- The race to snatch up stores belonging to Dominick’s grocery chain, which shuttered in 2014, is drawing to a close, according to a story in The Chicago Tribune. Now, grocers like Mariano’s and Jewel-Osco, which account for a combined 30% market share in Chicago, must find new growth opportunities in a saturated market with stiff competition.
- Discounters like Aldi, along with dollar stores, still have room to grow thanks to their smaller format and potential to thrive in underserved neighborhoods.
- “The problem is there's too many stores and there are only so many customers and so much shopping to go around," Mike Bousis, co-owner of Cermak Fresh Market, which operates 15 stores in the Chicago area, told the Tribune.
When Dominick’s closed in late 2013, it left behind 72 stores in the Chicago area — many of them situated in prime locations. The former retailer’s competitors, including Jewel-Osco, Mariano’s and Whole Foods, bought up many of the most promising sites. Some of the stores owned by Albertsons, which owns Jewel-Osco and bought Dominick’s parent company Safeway in 2015, remain dark. This frustrates many locals and some have accused the company of anti-competitive behavior.
This buy-up was a rare opportunity for retailers to expand their presence in a nearly saturated Chicago market. Now these companies are once again faced with the challenge supermarkets across the U.S. face: How to grow sales through existing stores rather than buying or acquiring new ones.
E-commerce presents an opportunity to capture new consumers and get existing ones to buy more items. Online shopping tends to encourage large fill-in trips, since shoppers don’t have to pick and bag the groceries themselves and want to get the most out of any fees they’re charged. But it’s a difficult environment for retailers to make money in right now, because added labor costs tend to cut into sales. It’s also an increasingly competitive market, with Amazon accounting for around a quarter of all online grocery sales.
These considerations are no doubt weighing on Jewel-Osco and Mariano’s, who have yet to step into the e-commerce arena.
The stronger bet for these two retailers, along with others, is to invest in the store experience. Kroger-owned Mariano’s has excelled here, with industry-leading prepared foods, strong fresh departments and memorable extras like a grill that will prepare any meat or seafood purchase to the customer’s liking. Jewel-Osco, meanwhile, has lagged behind, but is fast making strides. Last year, it introduced an upscale specialty concept in the city’s Old Town neighborhood.
“We really want to put forth a new image,” the store’s real estate manager told the Tribune at the time.