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updated: 2/25/2013 10:41 AM

Shoppers drive competition as new grocers expand in suburbs

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  • Produce clerk Charlie Gimmler of Palatine stocks apples and other produce at Mariano's in Palatine. Fresh produce is in high demand in the suburbs, so grocers pay special attention to it.

       Produce clerk Charlie Gimmler of Palatine stocks apples and other produce at Mariano's in Palatine. Fresh produce is in high demand in the suburbs, so grocers pay special attention to it.
    Photos by Mark Welsh | Staff Photographer

  • Uncle Joe's Tuscan Fresh Market is expected to open soon in a long vacant former Dominick's supermarket in Rolling Meadows.

      Uncle Joe's Tuscan Fresh Market is expected to open soon in a long vacant former Dominick's supermarket in Rolling Meadows.
    Daily Herald file photo

  • Avery Osby of Hoffman Estates grills some meat for a customer at Mariano's in Palatine. There's a seating area for customers to eat inside the store.

      Avery Osby of Hoffman Estates grills some meat for a customer at Mariano's in Palatine. There's a seating area for customers to eat inside the store.

  • What's offered behind all the counters at suburban grocery stores, like the deli counter at this Mariano's in Palatine, is separating some of the stores from the others. Suburban customers like prepared foods -- if they're fresh and healthy.

       What's offered behind all the counters at suburban grocery stores, like the deli counter at this Mariano's in Palatine, is separating some of the stores from the others. Suburban customers like prepared foods -- if they're fresh and healthy.
    Photos by Mark Welsh | Staff Photographer

  • Mariano's is one of the recent players in the competition for suburban shoppers.

       Mariano's is one of the recent players in the competition for suburban shoppers.
    Mark Welsh | Staff Photographer

  • Mariano's is one of the recent players in the competition for suburban shoppers.

       Mariano's is one of the recent players in the competition for suburban shoppers.
    Mark Welsh | Staff Photographer

  • Cori Baum of Hoffman Estates serves pizza at Mariano's in Palatine. Hot food offerings provide easy dinner options for suburban customers.

       Cori Baum of Hoffman Estates serves pizza at Mariano's in Palatine. Hot food offerings provide easy dinner options for suburban customers.
    Mark Welsh | Staff Photographer

  • Jewel-Oscos in Wheaton and other suburbs have lowered prices to try to compete with Target and Walmart.

      Jewel-Oscos in Wheaton and other suburbs have lowered prices to try to compete with Target and Walmart.
    Daily Herald file photo

  • Mariano's Fresh Market opened in 2010 in Arlington Heights. It opened in 2012 in Palatine and Hoffman Estates.

      Mariano's Fresh Market opened in 2010 in Arlington Heights. It opened in 2012 in Palatine and Hoffman Estates.
    Daily Herald File Photo

  • CEO Bob Mariano of Inverness stands at the deli counter of Mariano's Fresh Market in Arlington Heights.

      CEO Bob Mariano of Inverness stands at the deli counter of Mariano's Fresh Market in Arlington Heights.
    Daily Herald file photo

  • Produce expert Joe Bosch points out something to another employee at the Jewel-Osco in Elburn.

      Produce expert Joe Bosch points out something to another employee at the Jewel-Osco in Elburn.
    Daily Herald file photo

  • Video: Grocery Wars on ABC7

 
 

When Melanie Collins of North Barrington spends about $300 a week on groceries for her family, she wants a good selection of produce and freshly cooked prepared meals that are free of preservatives.

That's why she returns, time and again, to Dominick's, Trader Joe's and Fresh Market. She also goes every two weeks or so to Costco to buy items in bulk for the household.

"It has to be fresh, healthy and convenient," Collins said. "I don't want it to be from a fast food place or anything fried."

Grocery shoppers like Collins are helping to change the face of the grocery industry in the Chicago suburbs. They're demanding more produce and other foods that are fresh, healthy, quick and convenient, and they're willing to shop around to get it.

Price, store appearance and other factors also come into play, and that's telling local grocers to meet those needs if they want shoppers' business, experts said.

With mainstay Jewel-Osco's future in limbo under new owners, other major grocers are shaking up the local market with expansions, including Mariano's, Meijer and others. The latest entry, >Uncle Joe's Tuscan Fresh Market in Rolling Meadows, is expected to open soon on a site abandoned years ago by Dominick's. It is touting competitive pricing and special features to keep a growing suburban population well-fed and supplied with favorite to-go items.

Even in the face of such suburban expansion, the Chicago area as a whole is seeing more supermarket closings than openings. The region had 955 supermarkets in 2012, compared to 1,258 in 2011, according to the Marketing Guidebook Year in Review by Deerfield-based Stagnito Media and The Nielsen Co. LLC.

Some companies are downsizing, such as Dominick's, which has operations in Oak Brook, and Jewel-Osco, which has headquarters in Itasca.

Competition among traditional or similar competitors is very intense, said Bill Bishop, chief architect of Barrington-based Brick Meets Click, a research firm.

"The market for traditional grocery stores is saturated. So some capacity has to leave the market, and this is happening," Bishop said.

"But there are also exciting growth opportunities for any food retailer who can provide a new and different shopping experience," he said. "The reason some stores like Meijer and Mariano's continue to expand is because they offer a value to shoppers that causes customers to flock to their stores."

The U.S. Grocery Shopper Trends 2012 report showed that consumers seek low prices, a clean and neat store, high-quality produce and great selection of products as their primary reasons they return to certain stores.

Technology is playing an increasing role, since consumers are gravitating toward stores that incorporate it. Nearly 52 percent of consumers nationwide use a smartphone or grocery websites to help do their shopping, according to Arlington, Va.-based Food Marketing Institute's Annual Financial Review for 2011.

To keep customers coming back, many stores nationwide sought facelifts. Nearly 52 percent of stores did a major remodel in 2011, compared to 40 percent in 2010, and 37 percent built new stores in 2011, compared to 24.5 percent in 2010, FMI said. Its report for 2012 is expected in May.

A major player with suburban expansion plans is Mariano's, owned by Milwaukee-based Roundy's Inc. and led by CEO Bob Mariano of Inverness. Mariano's features a full-service bakery, sushi restaurant and other in-house cooked foods along with a full selection of products and organic items. Roundy's operates about 160 grocery stores and 98 pharmacies under other names as well, including Pick 'n Save, Rainbow, Copps and Metro Market in Wisconsin, Minnesota and Illinois.

Mariano's added four stores in 2012 -- in Palatine, Hoffman Estates and two in Chicago, bringing its count in the area to eight, said James J. Hyland, vice president of investor relations and communications for Roundy's.

This year, the company plans to open five more Mariano's in Wheaton, Elmhurst, Frankfort, Harwood Heights and Chicago. Another is expected to open in Lake Zurich in 2014, he said.

The overall plan is to have 25 to 30 Mariano's stores in the Chicago area, Hyland said.

"We get new competition all the time," Hyland said. "We focus on the consumers and their experience rather than the competition. There is nothing quite like Mariano's, and through focus on brand, leadership and our customers, we intend to keep it that way."

Instead of adding stores, longtime grocer Sunset Foods plans to unveil a new format inside its Libertyville location. Construction starts in April and could be completed this fall. It eventually could roll out to other Sunset Foods stores in Highland Park, Long Grove, Northbrook and Lake Forest, said Sunset Foods CEO John Cortesi.

The renovation will include a larger floral section, prepared foods and craft beer. A new entrance will be added just for the wine and spirits section, and a new outdoor area will seat 60 people, Cortesi said.

Sunset also will expand its e-grocery service at the Libertyville store to seven days a week, so customers can order items online and later drive up to a designated spot to pick up their groceries. That online service will eventually be offered at the other stores, he said.

The stores also use social networking more heavily, including Facebook and, soon, Twitter, Cortesi said.

Whole Foods opened a new store in Orland Park last year, then it closed a store in Palatine last month, Whole Foods spokeswoman Ashley Heaton said.

"Whole Foods Market will be growing its presence in suburban Illinois in the next two years with a store opening in Kildeer March 6 and then an additional store in Park Ridge later in the year," Heaton said.

Meijer, which has stores in Rolling Meadows, Bolingbrook and elsewhere, continues to expand. Its 16th store will open soon in Evergreen Park. Meijer also is in talks with a number of other suburbs, including Mokena, for future stores, said Meijer spokesman Frank J. Guglielmi.

"We believe competition is good for everyone, especially the customer," said Guglielmi. "At Meijer, our focus is always on maintaining high levels of customer service and the lowest prices, which has served us well as we focus on slow, steady growth."

In January, SuperValu, the parent of Jewel-Osco, announced the local chain would be sold to an investor group led by Cerberus Capital Management. The sale is expected to close in March, and a team has been reviewing staffing, said SuperValu spokesman Mike Siemienas.

Jewel has struggled in recent years and has introduced various campaigns, including lowered prices, to overcome competitors -- such as discounters Target and Walmart -- that have expanded their grocery sections.

"At this time, it is business as usual in our stores," Jewel spokeswoman Karen May said this week. "We can't speak to what will happen once the transaction closes."

Yet SuperValu's other subsidiary, Save-A-Lot, is adding a new store at the former Irv's menswear spot in the Palwaukee Center in Prospect Heights.

Also last summer, Ultra Foods in Hanover Park closed due to poor performance as a result of stiff competition and a "difficult economic environment," said Dave Wilkinson, president of Highland, Ind.-based SVT LLC, parent of the Ultra and Strack & Van Til chains.

The discount grocery chain has 14 stores in the Chicago area, including Wheaton, Lombard and Downers Grove, as well as in Indiana. Late last year, Ultra opened another store in Crestwood and plans to open in May in the vacant former Dominick's at Prospect Crossings on Rand Road in Prospect Heights.

Besides Ultra, Wheeling-based Garden Fresh Market also closed stores in Mount Prospect and Arlington Heights last year. Competition was a factor, Garden Fresh General Manager Golan Mor had said. It still has stores in Mundelein, Naperville, Round Lake Beach, Northbrook and Wheeling.

As the grocery industry continue to evolve here, the future looks bright. "In the next couple of years, stores that are unique and different will expand," Bishop predicted. "Whole Foods will definitely gain market share at the upper end of the market. Aldi will definitely gain at the lower end of the market. And Mariano's and Caputo's will gain in the middle market."

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