Despite the ongoing e-commerce trend, the physical store experience remains a core focus for many food retailers. In recent years, the number of physical stores has grown significantly, with companies investing in new formats, store renovations, and flagship projects. In 2020, this momentum is expected to continue, with numerous new store openings, development projects, and retailer concept tests across several U.S. markets. According to industry experts, the following four regions are particularly noteworthy: from sunny Southern California to New Jersey, these markets will be the focus of the grocery industry in 2020.

Charlotte, North Carolina

In Charlotte, the "Queen City," competition is heating up. Established retailers like Food Lion and Harris Teeter are facing challenges from new entrants such as Wegmans, Aldi, and Lidl. Add Walmart and Publix to the mix, and a battle of the giants is inevitable, says Mark Thompson, founder of real estate tracking site GroceryAnchored.com.

Thompson noted that the state's population size may not support the wave of new stores about to open. "The migration into the Carolinas is not sufficient to support the grocery expansion happening in the state, and Charlotte is no exception," he told Grocery Dive.

The key question is who will win. Thompson believes there are excellent operators locally, but some residents he has spoken with have 10 to 11 grocery stores within a three-mile radius. "When I have nine options, someone is bound to lose in this competition," he said.

Regarding Lidl's entry into Charlotte, spokesperson Will Harwood told Grocery Dive in an email that the company sees significant demand for its format along the East Coast. "You can see us becoming more flexible in real estate to maintain a continued focus on convenience," he wrote. The discounter opened its first store in Charlotte last December and plans to open another south of the city, while operating three stores in the suburbs.

In addition to Lidl, Amazon Fresh announced in December that it would expand into the Charlotte market; Harris Teeter plans to renovate an existing store, open a new one, and close another this year.

Washington, D.C.

Thompson said Washington, D.C. is another market to watch this year, and he is particularly focused on Publix. The Florida-based retailer has been steadily expanding northward in recent years and currently operates 1,230 stores, with about 80 more in development or at various approval stages.

"Publix has a store in Stafford, Virginia, which is about two-thirds of the way to Washington, D.C.," Thompson said. "They are at the doorstep." While he does not speak for Publix, he would be surprised if the retailer did not choose a location in the capital. "Publix entering Washington, D.C. would be very interesting to me."

Nick Egelanian, president of retail real estate firm SiteWorks, also considers Washington a market to watch in 2020. "Washington has always been a market of interest because of its high level of affluence," he told Grocery Dive. "It has always been a top market for Whole Foods, and many major players compete here: Giant under Ahold, Harris Teeter under Kroger, and Safeway under Albertsons."

Egelanian also observed that Aldi and Lidl are moving from the outskirts of the D.C. metro area toward the center. "In the past few months, I have seen four or five Aldi stores taking over locations; they are eating into market share." Lidl has multiple development projects around Washington, and Wegmans will continue to expand. Whole Foods, in addition to its new flagship store in Tysons Corner, plans to open more locations in the area.

New Jersey

With Aldi and Lidl expanding and competing with each other, New Jersey is one of the highlights for 2020. Marta Villa, senior vice president at commercial real estate firm JLL, said that when Lidl first entered the state, it focused on purchasing properties, paying premium prices for prime locations, but has now shifted to leasing, which is a relatively new strategy for the discounter.

"Lidl and Aldi are almost neck and neck in their expansion plans," Villa said. Harwood said Lidl opened two stores in New Jersey in 2019, bringing the total to six. "We do not forecast specific numbers of new store openings, but we expect to double this year."

In addition to Lidl, long-time market leader ShopRite continues to open stores. Villa mentioned that a new store opened in South Brunswick in November. "High-quality ShopRite stores in New Jersey can achieve weekly sales of $1 million to $1.5 million; they are strong players," she noted. Some locations have expanded organic produce and deli sections, while others remain traditional.

Villa believes that New Jersey has always been highly competitive due to its high population density. "New Jersey retail performs excellently; the key is density and the opportunity to reach the most customers." Retailers often concentrate along major corridors to maximize foot traffic and visibility. For example, Wegmans only selects locations near interstate highways, Lidl has moved onto Routes 22 and 35, and the new Whole Foods is on Route 46 in Parsippany.

"They have moved away from traditional neighborhood centers and are trying more regional layouts," Villa said. Whole Foods is expanding rapidly; in addition to the new Parsippany store, it opened locations in Commack, New York, and Weehawken, New Jersey, in 2019. Trader Joe's has more than a dozen stores in the state and has announced new locations, though progress has been slow; Sprouts has hired a brokerage firm to help it enter the state. Stew Leonard's new store in Paramus opened in September and is performing strongly.

Southern California

With Amazon announcing that the first store of its new grocery chain will be located in Woodland Hills, an upscale suburb northwest of Los Angeles, the region becomes a focus for the coming year. "Many eyes are waiting to see what they launch and how they will surpass grocers that have been around longer," Egelanian said.

Although the e-commerce giant is keeping details of the chain under wraps, information is gradually emerging as the opening approaches. For example, the store will be located in a former Toys 'R' Us space, and according to The Wall Street Journal, Amazon also plans to add locations in Studio City and Irvine, California.

"We will see what Amazon is in 2020." — Mark Thompson, GroceryAnchored.com

Thompson agrees, and he looks forward to learning the specifics of Amazon's traditional grocery store format and how many stores it plans to open. "We will see what Amazon is in 2020," he said.

Additionally, Grocery Outlet CEO Eric Lindberg previously told Grocery Dive that Southern California holds great potential for his company, which has significant expansion plans since going public last summer. "In terms of store count on the West Coast, we are still a small company, so there is plenty of room for expansion in Southern California, including filling in existing markets."

Whether it is intensifying competition in existing markets or new formats in untapped markets, the developments of 2020 are already on the horizon, and some are even underway.