Graphic by Amelia Freidline
Ranking of the top retail chains in the Chicago market remains virtually unchanged from a year ago, said Bill Bishop, chief architect at Brick Meets Click, a Barrington, Ill.-based consulting firm.
There have been no major new entrants, but the retail industry continues to evolve with online sales inching upward, independent stores struggling to compete and consumers on the lookout for greater discounts in their grocery purchases.
Itasca, Ill.-based Jewel Food Stores Inc. continues to be the market leader in the Chicago area, Bishop said.
“They have been very aggressive on their prices,” he said, “and they have done a very nice job of upgrading the shopping experience in their stores.”
Produce displays that traditionally have been confined to fixtures in certain sections of the store have become more prominent, Bishop said.
“They do a lot of off-shelf displays that give a more massive impression to the shopper and trigger spontaneous purchases,” he said.
Meanwhile, the consensus is that Mariano’s stores, part of the Roundy’s subsidiary of Cincinnati-based The Kroger Co., are run more efficiently than when they were operated by Roundy’s on an independent basis, but that they “have lost some of their competitive edge in terms of service and excitement,” Bishop said.
“The old regime at Mariano’s kind of lavished service on customers,” he said. “That’s not something that Kroger typically does.”
Mariano’s has tried to stay price competitive, but they also “do a great job with their loyalty program and targeted marketing,” Bishop said.
Grand Rapids, Mich.-based Meijer Inc., another traditional chain, has a strong base, mainly in suburban Chicago and the outer reaches of the Chicago market, he said.
“They run a really nice stores with aggressive prices,” he said, and do a good job with perishables.
“They may be comfortably holding their (market) share,” Bishop said, and may be gaining share if they are still building stores.
In general, however, traditional stores are barely maintaining market share, if they are maintaining market share at all, he said.
On the other hand, discounters, like Batavia, Ill.-based Aldi Inc. and Bentonville, Ark,-based Walmart Stores Inc. are gaining market share.
Walmart has opened at least one “dark store,” where consumers can buy groceries from Walmart online even if there is no conventional Walmart store nearby.
Jewel, Kroger and Meijer offer online shopping services as well.
The Chicago area is a bit ahead of the national average when it comes to purchasing groceries online, said David Bishop, partner in Brick Meets Click.
Nationally, 6.3% of grocery spending is online, he said.
In Chicago, which is one of the top 10 markets, online grocery spending is 7.8%.
Produce accounts for about 12% of in-store sales in traditional stores, he said, but that figure jumps to 14% for online produce purchases.
Despite the common perception that consumers do not buy produce online, David Bishop said, “Produce represents a larger portion of the grocery spend online as opposed to instore.”
Meanwhile, Aldi’s move to Instacart for delivery of groceries and the recent announcement that the company would deliver beer and wine should help add share, Bill Bishop said.
But the situation is not as positive for independent markets.
“The intensification of price competition has made it harder for independents to operate viably in the market,” Bishop said.