Miami
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Miami: The fast-growing gateway to Latin America

BY Mark Hamstra

Washington, D.C., might be the capital of the United States, but Miami is the unofficial capital of the Americas.

The Miami metropolitan area has a population of nearly 6.1 million, making it the eighth largest in the country. It is a densely populated market that stretches along the east coast of Florida — an area called the Gold Coast — in a long, narrow population strip between the Atlantic Ocean and the Everglades.

Its economy is largely driven by its status as a bridge between Latin America and the United States, and its population reflects its proximity to Central and South America and the Caribbean. Nearly half the population — about 41.6% — is Hispanic, and another 21% is African-American.

As a center for global trade, Miami also is home to the headquarters and regional branches of several large multinational corporations, and also is the headquarters for such Spanish-language media companies as Univision, Telemundo and UniMAS.

The metro area had a gross domestic product of $345.9 billion in 2017, making it 11th in the United States, according to the Bureau of Labor Statistics.

Florida overall added 195,000 jobs in 2017, and the Miami area was among the leaders in that growth, according to the state chamber of commerce. Job growth is expected to slow slightly in 2018, with about 180,000 new jobs statewide.

The state is expected to continue to see population growth. The state remains attractive as a destination for retirees, students and those seeking to take advantage of the lack of income tax, with 898 people per day moving to the state, according to the Florida chamber of commerce.

“Growth is important to retail, and the things I always look at are whether people are moving there and whether tourists are going there,” John Crossman, CEO of real estate firm Crossman & Co., said. “I don’t know of an engine that’s bigger than Miami on both those fronts.”

In addition to being a draw for high-income tourists, the Miami market also has been attracting a lot of top talent fresh out of business school, he said.

“If you are a retailer looking to grow, and you are looking at Florida, Miami is going to be on your radar,” Crossman said.

Local observers said the trend toward building residential developments in urban office centers is attracting younger consumers who are seeking such amenities as food and drug retail outlets in the areas where they live and work.

CVS Pharmacy and Walgreens have fairly even shares of the Miami metro market, according to a 2015 research report from Barclays Capital. Miami was the launch site of Hispanic-focused CVS Pharmacy y Más, which now has 14 area locations. The launch came a year after the Woonsocket, R.I.-based chain acquired Miami’s Navarro Discount Pharmacy, which had been the largest Hispanic-owned drug store chain in the country. Rite Aid does not have a presence in the market.

Lakeland, Fla.-based Publix — Miami’s fourth-largest private employer behind the University of Miami and two large hospitals — is a perennial growth leader in the consumable retail market. It is seeing increasing competition, however, from such specialty chains as Boulder, Colo.-based Lucky’s Market, a low-priced natural and organic specialist that has opened three locations in the area in the last few years as part of an aggressive push into Florida.

Miami is a significant market for BJ’s Wholesale, which has nine area warehouse clubs, and last year Costco opened a new location in the city.

Florida remains a stronghold for Walmart, which operates several Supercenters and Neighborhood Markets in the Miami area.

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Washington, D.C.
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Washington, D.C.: Cautious outlook amid spending cutbacks

BY Mark Hamstra

The economy in the Washington, D.C., metro market has been on a significant upswing for the past several years, although some economists fear the good fortunes could be coming to an end amid an anti-government spending attitude in the Congress and the White House.

The federal government, which accounts for about 30% of the jobs, has been cutting back on the scale of government-funded programs, which is leading to a reduction in high-paying federal contractor jobs, according George Mason University professor Stephen Fuller.

“We are a company town, and our company stopped spending more money here,” Fuller said in a recent presentation at the university, according to Washingtonian magazine.

However, the Washington metro area’s population remains one of the most highly educated in the nation, and also one of the highest paid, with the highest proportion of doctoral degrees and a median household income of more than $75,000.

In support of the federal government, the region is home to law firms, lobbying firms, nonprofits, trade groups and professional associations. Retail groups, including the National Association of Chain Drug Stores, National Retail Federation and Food Marketing Institute, all have their headquarters in the area.

Many observers of the retail scene believe the local economy remains vibrant, despite government cutbacks.

“D.C.’s retail market is expected to remain strong as the metropolitan area’s economy is expected to grow by an average of 34,000 jobs per year for the next five years,” the Washington, D.C. Economic Partnership wrote in a recent report, citing data from HIS Markit and real estate firm CBRE. “In addition, it is estimated that D.C. will experience roughly double the nation’s percentage growth in food and beverage spending in the next five years.”

The Washington metro market is one the largest for CVS Pharmacy, which captures more than half the drug store market share, according to a 2015 research report from Barclays Capital. The chain gained a significant presence in the market through the 1990 acquisition of Alexandria, Va.-based Peoples Drug, which it converted to the CVS Pharmacy banner in 1994. Walgreens and Rite Aid each had a much smaller percentage of the Washington drug store market share before the recent sale of Rite Aid to Walgreens and Albertsons.

Ahold’s Giant Food division is the leading grocer in the market with about 100 area stores and a 20.2% market share, according to the Washington Business Journal — about double that of second-place grocer Safeway, whose 79 stores reflect a roughly 10.7% market share.

CVS Pharmacy was ranked third on the list with 255 locations and 8.7% of the grocery market. It was followed by Kroger’s Harris Teeter banner, which has 42 locations and 7.3% share, and Supervalu’s Shoppers Food & Pharmacy, which has 31 stores and just under a 6% share.

Whole Foods has several stores in the market and a few more in the pipeline. Wegmans Food Markets, which has long been active in the Maryland and Virginia suburbs, said last year that it was planning its first store in the District of Columbia itself. Reportedly one of the retailer’s smallest locations, it is expected to be twice as large as the nearby 40,000-sq.-ft. Whole Foods.

While the suburbs and higher-income areas of the region have seen a boom in supermarket development, the market also has struggled with a high level of food deserts — or areas underserved by grocery retail.

One retailer seeking to tackle that challenge is Good Food Markets, which opened one small store in an underserved area in 2015 and has since been in discussions to expand to other underserved communities in the area.

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Atlanta
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Atlanta’s retail scene brings the heat

BY Carol Radice

Dubbed Hotlanta for its infamously scorching summer temperatures, this moniker also easily could be applied to Atlanta’s red-hot economy. As is the case in many metro markets, the IT sector has been leading Atlanta’s growth pace. Finance, insurance and real estate, as well as the transportation, utilities and professional and business services sectors, are also making large contributions to Atlanta’s growth. For these reasons and more, Atlanta is often considered the economic engine of the state and of the Southeast. City officials said it is important to them that Atlanta be viewed as a business-friendly city.

Atlanta has proven itself as an attractive place for business relocation. A big part of that is the national and global connectivity provided by Hartsfield-Jackson International Airport. For these and other reasons, such global companies as Porsche and Mercedes-Benz have their U.S. headquarters in Atlanta. Other companies that call this region home include NCR, GE and Honeywell, all of which have located their digital innovation centers here.

Its population growth, as well as its current and future job growth projections, handily outpace U.S. national averages, which is a signal to some that growth will continue to track upward for the next few years at a minimum. One trade magazine recently called out the Atlanta metro area as the No. 1 state to do business in, noting how Atlanta’s attractive low cost of doing business, combined with a job market that rivals Silicon Valley, Boston and New York City, helped push it to the top.

Competition for shoppers’ dollars is tight in this market, which means retailers need to bring their A-game to hold onto market share. Publix may lead in many markets in the South, but when it comes to Atlanta, Trader Joe’s is more often noted as the place customers love to shop. Trader Joe’s wins rave reviews from customers in this region for its friendly staff, healthy food choices and competitive prices. The wine, produce and floral departments are often cited for their great assortments and affordable prices, but customers said its Trader Joe’s eclectic frozen items, center store offerings and sampling program that keeps them coming back.

Also unique to this retail chain — if there’s a product customers want to try, all they have to do is ask an employee to open it. Company officials said this has been effective in boosting loyalty and increasing impulse purchases.

Rotating assortments and novel products are a great way to add excitement, but it can be hard for shoppers to keep up. To remedy this, the company has designed its store flyers, not to be a sales vehicle but an informative tool designed to teach shoppers about the products in the store. The flyers offer background information on some of its highlighted products, whether they are new or existing, but the real reason people love them is because they are written with a sense of humor and include interesting backstories on the products, they are so effective, that many shoppers walk around the store with the checklist from the back of the flyer, which encourages them to pick up everything on it.

Another area favorite is Kroger. One of its largest stores in Atlanta, the Kroger Marketplace on Glenwood Avenue South East, includes a drive-through pharmacy, gas station, urgent care clinic, Starbucks and an expanded housewares section called the Kitchen Place. It even has a bar in the store, featuring several local beers on tap and an Enomatic wine system with more than a dozen different wines sold by the glass. The bartenders at the “Krobar” are happy to offer samples of
anything customers would like to taste.

This location also boasts an expanded takeout area intended to go head-to-head with the likes of Publix and Chipotle. A sandwich bar and burrito station can also be found, along with the standard fried chicken fare.

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