The Chicago grocery sector showed a net loss of nine stores from 2015 to 2017, according to a Mid-America Real estate biennial urban Grocery study published this month. The average size of closed stores over that past 24 months is about 38,000 square feet while the size of newly opened grocers averages at 25,000 square feet.
The report details which grocers have the most stores, which companies plan on making investments in the coming year and what areas of the market have suffered the most closures.
“The combination of nearly one million square feet of Dominick’s space absorbed by the market over the past 24 months, combined with short-term bankruptcies and the ever present threat of Amazon’s launch into groceries, has created a stall and step backwards in Chicago,” said Dan Tausk, Mid-America Principal and director of urban tenant brokerage in a statement. Tausk is also the author of the report along with the company’s intern Dan Maentz.
Leaders in the market remain Jewel Osco with 51 stores and Aldi with 49 stores. This is the first time that Jewel has led this count in the report’s history. Another retailer that should be given attention in the grocery arena is Target. The company is quickly expanding their small format concept and have eight locations in the Chicago area. Since 2015, four of those locations have newly opened or are under construction.
Target’s small format of 20,000 to 30,000 square feet is clearly urban in-fill focused and offers a large variety of grab-and-go groceries, pharmacy and beauty products, apparel and electronics and most have in-store cafes. The company has a merchandise mix worthy of inclusion as an urban grocer, the report said.
Fresh Thyme Farmer’s Market has recently opened two locations in spaces under 30,000-square-feet. The gourmet grocer opened in the former Dominick’s in River Forest and has another location northeast of the city.
The south and southwest submarket has sustained a major loss in the past two years. The area lost four grocery stores equaling about 153,000 square feet. The west suburbs lost three stores, including two small format Meijer’s and a spacious Ultra Foods. These losses totaled about 262,000 square feet.
Central Grocer’s bankruptcy caused three Ultra Foods and Strack & Val Til to close in Chicago totaling 325,720 square feet. However, Supervalu has acquired the Joliet warehouse facility which could help the market.
Meijer closed two small locations in Chicago totaling 181,000 square feet and Wal-Mart closed all of their Express locations nationally including two in Chicago. They also closed two Wal-Mart Neighborhood Market locations which were primarily grocery stores totaling 58,700 square feet.
Amazon acquiring Whole Foods Market is another transaction worth noting, according to the report. While the acquisition gives Amazon about 450 distribution centers nationally, Whole Foods only accounts for about 7 percent of the total urban Chicago market share by square foot. Nine of 13 Whole Foods are in primarily higher income urban locations and these sites could offer a prime testing ground for Amazon.
Discount grocer Aldi is stepping up its investments in the US market. The grocer has two proposed developments along with a $3.4 billion national investment to bring 2,500 new storefronts to the US before 2022. Lidl is also in the process of expanding nationally and recently opened its first few US locations in the Mid-Atlantic region. If profitable, Lidl could expand to the Midwest and Chicago in the near future.
Another interesting find is that two local grocery co-ops, The Dill Pickle and Chicago Market, plan to open with 13,000 and 10,000 square foot spaces. However, even with these additions the total number of independent grocers is still on the decline.
H Mart, an Asian-based grocer with four locations in the suburbs, plans to open a 20,000-square-foot space in the West Loop. This is the second Asian grocer since the arrival of Seafood City on the Northwest Side of Chicago.
The biennial study began in 2009 to examine grocery activity in Chicago. The boundaries are west to Harlem, north to Touhy and south to 127th Street. The study includes 3.2 million residents, 1.2 million households and 262 operating or proposed grocery stores that are greater than 10,000 square feet in size and are located within the parameters.
