Economic Update — Grocers Have The Edge in Retail

In terms of profits, Wal-Mart took a haircut in its most recent fiscal quarter, but not a bath. Net income for the period ended Jan. 31 was $3.79 billion, or 96 cents a share, down from $4.1 billion, or $1.02 a share, during the same period a year ago. For a company that’s used to growth upon growth, that might be a disappointment, but most retailers would probably trade their recent numbers with Wal-Mart’s without hesitation. The retailer’s stock nudged upward 3.86 percent on the news.The best category for Wal-Mart was reportedly groceries as consumers cut spending in other categories, such as clothing, while simultaneously looking for value pricing in foodstuffs. The chains that can meet the needs of recession-minded consumers stand to do better than most retailers in these hard times, and even grow if local market conditions are just right. In Chicago, for example, Milwaukee-based regional chain Roundy’s Supermarkets Inc. inked a deal this week to lease 60,000 square feet at The Metropolis, a 123,000-square-foot mixed-use development under way in the Bronzeville neighborhood of the South Side. The privately owned Roundy’s currently operates about 150 grocery stores–under the Pick ‘n Save, Copps, Rainbow and Metro Market brands–in the Upper Midwest. The Metropolis is a joint venture between Capri Select Income II Fund and the Judson Investment Company of Chicago. “Even in the current economic climate, there are very good pockets of opportunities like The Metropolis, where there’s a pure lack of retail,” Stephen D. Lane, partner-asset management and development for Capri Capital Partners L.L.C., told CPN. In this case, we’re able to bring a high-quality grocer to the neighborhood,” which has historically lacked such retail. President Obama, visiting Denver for the occasion, signed the $787 billion stimulus into law on Tuesday. In his remarks at the signing, not a lot was said about real estate. In fact, the term “real estate” wasn’t mentioned at all, but the president did say “… we must stem the spread of foreclosures and falling home values for all Americans and do everything we can to help responsible homeowners stay in their homes, something I will talk more about tomorrow”–meaning Wednesday, when he will turn his attention to residential foreclosures. The stimulus’s green energy provisions may spur certain kinds of industrial development in places not overly active in that regard, and the president specifically said “places like North Dakota can produce a lot of wind energy but can’t deliver it to communities that want it, leading to a gap between how much clean energy we are using and how much we could be using.” Let 1,000 wind mills blossom, in other words. The equity markets didn’t seem overly impressed by the stimulus or presidential rhetoric. The Dow Jones Industrial Average sank 297.81 points on Tuesday, or 3.79 percent, while the S&P 500 was down 4.56 percent and the Nasdaq lost 4.15 percent.