A GOLDEN ERA FOR MARKETS Larry Lund, retired Principal, Real Estate Planning Group 312-751-1250 lundlarry@msn.com June 6, 2019
Golden Age: Evolving Robust Markets • London’s Borough Market • Since the 1600’s Neal’s Yard • 1756 Sold peas, beans, herbs and commodities to the public • 1862 it became a Wholesale Market • 1970s Wholesale moved to New Covenant Garden • Retail declined with better Supermarkets and Green Grocers • 1998 Reinvented as a Food Market influenced by: • Neal’s Yard and Brindisa influenced the Borough’s Market Renaissance • Brindisa – Spanish Food Specialists with shops multiple shops, 5-tapas restaurants, wholesale, and on Amazon. • Neal’s Yard – started “Whole - Food Warehouse” (1976) Source: London Borough’s Website
Evolution of “Public Markets” • Market Towns – Rise of Mercantilism vs. Localism • “Public Food Markets” Photo Credit: Dandelion Chandelier • Fair Weight Measurement, Health Standards, Competitive Prices • James Rouse (1914- 1996) created “Festival Marketplaces” to save downtowns Faneuil Hall in Boston, but they lacked “Authenticity” & became “Boring” • “Food Halls” outgrowth of London’s Harrod’s Department store (1842 grocery/ 1902/ 2017-18 Food Hall) and Eataly (2007) • PPS in 1987 started reviving and promoting “Public Food Markets” as a component of authentic placemaking
Business Responds to Changing Habits
Going out to eat is only increasing % 43.5% 35.8% 20.1% 1961 1990 2017
Limited-Service Restaurants have shown the greatest increases over the past two decades LIMITED - SERVICE
No one is immune from changing buying habits even within the Food System Walmart and Costco gain 14% share of food-at-home
“Generation Associated Lifestyles” Affect Buying Habits U.S. Population in Consumer Units by Generation: < 1927 1,439,000 1% Millennials: Silent: 1981 + 1928-1945 32,618,000 25% 16,471,000 13% Boomers: Gen X’ers : 1946-1964 1965-1980 44,694,000 34% 34,780,000 27% < 1927 1928-1945 1946-1964 1965-1980 1981-+
Food at Home Millennials Spend Lowest Share of Gen X’ers Spend the Most Total Expenditures on Food @ Home on Food @ Home Share of All Expenditures for Food Average Annual Expenditure for Food at Home by Generation at Home by Generation 61.3% 62.0% $6,000 $5,178 60.0% $4,557 58.4% $5,000 58.0% 58.0% $3,680 $3,647 $4,000 55.0% 56.0% $2,500 $3,000 53.1% 54.0% $2,000 52.0% $1,000 50.0% $0 48.0% Food @ Home Food @ Home < 1927 1928-1945 1946-1964 1965-1980 1981 + <1927 1928-1945 1946-1964 1965-1980 1981 + Source: U.S. Consumer Expenditure Survey 2017
BTW, for Produce Market Managers: Gen X’ers Spend Big on Fresh Produce Average Annual Spending by Consumer Unit on FRESH Produce by Generation (U.S.) $699 $800 $604 $700 $511 $508 $600 $500 $361 $400 $300 $200 $100 $0 Fresh Produce < 1927 1928-1945 1946-1964 1965-1980 1981 - later
Food Away from Home Millennials Spend Greater Share Gen X’er Households Spend of Food Expenditures on Food More Money on Food Away Away $4,229 $4,500 $4,000 42.0% 38.6% 41.6% 45.0% 46.7% $3,245 $3,223 50.0% $3,500 $3,000 40.0% $2,299 $2,500 $1,811 30.0% $2,000 $1,500 20.0% $1,000 10.0% $500 $0 0.0% Food Away Share Away <1927 1928-1945 1946-1964 < 1927 1928-1945 1946-1964 1965-1980 1981 + 1965-1980 1981 +
Millennials household structure is changing buying: small basket - eating out - socialization • Average household size declined from 2.63 (1990) to 2.53 (2018) One Person Households • Nonfamily Households increased from 29.3% (1990) to 34.9% (2018) • 27.9% (2018) of Adults are Living Alone • In major cities 1-person HH may grow to 45% in both the U.S. and Europe. • Within 10-min walk Borough Mkt & Essex St Mkt its 39%, and Reading Terminal its 59% single householders
BTW, Millennials are Boozers Alcohol Beverage Expenditures Share of Average Annual Expenditures 1.20% 1.00% 0.94% 0.87% 1.00% 0.84% 0.80% 0.64% 0.60% 0.40% 0.20% 0.00% <1927 1928-1945 1946-1964 1965-1980 1981 +
Demographics: Vision doesn’t become an Hallucination Population (not workers) 10-min. Walk Cloud from Markets 2,766 Grand Rapids, Mi 3,112 West Side Mkt, Clev. 3,739 North Mkt. Columbus, OH Granville Island, BC 3,784 4,813 Kansas City, Mo 6,740 Findley Cincinnati 10,407 Cusine Mkt Vietnam 12,540 Pike Place Seattle Borough Market Walk-Cloud Reading Terminal, Phil 16,071 26,938 St. Lawrence, Toronto Approx .8 km or ½-mile 33,949 Queen Victoria, Melbourne 34,215 Chau Long Mkt Vietnam 57,019 Flatbush Caton Bklyn Essex St NYC 65,518 100,26 Sant Antoni, Barcelona 13,101 Old Spitalfields UK 20,706 Borough UK 23,019 Brixton Uk Mercada UK 24,120 0 20,000 40,000 60,000 80,000 100,000
Market Managements role is to Fight Entropy • If your Market is not Growing, it’s Dying. Just like MALLS and FOOD COURTS they lose their FOCUS / CLARITY / ”HEAT” they become BORING “ENTROPIC” . Google Trends: Food Halls / Public Food Markets 2004 - 2018
How are Grocery stores are fighting Entropy? Becoming “Grocerants” Whole Foods Market – Wine Bar Mariano’s Market – Oyster Bar
Embrace E-Commerce • Delivered directly home/office or pic-up at Market • Uber-Eats e.g. almost half the sales in a downtown Chicago Food Hall is delivery • Supermarkets anticipate food and beverage growth from e-commerce growing from $124 average revenue per user to $160 per user – 13% increase by 2022. (Statista Analysis) • Social Marketing drives customers to Market events like cooking classes
Multi-Dimensional Markets are Stronger • Farmer’s Market • Retail stores • Performance/Entertainment • Co-working Space • Health & Wellness Centers • Indoor Sports complexes • Grocery Stores • Food Halls
The Granddaddy of Food Halls Keeps Evolving along with Eataly’s 10 -year run Eataly: It’s Authentic, Seasonal, and Harrods Food Hall, London Replicable at Home!
Chelsea Market, NYC Added Grocery Store in Basement Seafood Retailer / Wholesaler and Restaurant
Mercado de Colon, Valencia, Spain
Mercado de San Anton 4 levels- Madrid
City Point Shopping Center, Brooklyn, NY Trader Joe’s adjacent to DeKalb Market
Ponce City Market: 2 nd floor Makers Space, National retail tenants (Williams Sonoma, Food Hall and Entertainment
Social Aspects of Food Halls/Markets
Chicago’s Economic Development Tool and Pipeline for new food Businesses: “The Hatchery” • Outgrowth of 1871 Venture Capital Business Incubator in the Merchandise Mart • Opened 2019 (Grand opening was in April ) • The Hatchery has 67,000 square feet • 56 Private Kitchens, warehousing, and a communal kitchen • Services Food Trucks • Grants $100,000 per business • Currently (April) 30% occupancy)
London Street Food Union – • “University” to train street food vendors • Street Food Night Markets • Street Food Arenas • Operator runs the liquor business • Vendors pay 10% to 20% of revenue • Six-week trial moving to 3-month license and then rolling license after • Jonathon Downey – idea developer 2016-2018
New Leasing Model: License to Occupy • With the exception of high cost build out vendors, License to Occupy is replacing the lease • It typically means the agreement is not subject to leasehold interest legal analysis. • Universal point-of- sale (POS) system owned by the “developer” so real time reporting of sales identifies issues. • Granville Island in Vancouver, BC uses this system • Owners are providing initial stall build-out- and providing basic, FF&E
Pike Place Market: The Importance of the “Experiential” “ -ing the thing”
Boston Public Market Producing Honey
In the End, you do not get to select your customer, your customers choose you. Milwaukee Public Market
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