RESEARCH • 7 May 2020

A case for food retailers

Even during recessions, people must drink and eat, and most consumers still prefer to buy food in store.

  • Supermarkets and grocery stores are relatively immune to economic downswings.
  • Consumers still prefer to buy food in store, making the segment less vulnerable to e-commerce disruption.
  • Grocers offer long, inflation-linked leases, and investors can benefit from attractive supermarket valuations.
  • Sale-and-leaseback transactions are an opportunity to source property that provides secure income streams.
  • Throughout the COVID-19 lockdowns most grocery retailers have largely continued to pay rents to landlords.
  • Since online shopping is increasing, though, investors should focus on grocers with the best in-store and online offer.
  • Investors must consider local competition, planning regimes, construction site availability and tenant covenants.
  • We like integrated, regionally dominant and food-anchored retail parks and neighbourhood schemes including convenience elements in larger cities across Europe.
  • We recommend a minimum catchment area of about 80-100,000 inhabitants for retail parks, whereas solus supermarkets of 1,200-1,500 sq m require a minimum catchment area of about 5,000-10,000 inhabitants.




Research & Strategy

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