Shoppers can expect more change in Chicago’s grocery stores in 2018
Greg TrotterContact ReporterChicago Tribune
Walking the grocery aisles with Jewel-Osco President Doug Cygan offers a glimpse at how changing consumer tastes have altered grocery stores.
In the center aisles — where sales have stagnated or declined in recent years for many retailers — Jewel-Osco has overhauled its product assortment and bolstered natural and organic offerings, Cygan said. Square feet devoted to frozen food has diminished, while floor space for myriad beer, wine and liquor options has grown.
And water, as Cygan puts it, is on fire. What used to be 4 feet of shelf space now consumes most of an aisle of both sparkling and nonsparkling waters.
“And this stuff all sells,” Cygan said, staring down the Deerfield Jewel’s water aisle. “That’s what the people want. That’s what you give ’em.”
It’s change or die in the hypercompetitive grocery industry, as retailers try to keep up with customers who demand fresher food, a better in-store experience and delivery or pickup options. In the year ahead, industry experts expect those trends to continue, even as the pace of store openings slows. And much of the growth from large chains is likely to come from those that operate smaller discount stores like Aldi, which is planning six store openings in 2018 , including stores in Naperville, Elk Grove Village and Downers Grove.
By comparison, Jewel is planning on opening two stores in 2018, in the Woodlawn neighborhood on the South Side and in northwest suburban Huntley. Mariano’s, meanwhile, will open one in suburban Crystal Lake. Both companies say they’ll largely be focused on remodeling existing stores in the year ahead.
The problem for chains like Jewel and Mariano’s is that shoppers are increasingly buying their groceries from more than one store, said Dan Tausk, a principal at Oakbrook Terrace-based retail brokerage Mid-American Real Estate Group. That means grocery dollars are splintered among a wide variety of formats including upscale grocers, discounters, dollar stores and drugstores.
“If you are not able to fit into special niches and still trying to be all things to all people — to me, that’s the most vulnerable,” said Tausk, who writes a biannual report on Chicago’s grocery industry.
“To me, Jewel has done all the necessary things to survive as a middle market, one-stop-shop for consumers,” Tausk said.
In the past five years, the Albertsons-owned company has remodeled 140 of its 187 stores, expanded produce and deli offerings, and put more emphasis throughout the store on fresh food, Cygan said. In the year ahead, Jewel plans to remodel another 20 stores.
And last year, Albertsons rolled out delivery from Jewel-Osco stores and acquired Plated, a meal kit startup.
Mariano’s also continues to evolve since its parent company, Roundy’s, was acquired by Kroger for $800 million in 2015.
Since that acquisition, Kroger has largely left Mariano’s to make its own decisions, said Don Rosanova, Mariano’s president.
But Mariano’s — best known for its prepared food offerings on the perimeters of the store — has availed itself of some of Kroger’s infrastructure to grow the business. Last year, the 43-store chain opened its first Mariano’s-branded gas station outside the new Lombard store. Mariano’s shoppers can earn fuel discounts by racking up reward points buying groceries, Rosanova said.
Expect more of that in the years to come. The company is planning its second gas station outside the new Crystal Lake store opening later this year and will look to add fuel to existing suburban locations in 2018 and 2019, including Lake Zurich, Oak Lawn and possibly Frankfort.
Mariano’s is also phasing in some of Kroger’s store brands to replace existing Mariano’s store brands, Rosanova said. For example, most Roundy’s Simply Organic products have been replaced by Kroger’s Simple Truth brand. And in some locations, such as the new Bannockburn store, the chain is testing whether Starbucks performs better than Vero Coffee, Mariano’s original in-store coffee concept, he said.
Despite such changes, Rosanova said, Mariano’s remains committed to its distinct in-store experience and is placing even more focus on convenience throughout the store.
“I’m responsible for protecting the Mariano’s brand,” Rosanova said. “We’re not going to do anything to jeopardize what we’ve established for the last seven years.”
Meanwhile, Aldi just keeps growing and changing. Beyond the six store openings, Aldi plans to remodel 30 stores, making them brighter, more contemporary and, in some cases, larger. It’s part of a broader initiative to remodel 130 of its 150 Chicago-area stores by 2020.
“We look forward to continuing to grow our Chicagoland presence in 2018 and the years ahead,” said Heather Moore, Aldi division vice president.
Some questions for Chicago’s grocery landscape remain unanswered for now. Whole Foods Market, acquired by Amazon last summer, declined to comment for this story. On the other end of the price spectrum, Dollar General, a fast-growing retailer that’s mostly flourished in rural settings, said it would open its 28th Chicago area store in the Roseland neighborhood early this year, but otherwise declined to comment on its plans.
“I do think we’re going to see more dollar stores in the Chicago area and they’ll be selling more food than ever before,” said Jon Hauptman, a senior director of retail for grocery consulting firm Willard Bishop.
And of course, nearly all retailers will be working to grow their delivery and pickup options for customers this year. Both Jewel and Mariano’s launched their respective e-commerce services last year.
Pickup could emerge as the better option for both shoppers and retailers, though, said Jared Koerten, lead analyst at Euromonitor International.
“It’s a lot easier. The last mile in terms of delivering perishables continues to be a big challenge for grocery stores,” Koerten said.
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