Chicago retailers vie for online consumers

Competing for online  grocery shoppers is a dominant trend for leading Chicago retailers.

“It seems to be that the online play (is) where everybody’s trying to really make a difference,” said Craig Carlson, president CEO of Chicago-based Carlson Produce Consulting LLC. Whole Foods and Amazon are pushing hard in Chicago — the cashier-less Amazon Go format has two Chicago locations, Carlson said. Major retailers are investing in online grocery delivery, with Whole Food and Amazon pushing two-hour deliveries and Instacart expanding in the Chicago market.

“Everybody is trying to respond to growth in the (online grocery) movement,” he said. Walmart has added delivery options in addition to its click and collect options for its shoppers.

In May, Walmart launched grocery delivery service in the Chicago area. According to the Chicago Tribune, Chicago chains like Jewel-Osco (owned by Albertsons), Mariano’s (Kroger), Aldi and Meijer also offer some form of mobile ordering, pickup or delivery. Walmart’s scale will present new challenges, analysts said. Walmart’s delivery service, according to the Tribune report, offers same-day delivery within a one-hour window for a flat fee of $9.95.

At the time, Chicago was the 11th metropolitan area to have access to the service. “Amazon woke them up and they are going at it with vigor,” Carlson said, noting Walmart’s effort in online ordering, click and collect and now delivery services. “I’m really impressed with what Walmart is doing,” he said.

“As an organization in grocery, they are moving faster than I have ever seen them.” Beyond pushing sustainability and social responsibility, Walmart continues to buy from top produce suppliers.

Walmart is now paying its employees more and creating incentives to reduce their store-level turnover. “They are not great at it, but they are much better than they were,” Carlson said. Shelby reported about 10% of sales were unreported to Central Grocers’ exit in 2017. Carlson said the retail scene is stable for now.

“It is kind of steady as she goes, with the big players fighting it out,” he said. Carlson said there were not a lot of new store openings in the Chicago market in 2018. There was a period when Mariano’s redid all of its stores several years ago, he said, but that activity has quieted since Mariano’s was acquired by Kroger in 2015. In September, the Chicago Tribune reported Kroger consolidated leadership at its Chicago-area Mariano’s banner into a single division in Wisconsin. The move was attributed to Kroger’s efforts to cut costs and invest more in the in-store experience, according to the Tribune report.

Organic retail growth Chicago has witnessed growth in organic produce sales, and Carlson said the trend should continue. “The double-digit growth is starting to wane a bit, but it is still going to grow (at a higher rate) than the rest of the produce department,” Carlson said.

Keys to maximum future growth of organic produce categories, Carlson said, include 52-week per year availability and pricing within about 25% of conventional produce. Locally grown produce also is expanding, with some of the biggest challenges in making sure suppliers meet and maintain all food safety requirements, Carlson said.