With a wide range of products tailored to specific neighborhood needs, independent Chicago-area grocers are thriving.
I think I have seen the future of the supermarket industry and it rests in the Chicago metropolitan area.
As you will read in this issue, Grocery Headquarters has selected Roundy’s as our 2013 Independent Grocery Retailer of the Year. The Milwaukee-based chain operates more than 160 stores in Minnesota, Wisconsin and Illinois under five different banners. But it is quite clear from discussions with the chain’s top executives that their Mariano’s banner is now the focus—or at least a test tube—for future growth for the chain.
Mariano’s operates seven high-end stores in the Chicagoland area, each about 65,000 square feet of fine shopping experiences, ranging from robust bakery and cheese sections to a hearty meat and produce area. A sit-down sushi bar and a walk-in beverage cooler at some stores only add to the ambiance.
With stores packed with shoppers at 2 p.m. on a weekday afternoon, it is clear that Mariano’s is carving out a niche with those shoppers looking for a broad assortment of quality products at price points that do not break the bank.
Mariano’s is not the only operation turning the tables on the big boys in the Windy City. Area officials say that independents are gaining strength in the Chicago area at the expense of the larger chains like Dominicks, Jewel/Osco and even Walmart and Target. These smaller operations are capturing the hearts of area residents by figuring out what consumers want and need, neighborhood by neighborhood.
They are offering a wide range of products, in pleasant settings, and, most importantly, at reasonable price points to get shoppers looking for something as a more legitimate alternative. It goes back to the old philosophy that consumers no longer look at the supermarket as an outlet to purchase a week’s worth of groceries, but instead as a place to buy lunch or dinner for the next day or so. That means that these stores are competing as much against each other as the McDonald’s or Chilis down the street.
Chicago is known as a rough city and things may get going in the battle for market share. Observers say the larger players are trying to fight back. With deep pockets behind it from Safeway, Dominick’s, for example, has reworked its merchandise mix in many urban stores to try to copy the success of the independents. Recently-sold Jewel/Osco, meanwhile, is rumored to be trying to add or expand several key perimeter departments in certain locations.
The end result will be more remodeled grocery stores with a greater selection of departments designed to make consumers more eager to shop their outlets. If done correctly, it should get consumers excited about the offerings and willing to pay for these products.
That should mean more profits for those retailers who understand that the supermarket game has changed from one that stressed just price to one that incorporates price as one component needed to win consumer hearts, minds and wallets.