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Chicago Shows Off

From independent ethnic grocers to big national chains, the Windy City’s dynamic supermarket scene puts it on the map.

Like many great American cities, Chicago was built by immigrants, many of whose descendants still live in and around Chi-Town. In fact, the 1.5 million

Only in Chicago would shoppers find such a wide array of Italian beef

residents who claim Polish ancestry are fond of saying that Chicago is home to more Poles than any other city in the world outside of Warsaw. But Chicago also boasts significant Hispanic, Asian, German, Greek and Irish populations, which tend to cluster in distinct enclaves, creating a “City of Neighborhoods” — each with their own unique food preferences. As a result, Chicago boasts an “unparalleled” ethnic grocer scene, says Richard Bode, CEO of Wilton, Conn.-based Cadent Consulting, who lived in the Windy City for more than a decade before recently decamping to the suburbs.

While the city hosts a growing number of large national chains, the independents survive — and often thrive — “because they have credibility in the neighborhoods where they operate,” says Bode. “They offer unique, ethnic foods and fresh foods that the larger chains don’t carry.”

Chicago shoppers are diverse, demanding and dedicated to retailers that recognize their unique needs and deliver accordingly, confirms Kevin Smith, director of North Central sales for Advantage Sales, a division of Advantage Solutions, Irvine, Calif. “The city is a great place to do business,” he adds, “but it’s a very competitive marketplace.” It’s also changing.

In the last 10 or 15 years, several major corporations moved from the suburbs into downtown Chicago, followed by an influx of young professionals with higher-end tastes. That, in turn, triggered expansion by upmarket national chains like Whole Foods and Trader Joe’s as well as a whole host of more mainstream players, significantly altering the landscape of the city’s supermarket scene.

In the 1990s, recalls Chicagoland resident Jon Hauptman, also senior director of e-commerce and retail pricing at Winston-Salem, N.C.-based Inmar Intelligence, the Chicago marketplace was dominated by an assortment of independents and two large local chains. Dominick’s closed up shop nearly a decade ago, though Jewel remains a key player. But it was acquired by Albertsons in 2013. As a result, “Nine of the top 10 grocery chains in Chicago today are national operators, and they comprise more than 75% of the market: Albertsons (Jewel), Kroger (Mariano’s), Walmart, Costco, Sam’s Club, Target, Aldi, Whole Foods and Trader Joe’s.” (Regional powerhouse Meijer is the outlier.)

‘Nine of the top 10 grocery chains in Chicago today are national operators, and they comprise more than 75% of the market.’

Still, says Hauptman, independents remain strong contributors to the Chicago grocery marketplace. “Operators like Caputo’s, Tony’s, Butera, Berkot’s, Walt’s and Sunset Foods have captured strong loyalty among shoppers in their respective neighborhoods by focusing on areas where national players are often vulnerable: locally tailored assortments, prepared foods, fresh departments and customer service.” In fact, those are all store choice drivers that are more important to Chicago shoppers than to the average U.S. consumer (see “…And Why Do They Shop There” on page 22). So, while some residents worry that independents will eventually be squeezed out of the Windy City, Hauptman isn’t concerned.

Like many Chicago independents, Tony’s Fresh Market was founded by a pair of Italian immigrants.


Whether in Chicago or any other city, he explains, “As national chains begin to dominate a market, the appeal
of local, neighborhood-focused independents actually
becomes even stronger.” He adds, “The Chicagoland supermarket scene really highlights the opportunities that exist for local independents to capture share of wallet in their neighborhoods by tailoring their offerings to the needs of local shoppers.”

That said, “I think it gets a little harder for them to compete each year,” especially the last two years, claims Scott Swartz, director and brand manager of Jacksonville, Fla.-based Acosta’s Midwest Hub.

The pandemic has been especially challenging for small operators that don’t have the same clout with suppliers as large national chains. On the plus side, though, the closure of Chicagoland independents’ two primary wholesalers a few years back led most to partner with AWG and Super Valu instead. “Those are two of the largest independent wholesalers in the country and, as a result, they’re able to negotiate better deals from manufacturers for Chicago independents,” says Swartz.

The fact that independents continue to enter and expand in the city also bodes well for their long-term survival. For example, says Bode, even though it’s partially backed by Meijer and recently started offering Meijer private brands, Fresh Thyme Farmer’s Market’s successful 2014 Chicagoland debut proves there’s still room for independents that fill a niche.

Another new entry, family-owned Urban Market, opened earlier this year in the up-and-coming River West neighborhood where it offers made-to-order food, a wine and beer bar and a to-go coffee window in addition to the usual supermarket fare. Meanwhile, Farmer’s Best, an independent known for its ethnic offerings, plans to open a third Chicagoland location in Logan Square this spring. But perhaps the most-talked about new addition to the independent supermarket scene comes from Bob Mariano, founder of now Kroger-owned Mariano’s, and Jay Owen, grandson of Dominick’s founder Dominick DiMatteo.

Best described as a supermarket-restaurant hybrid, Dom’s Kitchen & Market opened its doors last June in Chicago’s upscale Lincoln Park district. In addition to a distinctive assortment of groceries, the 17,800-square-foot “grocerant” features more than a dozen branded stations where shoppers can order meals for dine in, carryout or delivery.

“It’s a place where patrons can stop by for breakfast, hang out during the day, grab a glass of wine after work and bring home a hot, fresh meal,” says Hauptman. “And while you won’t find many traditional national brands at Dom’s, the packaged food offerings are curated to provide unique, local and upmarket items not found elsewhere.” He adds, “Dom’s is successfully satisfying an upscale neighborhood need…and is well-positioned to expand in similar young Chicagoland neighborhoods that are still being served by traditional national operators.”

And that’s exactly what it’s doing. After announcing plans to open as many as 15 stores by 2025, the company said last month that it will open a second location this fall in an Old Town storefront currently occupied by Plum Market (whose CEO claims it’s being pushed out). The new Dom’s will be 10,000 square feet larger than the flagship store with an attendant increase in variety — though organic, seasonal and locally sourced items will still grab the lion’s share of space. And while the chain will continue working with some current suppliers, Dom’s execs will also pursue new partnerships with Old Town businesses, according to the company.

Goddess and Grocer, an early pioneer of the grocerant concept, is also branching out, with plans to open a fifth store in the West Loop very soon. Described as a specialty grocer-meets-deli, “It provides custom sandwiches and prepared foods but also offers premium yogurts, refrigerated beverages and high-end snacks,” says Bode. “You can also buy premium beer and wine and have a seat, but many people choose to grab and go.” The independent opened a location at O’Hare Airport a few years ago, “demonstrating that the grocerant concept can work in other venues as well.”


Independents aren’t the only operators eyeing new Chicagoland locations. “Two of the fastest-growing chains in the Chicago area are strong regional entrants — Meijer from the east and Woodman’s from the west,” says Hauptman. “Both are opening new stores in the suburbs and offer a strong low price/high value proposition.”

Swartz says he’s also keeping an eye on Hy-Vee, though its nearest store in exurban Sycamore, Ill., is well over an hour from Chicago. The chain reportedly plans to expand into several new states, including Indiana, though it hasn’t mentioned Chicago specifically.

But perhaps the fastest-growing chain in the Chicago marketplace is Amazon. In addition to five Amazon Go c-stores in the city, the e-commerce giant recently opened six Amazon Fresh supermarkets in the suburbs — with more likely to come. “They both offer the right fresh foods coupled with a convenient experience,” says Bode. Beyond that, however, Amazon Fresh in particular helps the company capture a piece of the burgeoning online grocery segment.

Albertsons-owned Jewel is going after that business as well, opening an automated micro-fulfillment center in suburban Westmont, Ill., in December that

Chicago independents cater to local tastes by offering Chicagoland’s favorite brands, including Connie’s frozen pizza.

can fill approximately 1,000 online orders daily. The chain is expected to open another MFC in Chicago later this year.

Beyond its investment in e-commerce, Jewel performed well during the pandemic, says Bode, who calls it a “strong and steady” mainstream competitor. “Before the pandemic, I would have bucketed them in the ‘just doing OK’ group of Chicagoland supermarkets. But under the Albertsons banner, Jewel has been a reliable operator these past two years that did the basics right as far as supply and digital ordering,” he explains. “Plus, their stores are in some pretty good locations.”

Bode views Walmart and Whole Foods the same way. And he’s bullish on Target, which is doing well in Chicago and elsewhere, thanks to its renewed focus on grocery and revamped private brands. But he’s a little less enthusiastic about Mariano’s, which critics say has lost some of the envelope-pushing innovation that put it on the map. “It went from being a very special, unique store to more of a typical Kroger supermarket,” says Bode. Company execs say they’re working hard to maintain Mariano’s unique identity. But there’s no doubt, “It’s more conventional now.”

Aldi is also losing some ground after closing its West Garfield Park store late last year, angering residents left with only one supermarket nearby. Determined not to allow an existing food desert to get even bigger, Chicago’s city council recently granted the mayor the authority to purchase the shuttered store and either bring in a new grocer or rehab the site to make it more attractive to a future tenant.

However, the store’s closing highlights a potential obstacle to continued growth in the city proper: high crime that’s driving young families in particular back into the suburbs. Between that and the pandemic, “It feels like the city has probably lost some of the momentum it had for the past 15 years after companies like Google, McDonald’s and Kraft Heinz moved downtown, bringing their employees with them,” says Bode. In fact, he says, some of the innovative concepts that originated in Chicago have already started to push into the suburbs to meet demand from former city-dwellers.

The owners of upscale Dom’s Kitchen & Market hope to open as many as 15 additional stores by 2025


Like many Chicago independents, Tony’s Fresh Market was founded by a pair of Italian immigrants.

One thing the suburbs don’t have is ultrafast delivery, which is suddenly very popular in Chicago as startups from all over the country rush to establish a

Industry observers give Jewel high marks for its performance during the pandemic as well as its investment in e-commerce, including a new automated micro-fulfillment center.

foothold in the Windy City. For example, New York-based Buyk launched its Chicago business earlier this year with six dark stores, though plans call for another 14 by the end of 2022. Then, last month, California-based Farmstead announced it was entering the Chicago market as well, supported by a 30,000-square-foot warehouse in Franklin Park. Although the e-grocer emphasizes same-day delivery across a much broader geographic area, it also offers delivery in as little as an hour.

Both companies will have to contend with upscale c-store operator Go Grocer, which launched its own delivery service last fall. From 11 existing downtown locations, the company can reportedly deliver to 95% of urban Chicago within 7 minutes (though it doesn’t promise a specific time frame). Because Go Grocer doesn’t have to rent additional space in the pricy downtown, observers say it enjoys a significant advantage over competitors. On top of that, it’s got name recognition — and it can deliver alcohol, which companies without brick-and-mortar stores can’t do in Chicago. The company is reportedly planning to open additional locations in the coming months.

A pioneer of the grocerant concept, Goddess and Grocer offers custom sandwiches, salads and prepared foods as well as premium yogurts, refrigerated beverages and high-end snacks.

“The market won’t be able to support all of these new entrants, but there’s certainly demand for ultrafast delivery in Chicago’s densely populated urban areas,” says Hauptman.

Bode agrees. “There will likely be some sort of shakeout. But for now, there are enough high rises in the city filled with yuppies who have the means to try it out.”

He adds, “The Chicago grocery scene has always been an incubator for new concepts and brands. The expansion of Google into the West Loop and the growth of innovation research center 1871 have helped add to this culture… Coupled with Chicago’s history as a center of the meatpacking industry, the city is likely to remain at the forefront of supermarket innovation.” n

Denise Leathers

Denise Leathers

Denise is the Editorial Director for Frozen & Refrigerated Buyer.

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