There are big changes afoot in the grocery sector with new formats, organic initiatives and pared down urban locations, not to mention mergers and acquisitions. In Chicago, there is a supermarket spring awakening and if this market is any indication, shoppers are in for an exciting few years.
Here in Chicago, I’ve got a front row seat to what is shaping up to be an exciting time, at least for grocery shoppers.
It wasn’t the case six months ago, when Albertson’s announced it would close all Dominick’s stores in the Chicago market, leaving many shoppers and neighborhoods with few alternatives. It was a long, cold winter and those of us inside the Polar Vortex without a neighborhood market suffered doubly.
Spring has been slow to arrive but arrive it has. New markets are opening in the shuttered Dominick’s stores and the variety of new shopping options springing up in Chicago promises to create a vibrant retail market with many players where once there were two.
For years Jewel-Osco and Dominick’s dominated the Chicago metropolitan area. Both were acquired and re-acquired over the years, stripping away much of what had made these chains successful. One owned by Albertsons and the other Safeway. Aldi, Trader Joe’s, Whole Foods and Target all operate here, but these stores are few and far between, operating only in select markets.
Walmart has largely been kept outside the city limits by political pressure.
All this serves to make Chicago unique. “It’s somewhat isolated,” notes McMillan/Doolittle retail consultant Neil Stern. “Almost everywhere else you have Walmart as a major factor in the market, but in Chicago it plays a relatively small role.”
The area can’t accommodate large supercenters, so both Walmart and Target have gotten creative with new formats and prototypes to serve an urban market. Walmart Express stores are popping up in Chicago neighborhoods and two story Target stores with fresh food departments are growing too. Say what you will about Walmart, but in Chicago there are neighborhoods without a supermarket at all, where people rely on liquor stores for daily items or are forced to haul grocery bags home on multiple buses. A small format Walmart grocery store would be welcome.
And so we have retailers now vying to locate inside these neighborhoods, these food deserts as they are called. Even Whole Foods is developing a prototype that better caters to lower income shoppers, and its 365 Everyday store brand has brought a good many household staples down in price. As Whole Foods works to ditch its “Whole Paycheck” reputation it expands the shopper base. Expanding in Chicago makes more sense.
Wisconsin-based Roundy’s has arrived in Chicago in a big way, opening stores and buying up closed Dominick’s locations like a superhero swooping in to rescue shoppers and Chicagoan’s have welcomed it with open arms. Shoppers wander the aisles of newly opened stores tasting store brands, eating fresh popped popcorn and sampling gelato as a piano player tickles the ivories near the checkout.
Mariano’s arrival and immediate success is due in part because there hasn’t been any compelling competition in Chicago for so many years, said Stern. But it also speaks to the success of regional chains, a list that includes Harris Teeter, Publix, Wegmans and H-E-B. As the large national players like Albertson’s, Safeway and Supervalu consolidate and Kroger sits on the sidelines trying to avoid taking on debt, these strong regional grocers are growing and winning over shoppers.
Because it’s the shoppers who win here. Retailers are innovating at a rapid rate and the more competition, the better the shopping experience. Prices drop and selection increases, it’s a win for shoppers.
In Chicago, where the long cold winter is an analogy for the long dark decades of dreary shopping, this supermarket spring is very welcome.