Necessity Retail Is Becoming One of Real Estate’s Most Compelling Sectors
For much of the past decade, the strongest real estate narratives were built around disruption. E-commerce would replace stores. Software would make physical locations less important. Capital would migrate toward asset-light businesses that could scale without occupying real estate.
Necessity retail has challenged that assumption.
Grocery stores, pharmacies, fitness concepts, medical providers, restaurants and neighborhood services remain dependent on physical locations. Their customers may discover products online, compare prices through an app or place orders digitally, but the service is still frequently delivered through a store embedded in a local community.
That combination of recurring consumer demand, limited new supply and measurable operating performance is making grocery-anchored and necessity retail one of the more compelling areas of commercial real estate.
It is also creating a meaningful opportunity for venture-backed technology companies.
Retail’s Strength Is Being Driven by Scarcity
The renewed interest in retail is not the result of excessive development or speculative growth. It is being driven by the opposite.
The United States has built relatively little new shopping-center inventory over the past decade. At the same time, expanding grocers, restaurants, fitness operators, discount retailers, and service businesses continue to compete for high-quality locations.
The result is a market where well-located space can be difficult to replace.
A grocery-anchored shopping center benefits from recurring visits, predictable consumer needs and a collection of complementary tenants. The grocery store generates frequency. Restaurants, fitness studios, medical providers and service businesses create additional reasons for consumers to return.
The strongest centers are therefore more than collections of leases. They are part of the daily routine of the communities they serve.
They connect households to food, healthcare, wellness, financial services and convenience. When located in a growing market with limited competing supply, that relevance can support durable occupancy, tenant demand and cash flow.
The Retailers Driving Expansion
The current retail expansion cycle is being led by companies whose business models depend on value, convenience, frequency and local market penetration.
ALDI, Lidl, Sprouts Farmers Market and Trader Joe’s continue to expand specialty and value-oriented grocery formats. Warehouse clubs such as Costco, BJ’s Wholesale Club and Sam’s Club are selectively adding locations, while regional grocers such as H-E-B and Publix continue investing in new stores and distribution capacity.
The momentum extends beyond grocery.
Chipotle, CAVA, Chick-fil-A, Raising Cane’s, and Starbucks continue competing for highly visible outparcel and end-cap locations. Planet Fitness and other fitness operators are taking larger spaces, while urgent care, dental, physical therapy, veterinary, and other medical-service businesses are becoming increasingly important components of the tenant mix.
These companies do not merely occupy shopping centers. They help define traffic patterns, consumer demographics, and long-term property performance.
That creates a more important question for landlords.
It is no longer enough to know whether a retailer can pay rent. Owners increasingly need to understand whether that retailer adds value to the center.
Retail Real Estate Is Becoming a Data Business
The traditional retail leasing model relied heavily on demographics, traffic counts, broker experience and tenant credit.
Those inputs remain important, but they are no longer sufficient.
A landlord evaluating a tenant today may want to know how much consumers spend with the brand, how frequently they return, how the location performs relative to nearby stores and whether the concept generates incremental demand for neighboring tenants.
This shift is creating an opportunity for a new generation of retail real estate technology.
CenterCheck is approaching the market through transaction-based retail intelligence. The company uses aggregated and anonymized payment data to help owners, brokers, investors, and retailers evaluate store-level sales, brand performance, and consumer spending behavior. Its broader value proposition is moving the industry from estimating commercial activity to measuring it more directly.
LocateAI focuses on retail site selection and location intelligence. Its platform helps expanding brands evaluate potential locations, forecast performance, and make market decisions using data rather than relying entirely on intuition or static demographic reports.
Tango Analytics provides location strategy, market planning, site selection, and lease-administration technology for retailers and restaurant companies. Its platform reflects a broader movement toward connecting real estate decisions with portfolio strategy and store performance.
Esri remains deeply embedded in location analytics through its mapping tools, demographic datasets, and geographic information systems. Its technology continues to support trade-area analysis, market planning, and site evaluation across retail.
Together, these companies represent the technology layer developing around the physical retail asset.
Grocery Technology Extends Beyond the Property Line
The technology opportunity does not stop once a lease is signed.
Inside the grocery store, operators must manage inventory, pricing, labor, merchandising, fulfillment, shrink and food waste. Small improvements in any of these areas can materially affect store-level margins.
Instacart has evolved beyond grocery delivery into a broader technology and advertising platform for retailers. Its tools support e-commerce, fulfillment, digital storefronts, in-store technology and retail media.
Ocado Solutions provides automated fulfillment and warehouse technology for grocery operators. Its model demonstrates how software, robotics and distribution strategy are becoming closely connected to store networks and real estate decisions.
Afresh applies artificial intelligence to fresh-food inventory management. Its technology helps grocery operators forecast demand and manage ordering in departments where perishability makes inventory decisions particularly difficult.
Crisp connects retailer, distributor, and consumer-goods data to improve forecasting, replenishment, inventory visibility, and supply-chain execution.
Upside uses digital incentives and transaction data to help grocery stores, restaurants, and fuel retailers attract customers and measure incremental spending.
Swiftly provides digital engagement, loyalty, and retail-media technology for grocery retailers, allowing regional operators to build stronger consumer-facing capabilities without developing the entire system internally.
These businesses may be described as grocery technology, retail software, supply-chain technology, advertising technology or fintech. But their economic impact ultimately reaches the real estate.
A store with better inventory availability, stronger margins, more loyal customers, and more efficient fulfillment can become a stronger tenant. Stronger tenants create more durable rent streams, higher renewal probabilities, and more valuable shopping centers.
Why Venture Capital Is Paying Attention
The venture opportunity surrounding necessity retail is not concentrated in a single application; rather, it spans the entire lifecycle of a retail location.
Site-selection and revenue-forecasting platforms help retailers decide where to open.
Tenant-intelligence tools help owners determine which brands will strengthen a center.
Leasing software helps brokers and landlords convert demand into signed leases.
Transaction data helps investors measure store and category performance.
Inventory and supply-chain platforms improve store-level profitability.
Retail-media technology creates new revenue streams from existing customer relationships.
Facilities and operations platforms help owners manage increasingly complex properties.
The common thread is measurable economic value.
The strongest retail technology companies can connect their products to revenue growth, margin improvement, occupancy, tenant retention, operating expenses, or asset value. Those outcomes are clearer and more financially meaningful than a general promise of digitization.
This makes necessity retail particularly attractive for venture investors.
The addressable market is not limited to shopping-center landlords. It includes grocers, restaurant companies, fitness operators, healthcare providers, brokers, lenders, asset managers, property managers, consumer brands, and logistics companies.
Each participant has different workflows and budgets, but all of them need better information about where consumers shop, what they purchase, and how physical locations perform.
The Next Stage of Retail Intelligence
The first generation of retail analytics helped the industry understand movement.
Owners could estimate visits, study trade areas, and compare consumer patterns across locations. That information improved the industry's evaluation of demand, but it still relied heavily on indirect signals.
The next generation will focus on commercial performance.
Owners will increasingly want to know what consumers spend, how often they return, which retailers generate incremental visits, and how one tenant affects the performance of another.
That shift matters because traffic alone does not determine value.
A high-traffic tenant may generate limited spending. A smaller operator may attract a highly loyal customer base. A fitness concept may create repeat weekly visits that support nearby restaurants. A grocery store may anchor a center, while its surrounding service tenants determine how much additional value the property captures.
The technology companies that can measure these relationships will influence how landlords lease space, how retailers choose sites, and how investors underwrite assets.
From Defensive Asset Class to Technology Opportunity
Grocery-anchored retail has historically been viewed as a defensive investment.
Consumers continue to purchase food, medicine, and essential services throughout economic cycles, making the underlying income comparatively resilient.
That remains true, but it is no longer the complete story.
The sector is becoming more sophisticated, more measurable, and more closely connected to technology. Stores are functioning as fulfillment points. Shopping centers are evolving into service-oriented destinations. Leasing teams are using more data. Owners are adopting systems that connect property operations, tenant performance, and consumer behavior.
The strongest technology companies will not attempt to force a generic software model onto retail real estate.
They will understand how the sector actually works — market by market, tenant by tenant, and center by center.
They will recognize that a landlord does not need more data simply because it is available. The landlord needs to know which retailer belongs in a particular space, what that retailer contributes to the center, and how the decision will affect income over time.
That is the larger opportunity emerging around necessity retail.
The physical assets are valuable because supply is constrained and consumer demand is recurring. The technology opportunity exists because the industry is only beginning to measure that value with precision.
What This Means for Proptech
For founders, necessity and grocery-anchored retail represent a market where technology can become directly connected to property performance.
For venture investors, the category offers exposure to resilient real estate and the software modernizing how it is selected, leased, and operated.
For owners, the competitive advantage will increasingly come from understanding not simply how many consumers visit a property, but how effectively the property converts those visits into commerce.
The next generation of retail real estate will be built around a clearer operating principle:
Location creates opportunity.
Tenant performance creates value.
Technology makes the difference measurable.
