotes from Blair that explain why, in our view, this distinction matters.

  “We started buying grocery-anchored real estate in a big way in the financial crisis and I think we always looked at grocery-anchored real estate as food logistics, rather than a retail play,” Welch explained. “In the pandemic it’s really proven the local food store, or the spoke in the hub, is just as valuable as the hub itself.”

  Despite an increase in online grocery shopping (to about 10 per cent in the U.S.), people are still going to the stores. Or, at least, (are) getting their products from the local stores. Again, think “food logistics.”

  “That (10 per cent bought online) means 90 per cent is done in store,” Welch observed. “Now, here’s the interesting thing. Over 90 per cent – probably closer to 95 per cent – of the online sales are done at the local store.

  “So what we are saying is over 99 per cent of all the sales are done at the local stores, whether it is click and collect, or someone delivers. You are not changing the distribution pattern.”

  Here are a few more words and a comparison to what Amazon is and has been doing when it comes to food logistics:

  “If I’m Kroger or Walmart if I have to pay $10 (per square foot) for my warehouse what’s the difference if I’m paying $10 for my store? It’s the same cost, they just look at it as a distribution cost,” he said.

  However, those stores are in the middle of most neighbourhoods. Exactly where Amazon wants to be.

  “I think Amazon is an amazing company. I think their acquisition of Whole Foods and others is actually to get closer to the consumer. And the Whole Foods (acquisition) was just under 400 grocery stores in a market of 35,000 stores.

  “If I am Walmart with 5,000 stores or Kroger with about the same under different banners, that infrastructure is extremely valuable.”

  Slate will soon own more of it.

  For the full article, click here.

  2021.04.13