Amazon finds Schaumburg grocery market favorable, but unlikely to dominate it
Schaumburg officials Thursday addressed why they believe Amazon chose the village to be among the first to showcase a new type of grocery store by the retail giant, as well as their expectations for it on the local competition.
Economic Development Director Matt Frank said attractive demographics and a diverse economy are among the factors that often put Schaumburg at the top of companies' lists when they contemplate entering the Chicago market.
Mayor Tom Dailly said Schaumburg alone provides a vibrant community of 74,000 residents, while Hoffman Estates and its estimated 51,000 residents are immediately adjacent.
"They picked a nice, central location," Dailly said of the forthcoming Amazon store.
The nearly 43,000-square-foot grocery store with an 862-square-foot dining area will open sometime during the second half of 2020 on the former Babies R Us site at 16 E. Golf Road.
Amazon earlier this year sent signs they plan another grocery store in the suburbs, when the company applied for a license to sell liquor from a grocery store at 3116 S. Route 59 in Naperville.
In choosing those suburbs, Amazon was clearly choosing highly populated areas with robust local economies, said David Bishop, partner for Brick Meets Click, a Barrington-based marketing firm specializing in grocery retail.
How Amazon plans to distinguish itself in the market beyond its initial novelty value remains to be seen, but the venture certainly was carefully deliberated, Bishop said.
"They've demonstrated a willingness to invest for the long term," he added. "If it isn't working, they're going to make changes."
One thing that was clear about the grocery industry even before the pandemic is that it is one of the largest focuses of consumer spending in the country and is likely to continue attracting more competitors, Bishop said.
"I think, obviously, as competition increases that benefits the consumer in terms of options, prices and services," he said.
An Amazon spokesperson this week clarified that the Schaumburg location will not be part of the cashier-free Amazon Go line of stores, but will have a more traditional checkout experience.
While Amazon, as an online retailer, has an overall reputation for sometimes overwhelming its competition, Frank and Dailly believe its grocery store will be only one option among many in Schaumburg. That includes the Amazon-owned Whole Foods store at 750 N. Martingale Lane, near both Woodfield Mall and the Streets of Woodfield shopping center.
"I think during the pandemic we found out how important our grocery stores are," Frank said.
With its bakery and organic focus, Whole Food generally aims for a different segment of the grocery market, Frank said.
That distinction, even within a single company, demonstrates the variety of niches within the grocery industry that other competitors like Trader Joes, Jewel and many others try to cater to, Dailly said.
"Everyone has a different design and way of being in that market," he added.
Neither Frank nor Dailly believe the new Amazon store would have an adverse impact on the future use of the former Dominick's location in Town Square at 200 S. Roselle Road. Vacant since 2013 and now owned by Tony's Finer Foods, that former Dominick's is being kept empty through a lingering lease option by Albertsons, the parent company of Jewel-Osco.
Frank said a grocery store remains the village's preferred use of the site, and that its distance from the Amazon store and proximity to homes -- including many new ones -- would provide sufficient demand.
Dailly said that even if the space were eventually divided up, the former Dominick's building could easily provide space for a smaller, specialty grocery store such as KD Market-Krystyna's Deli, which provides Polish cuisine just to the south at 1102 S. Roselle Road.