Bill Bishop, chief architect of Chicago-based retail consulting firm Brick Meets Click, describes the market as one with significant price competition.
The pressure comes from several directions. Market share leader Jewel-Osco prices aggressively in general and on fresh produce, and hard discounter Aldi has been upping its game with numerous store remodels in the area, with those upgraded locations then generating significantly higher sales, Bishop said.
He noted that higher-end operators that appear to be doing well include Sunset Market, Heinen’s and Whole Foods, which are catering to shoppers looking for the best quality for their fresh foods.
Another development in the Chicago area has been the change in Mariano’s management, which is now under the same leadership as the Roundy’s banner in Wisconsin.
Bishop said that Kroger is a good operator but noted that, between having the two banners under the same management and the original Mariano’s management no longer around, there will likely be some changes at Mariano’s, though Bishop hasn’t noticed any yet.
Online grocery continues to have a presence in Chicago, which has had Peapod for quite some time, Bishop said.
He noted delivery is more popular there than pickup, although there are pickup options available.Bishop said one of the big developments in Chicago is the convergence of Aldi and Instacart, the crossover of the hard discount and online retail.
Bishop’s feeling is that Aldi has benefited significantly from partnering with Instacart because it increases the exposure of the retailer’s low prices and unique brands.