Grocers, big box retailers battle to win suburban shoppers

A grocery war is brewing, and it isn't about offering customers the best price. It's about location and expansion.

Well-established chains and newcomers are filling the suburbs with more options to buy food and general merchandise, despite the recession and its aftermath.

Grocery operators are targeting Chicago and the suburbs with new or remodeled stores, including Mariano's Fresh Market, owned by Wisconsin-based Roundy's. Mariano's opened in Arlington Heights in 2010 with plans to open grocery stores in Palatine and Vernon Hills later. Low-cost grocers Aldi's, Food4Less and others also are expanding.

Stores are catering to a growing customer base, especially those suburbanites who are eating more at home, said Jeff Weidauer, vice president of marketing and strategy for Vestcom. Weidauer also worked for 30 years in food retail, including at Jewel-Osco parent, Supervalu.

“People still have to eat,” said Weidauer. “But the question is, where are they getting their food? People stopped eating in restaurants and began eating more at home to save money during the recession. That was good for the grocery industry.”

The lines also are blurring on where groceries are bought. While traditional grocery stores have fragmented into segments ranging from low-cost and no-frills to more elaborate, natural or organic offerings, big box retailers have entered the fray in a big way. Walmart, Target and other retailers that traditionally offered general merchandise have become more aggressive here in the last year by adding or expanding their grocery sections.

Shoppers travel to big box stores more often now to get various items, including groceries, Weidauer said.

“If you get those shoppers in twice a week, then you have more traffic and more cash flow.”

Michigan-based Meijer has found its combination of general merchandise and groceries to be successful, leading it to build 13 area stores in Rolling Meadows, Bolingbrook and elsewhere, said Meijer spokesman Frank J. Guglielmi.

Meijer also debuted a new format here with some smaller stores, including one in Niles. It plans to open at least one new store this year, which will be in Melrose Park, Guglielmi said.

“Chicago is a vibrant market and we are very pleased with our continued growth, both in number of stores and in sales,” he said.

German-based Aldi, a low-cost, no frills chain, has been in the Chicago suburban market for about 30 years and now has about 150 stores here. Over the past three years, it's opened more than 25 new area stores, including in Naperville, Buffalo Grove, Oswego, Schaumburg and Glen Ellyn.

Aldi plans to open more stores this year, and older stores likely will get makeovers, said Aldi Batavia division Vice President Scott Patton.

The current prototype offers more natural light, brighter colors and different flooring. One new model includes the store in Schaumburg, he said.

While other chains are expanding, the competition doesn't worry Aldi. After all, the landscape has changed as other low-cost operators have left, such as Cub and Eagle. There's Food4Less and even supercenters inside Walmart, Target and others.

“While others are experimenting, we've continued to do what we do, and have been growing every year since we came into existence,” Patton said.

SuperValu's Jewel-Osco operates 167 stores in Chicago and the suburbs, but no new locations are planned for this year. The last store it opened was in October in Chicago's Lakeview neighborhood. Jewel-Osco spokeswoman Karen May declined to discuss company strategy on selecting store locations or other measures to keep up with competition.

However, Supervalu has been expanding its Save-A-Lot no-frills, low-cost stores. There are 11 Save-A-Lot stores here. Another five Save-A-Lot stores currently are under construction on the South Side of Chicago and are scheduled to open in late February. Supervalu also plans to open “many additional” Save-A-Lot stores throughout the Chicago and suburban market during the next four years, May said.

Also, Sunset Foods will open a new store early this year at the Sunset Grove Shopping Center in Long Grove. Sunset is a full-service, upscale grocery retail chain that has a heavy focus on the North Shore.

The third-generation, family-owned chain has served the area since 1937, beginning in Highland Park and expanded into Northbrook, Lake Forest, Libertyville and, now, Long Grove.

The 50,000-square-foot Long Grove store will have many “green” initiatives, including a reflective solar roof membrane, recycled building products; high-efficiency heating, air conditioning, refrigeration, water and lighting systems; and high-efficiency flooring and siding.

“We offer restaurant-quality food at grocery store prices,” said John Cortesi, Sunset Foods president and CEO. “We value strong relationships with the communities we serve and a unique approach to customer service.”

Also, Whole Foods, which specializes in organic and natural foods, has 17 stores in the Chicago area. One store is in development in Kildeer, said Whole Foods spokeswoman Kate Klotz.

What does Whole Foods look for to select those sites and decide on expansion?

“We have a pretty extensive list that includes traffic patterns, local competition, areas with a high level of college graduates and collections of people traveling distances to visit our stores. We track by ZIP codes,” said Klotz.

Can Whole Foods, which carries many higher-priced brands, survive among discounters and no-frill operators?

“Absolutely,” said Klotz. “Competition is good for any market. As the world's leading organic and natural retailer, we appreciate competition in products we sell, as it means the marketplace for natural organic products is increasing.”