Grocery Store Investments: 3 Ways To Gain Access To This Asset Class


Jeremy BiberdorfBy: Jeremy Biberdorf

February 12, 2024February 12, 2024

Investing in grocery stores is grounded in a basic human need: food. This sector offers a stable and essential product that maintains demand year-round, regardless of economic fluctuations. While it may not have the glamor of other investments, grocery stores have a track record of providing consistent cash flow, making them an attractive choice, especially for retirement portfolios.

The grocery industry, once considered unexciting, has experienced a remarkable transformation driven by various factors. Technological advancements, the entry of new market players, and the global pandemic have breathed new life into the grocery business. It’s no longer perceived as a dull investment; instead, it presents opportunities for exciting returns.

In this article, we explore the compelling reasons behind the attractiveness of grocery store investments. We’ll also discuss three distinct approaches for investors to tap into this evolving sector, shedding light on the potential benefits of venturing into grocery store investments.

Are Grocery Stores A Good Investment?

Are grocery stores a good investment? The answer lies in the unique characteristics of this asset class and how investors choose to gain exposure to it. Grocery stores have a history of being a sound investment, but the specifics can vary based on the investment approach.

Investing in grocery stores offers several advantages. These establishments provide essential products with consistent demand, making them recession-resistant. People need food regardless of economic conditions, which translates into reliable cash flow—a desirable feature for investors.

However, the suitability of grocery store investments can depend on how one accesses this asset class.

Grocery Store Investments: The 3 Main Ways To Invest

There are 3 broad categories in which you can gain exposure to grocery story investments: owning real estate that leases to grocery stores, stocks, direct ownership of a grocery store. Let’s get into the specifics of each:

Grocery Anchored Real Estate

One beneficial way to gain access to grocery store investments is through grocery anchored real estate. You can buy existing real estate that has grocery stores or construct a building to host grocery anchored real estate, although both of these options will be prohibitively expensive for many.

Fortunately, there is a way to invest in grocery anchored real estate for much less, Fractional real estate investing. You can gain access to well vetted, high quality grocery store anchored real estate with First National Realty Partners. I will give you a brief overview of the benefits of First National Realty Partners.

First National Realty Partners

First National Realty Partners Logo

First National Realty Partners is a specialized platform catering to accredited investors interested in the commercial real estate sector, particularly grocery-anchored properties. It offers a distinctive investment opportunity with a minimum requirement of $50,000 per deal.

What sets it apart is its approach of featuring properties anchored by premier tenants like ShopRite, Walmart, Dollar Tree, and Aldi. These nationally-recognized brands show the stability of the investments.

The properties are strategically valued below replacement cost, allowing for potential capital appreciation and exit strategies through sale or refinancing within 3 to 5 years. This approach ensures that investors receive quarterly distributions along with the possibility of capital appreciation.

For those seeking an alternative to individual property investments, First National Realty Partners offers an Opportunity Fund. With a minimum investment of $50,000, this fund guarantees placement in the platform’s offerings.

Investors also benefit from tax advantages, as they receive K-1 forms for tax purposes, which include tax deductions for property depreciation. Click Here to learn more about First National Realty Partners.
Learn More About First National Realty Partners

Grocery Stocks

Investing in grocery store stocks can be a smart move considering their historical performance and stability in the stock market. Grocery stocks are like the dependable workhorses of your portfolio, often offering consistent dividends.

What’s even more reassuring is that the grocery industry is considered defensive and recession-proof. Why? Because no matter what the economy is doing, people still need to buy food. It’s a fundamental necessity. So, investing in grocery stocks can provide stability in both robust economic times and during economic downturns.

Now, if you’re thinking about adding some grocery stocks to your investment mix, here are some top-notch options to consider:

  1. Target Corporation (TGT): Target isn’t just your average grocery store; it offers a wide array of products alongside groceries.
  2. Kroger Co. (KR): Kroger is a big player in the grocery business, with a strong presence and a variety of grocery brands in its portfolio.
  3. Dollar General Corp. (DG): While Dollar General is known for discounts, it also stocks groceries, making it an interesting choice.
  4. SpartanNash Co. (SPTN): SpartanNash operates in both grocery wholesale and retail sectors, providing a bit of diversification.
  5. Albertsons Corporation (ACI): Albertsons is another major name in the grocery industry, with various grocery store chains.
  6. Walmart Inc. (WMT): Walmart is a massive retail giant, and groceries are a significant part of its business, offering stability and diversity.
  7. Costco Wholesale Corp. (COST): Costco is famous for its membership-based warehouse clubs and is a solid option for those interested in groceries.

Own A Grocery Store

Owning a grocery store can be a venture with high risks and potentially high rewards. However, it’s not a one-size-fits-all endeavor, as the specific demands, prerequisites, and initial investments can fluctuate significantly based on factors like the store’s location, size, and overall scale of operations.

The world of retail, in general, has never been a walk in the park, and when it comes to managing a grocery store, the challenges can be even more demanding. Store owners and managers are tasked with handling a range of complex issues, from the management of perishable inventory to navigating daily supply chain intricacies.

On top of that, they must contend with the demands of discerning customers, often managing a relatively youthful and less experienced workforce. The burden of overhead costs looms large, making the entire enterprise a challenging undertaking.

Conclusion

Grocery store investments offer stability and reliable cash flow due to the constant demand for essential products like food. The grocery industry has evolved, presenting exciting opportunities for returns.

Investors can explore avenues such as grocery-anchored real estate, grocery stocks, or direct ownership of a grocery store, each with its unique characteristics and challenges. Whether through real estate, stocks, or ownership, grocery store investments provide diverse options for those seeking stability and potential returns in this essential industry.

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Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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