Supermarket competition is intensifying, fun and fitness are flourishing and department stores are struggling.
Long Island's retail landscape, like that of other regions across the country, is evolving as discounters expand, large department stores close and mall and shopping center landlords are forced to diversify their tenant lineups.
"All good landlords really care about their assets and what is the best mix of tenants that will create the best draw and the most traffic," said Joshua Weinkranz, president of the Northern region for Kimco Realty Corp. of New Hyde Park, one of the largest publicly traded owners and operators of shopping centers in the country. "The consumer wants convenience. It's all about convenience today."
This year, upheaval in the Island's grocery industry will persist, discount stores will gain more of a footprint, large stores will keep closing and gyms and other non-store businesses will fill more vacant retail spaces.
One supermarket chain buying another
Stop & Shop (stores in blue on the map) is acquiring King Kullen (red dots) and its related Wild by Nature stores (purple). Zoom in to see close ones and click dots for details.
As brick-and-mortar stores close, shopping center and mall landlords are seeking to fill vacancies with more tenants that are less susceptible to online retail competition, such as medical offices, gyms and entertainment options, retail analysts said.
Here is what's on deck for Long Island retail in 2019:
European grocery retailers are taking over longtime local businesses, a Walmart in Farmingdale will "supersize" with the addition of a grocery store, and ShopRite and Whole Foods will expand.
The grocery store wars are heating up, providing consumers with more options, said Jeff Metzger, publisher of Food Trade News in Columbia, Maryland, and a Wantagh native. "The diversity of competition is going to make the market more price competitive as a whole."
Major supermarket moves that have taken place or are expected this year include:
• Massachusetts-based Stop & Shop Supermarket Co., owned by Dutch company Ahold Delhaize, announced on Jan. 4 it planned to buy King Kullen Grocery Co.’s 32 supermarkets and five Wild by Nature natural food stores — all on Long Island. Stop & Shop, which already owns 51 stores on the Island, has not provided more details about planned King Kullen changes, including whether the purchased stores will be converted to the Stop & Shop name and whether any stores will close.
Metzger said he expects the renaming and predicted some closings.
"I would think [Stop & Shop] will end up closing stores, or flipping locations if King Kullen has significant physical property that is superior to the existing Stop & Shops ... in areas where there is overlap," he said.
• German discount grocer Lidl broke into the market with the purchase last month, by its Lidl U.S. arm, of Bethpage-based Best Market’s 27 stores in New York and New Jersey, including 24 on Long Island. This spring Lidl will announce a schedule for remodeling the Best Market stores and converting them to the Lidl name, spokesman Will Harwood said.
“Best Market stores will continue to operate as they do today over the near term, and the transition to Lidl stores will include a step-by-step remodeling and reinvestment process that we expect to last two to three years,” he said.
• A ShopRite will open in March in Port Jefferson Station, on Nesconset Highway in the Station Plaza shopping center, the company said. The space was occupied by a Staples office supply store and a Pathmark supermarket. The Pathmark was among 51 Long Island stores that closed after parent company Great Atlantic & Pacific Tea Co. sought bankruptcy protection in 2015. There are 15 ShopRite stores on Long Island.
• Whole Foods will open a Commack location — its fourth store on Long Island — in Veterans Memorial Plaza this spring, said Jennifer Maisch, a spokeswoman for shopping center owner Kimco. The store will occupy 45,000 square feet of a former King Kullen, which was 60,000 square feet.
With its Prime Now service, Amazon, which bought Whole Foods in 2017, expanded its one-hour and free two-hour delivery for Whole Foods into parts of Long Island last summer.
• Walmart plans to convert its store on Broadhollow Road in Farmingdale to a supercenter with a grocery store and online grocery pickup by increasing the location’s size by 40 percent — to about 219,450 square feet, Walmart Inc. spokesman Phillip Keene said. The 12-year-old store will remain open during the project, which will start in the spring and take 14 months to 18 months to complete. Of Walmart's 12 stores on Long Island, only the Valley Stream store is a supercenter now.
Even before adding the King Kullen locations, Stop & Shop had the largest market share among supermarkets on Long Island — 35.25 percent, according to a June 2018 report from Food Trade News. ShopRite was second, with 13.68 percent, followed by King Kullen, with 11.46 percent.
Long Island is experiencing consolidations among its traditional grocery store operators, while seeing a shift to a wider range of nontraditional retailers, said Jon Hauptman, senior director of Inmar, a retail industry analytics company in North Carolina.
“You have the Lidl and Aldi and Trader Joe’s and dollar stores on the value side, and you have Whole Foods on the upper side. And to some degree you have Stop & Shop and ShopRite on the mid to upper side … they provide both service-oriented and strong value options,” he said.
Consumers’ demand for bargains is fueling growth in discount stores nationwide, and the number of brick-and-mortar department and specialty stores offering full-price merchandise continues to shrink.
Long Island is getting more money-saving places to shop this year:
• Dollar Tree, where toiletries, food, cleaning supplies, home decor and everything else is priced at $1 or less, will open three local stores — a 10,500-square-foot location at 20 Smith St. in Farmingdale in late summer, a 9,500-square-foot store at 1626 New York Ave. in Huntington Station in late spring and a 14,500-square-foot store at an undisclosed location in Riverhead in late spring, said Kayleigh M. Painter, spokeswoman for Virginia-based Dollar Tree Inc.
• Five Below, which targets kids and teens with accessories, gadgets and bedroom decor priced at $5 or less, will open two local stores — in Shirley and Commack.
The Shirley store will open in the South Port Shopping Center in March, said Ken Simon, vice president at New Jersey-based Heidenberg Properties Group, manager of the center. The store, about 9,600 square feet, will replace a Famous Footwear that relocated to a former Toys R Us and Verizon space in the shopping center in October.
The Five Below in Commack will open in the fall in 11,525 square feet in Veterans Memorial Plaza; the space was part of a 63,000-square-foot Toys R Us/Babies R Us, Kimco's Maisch said.
Philadelphia-based Five Below Inc. has nine stores on Long Island.
• Also this fall, off-price department store Burlington will open next to the Five Below in Commack, in 40,000 square feet vacated by Toys R Us/Babies R Us, Maisch said. The New Jersey-based chain has six stores on Long Island.
Though consumers are demanding more convenience, such as same-day delivery, they are willing to forgo that for savings, which is driving growth in the discounter market, said John Mercer, senior analyst at Coresight Research Inc., a Manhattan retail analysis provider.
Some of the other factors driving the demand for discount stores are millennials' getting more squeezed by college debt, and young consumers' prioritizing spending on leisure activities, such as traveling and dining out, over shopping, he said.
“An unwillingness to spend big on fashion has supported the flow of shoppers to off-price retail,” Mercer said.
Major retailers continue to close stores, partly because consumers are shifting more of their spending online. In addition, previous leveraged buyouts have left some retailers with heavy debt loads that have forced them into bankruptcy, according to Coresight Research.
In 2017 major retailers in the United States closed a record 8,139 stores and opened 4,231, Coresight said. Last year 5,524 stores closed and 3,083 opened.
Some of the closings scheduled for Long Island this year will leave large spaces empty:
• Sears Holdings Corp. will close 40 stores this month, including a 102,949-square-foot Kmart in Huntington, as part of its restructuring under bankruptcy. Last year the Illinois company announced several rounds of closings that shuttered or will shutter at least 474 stores, including six on Long Island. After the Huntington Kmart closes at 805 New York Ave., Long Island will have three Sears — in Smith Haven Mall in Lake Grove, Sunrise Mall in Massapequa and Green Acres Mall in Valley Stream — and three Kmarts — in Bridgehampton, Farmingville and Bohemia.
Sears Holdings chairman Eddie Lampert is trying to rescue the remaining 400 stores. On Jan. 16 he won a bankruptcy auction for the company with a bid of $5.2 billion made through his hedge fund, ESL Investments. A bankruptcy court must still approve the plan — a hearing is scheduled for Monday — but some unsecured creditors object to the proposal and want to see the company liquidated.
• The Kohl’s at Green Acres Mall in Valley Stream will close April 13, the company said. The 107,000-square-foot store was among four “lower performing" locations the chain said it would shutter in the first half of this year.
• A Target in Commack is one of six underperforming locations in five states slated to close Saturday. The 143,000-square-foot store at 4 Henry St. in the Commack South Shopping Center has faced more competition over the years as more retailers opened nearby, especially those that had full grocery offerings while Target did not, John Baker, vice president of construction and development at center owner Cosentino Realty Group, said when the closing was announced in October.
Nonretailers moving in
More diverse businesses, from medical offices to gyms, are filling a growing amount of retail space as landlords seek tenants that aren't susceptible to online competition.
Nonretail and nonrestaurant tenants occupied 24.5 percent of shopping center space in 2018, up from 19.15 percent in 2012, according to the International Council of Shopping Centers, a Manhattan trade association.
Here are some of the nonretail businesses headed to Long Island shopping centers this year:
• An Urban Air Adventure Park will open in a shopping center at 3147 Middle Country Rd. in Lake Grove around August, Mayor Robert Scottaline said. The Texas-based chain of kids’ entertainment centers includes indoor trampolines, go-carts, bumper cars and obstacle courses. The Lake Grove venue will be in a 48,000-square-foot space formerly occupied by a JCPenney Home Store, which closed in 2017.
• Among the 11 Orangetheory Fitness franchises that will open this year on the Island will be a 3,151-square-foot studio in Airport Plaza in Farmingdale. The space was subdivided from a 7,180-square-foot vacancy left by Floris Day Spa’s exit several years ago, said Maisch, of Kimco, which owns the shopping center. Florida-based Orangetheory has 14 studios on Long Island.
• Merrick BarFit Studio will open at Merrick Commons shopping center this year, Maisch said. The 1,785-square-foot space was formerly occupied by InMotion Clothing, a children’s clothing store that closed in 2016.
• Two Blink Fitness franchises will open this year, said Cameryn Fannin, spokeswoman for Manhattan-based Blink. One gym will fill 13,000 square feet at 450 East Main St. in Farmingdale in part of a former Waldbaum’s grocery store. The other gym will be in a not-yet-disclosed location in Lake Ronkonkoma. There are nine Blink gyms on Long Island.