NEWS RELEASE
Mid-America Urban Grocery Study Reveals Modest
Increase in Square Footage, Significant Shift to
Gourmet
Links to charts are listed at end of the release.
CHICAGO (August 14, 2015) – According to Mid-America Real Estate Corporation’s biennial
Urban Grocery Study published this month, the Chicago grocery sector showed a net loss of five
stores from 2013 to 2015 but a modest gain of 140,000 square feet due to newer openings dominated
by larger format stores. The average store size for new openings and absorption has increased from
35,000 square feet in 2013 to 46,000 square feet currently.
“The total operating grocery footprint in urban Chicago is 9.86 million square feet with southwest
suburbs, 15.3 square feet per household, and west suburbs, 13.3 square feet per household, leading in
existing penetration. By contrast, the most dramatically underserved areas continue to be the south
and southeast regions of the city of Chicago at only 3 square feet per household and the west region
of the city at 4.3 square feet per household,” says Dan Tausk, Mid-America principal and director of
urban tenant brokerage who is author of the study along with intern Matt Westhaver.
The market leaders by store count remain Aldi with 51 stores and Jewel Osco with 49.
MOVEMENT THROUGHOUT THE SUB-MARKETS
Central city can’t get enough Gourmet grocery with staggering post-recession gains. Between 2011
and 2013, there was a 52% increase in the Gourmet category with 264,000 square feet added,
followed by a 28% increase between 2013 and 2015 with 203,000 square feet opened.
The north and northeast city was unusually active due to Dominick’s departure creating multiple
opportunities.
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“Dominick’s created unique opportunities for existing portfolio buyers by allowing them to expand
stores into a market with a low supply of available existing grocery or other sizable available space,”
Tausk explains.
The southwest city showed the highest net decrease of five stores or 10%, but also saw the
emergence of Gourmet in Chicago’s more underserved areas. Mariano’s will open two stores in the
southwest city and Whole Foods will be introducing its 365 by Whole Foods Market concept, a
lower-priced chain to combat underserved areas, in the south city submarket of Englewood in 2016.
The west city, southeast city, southwest suburbs and west suburbs had almost no activity, significant
due to the fact that west and southeast city are traditionally Food Desert areas with the lowest square
foot per person ratio in the Chicagoland area. Overall store count did not change in these submarkets.
THE SHIFT TO GOURMET
There was a significant shift in market share from Full-Service to Gourmet in 2015 due to the closing
of Dominick’s, a Full-Service grocer, and the expansion of Whole Foods and Mariano’s, both of
which classify as Gourmet. Dominick’s closed 21 stores or roughly 1.2 million square feet in late
2013. Of that, 38% or nine stores shifted from Full-Service to Gourmet. As a result, total market
share by Gourmet increased 6%, while Full-Service decreased 7%.
The Discount category, including Aldi and Walmart Neighborhood Market, was fairly inactive
from 2013 to 2015 with a 1% increase in market share and a decrease of two stores.
GROCER ACTIVITY
In 2016 and 2017, the Chicago urban grocery market will see the entry and emergence of Fresh
Thyme Market. Both Gourmet and smaller format, Fresh Thyme absorbed one urban Dominick’s
and has two other new stores proposed for a total of 83,000 square feet. The grocer is projected to
continue a rapid expansion.
Mariano’s had a major impact on the growth of the Gourmet sector. The grocer absorbed 20% of the
Dominick’s stores, while also maintaining organic growth to the tune of 302,000 square feet
proposed in four stores for 2016 and 2017. Mariano’s will continue to have a strong influence on the
urban grocery market with 15 stores open to date and quickly on the way to more than 20 units.
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Whole Foods impacted the shift from Full-Service to Gourmet as well. Having absorbed 15% or four
of the former Dominick’s, the Gourmet grocer is also continuing healthy growth at 160,000 square
feet proposed in four stores in 2016 and 2017. This bucks the trend of Whole Foods sales dropping
nationally.
“Whole Foods is also debuting its new 365 by Whole Foods Market concept by entering one of
Chicago’s Food Deserts, Englewood, albeit only at 18,000 square feet. This is the only real
significant move impacting an underserved area for 2016,” says Tausk.
Target Express will make its Chicago debut in late 2015 to early 2016. The small-format Discount
store has 94,000 square feet proposed in four stores. The smaller format is catering to a fast and
convenient shopper, but the percentage of grocery stock will vary by store. The concept is also
expected to carry heavy pharmacy and limited other product lines. Target Express is anticipated to
have a significant urban presence by 2017.
Walmart Neighborhood Market, which is predominantly grocery in nature, showed limited urban
expansion opening just 80,000 square feet between 2013 and 2015 in comparison to 160,000 square
feet between 2011 and 2013. The Walmart Express model has been mostly abandoned while the
focus seems to have turned to the Neighborhood Market concept for future Chicago expansion.
A defensive strategy appeared to be the theme for Jewel Osco taking 28% of the Dominick’s, but
mostly in areas where a strong Jewel presence already existed including South Loop, Old Town and
Lincoln Park.
Local, ethnic leader Pete’s Market was defensive and opportunistic simultaneously, opening three
stores including one former Dominick’s and two net new stores.
ON THE HORIZON
Sprouts Farmers Market is in the process of expanding nationally. The grocer recently opened
stores in Texas, Georgia and Colorado. With the expansion plans, it is likely Chicago may be a
market they will consider.
With one store in the urban Chicago market opened and already closed temporarily for concept
tweaking, Mrs. Greens Natural Market may be looking to expand only in the suburbs to gain a
further foothold. The grocer has recently announced a suburban store in Winnetka for 2016/2017.
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The question remains whether Aldi will aggressively further expand in urban Chicago. The grocer
already has a dominant presence with 46% of the Discount category and the highest store count at 51.
Aldi has been more active in other markets nationally, after a high level of Chicago post-recession
growth between 2009 and 2013.
West Coast-based Seafood City will be making an entrance to the Chicago urban grocery market in
2016. Defined as Full-Service, the store caters to a predominantly Asian customer and is on the radar
to make an influence in the ethnic market.
Plum Market currently has one full-sized store operating in Old Town. The Michigan-based
Gourmet newcomer will be implementing a new store format that is smaller scale and will fit into a
niche market of healthy, but convenient food for on-the-go shoppers. This new concept is rumored to
be less than 10,000 square feet.
Independent local grocers are on the decline in the urban market. Excluding the 21 shuttered
Dominick’s, independent grocers accounted for 65% of the grocery closings, made up of 11 stores
and roughly 200,000 square feet between 2013 and 2015.
STUDY PARAMETERS
The biennial study originated in 2009 to examine grocery activity in urban Chicago and surrounding
suburbs. The boundaries are west to Harlem, north to Touhy and south to 127th. There are eight submarkets including city center, west city, north and northeast city, north and northwest city, south and
southeast city, southwest city, southwest suburbs and west suburbs.
The study includes 3.2 million residents, 1.2 million households and 278 grocery stores that are
greater than 10,000 square feet in size and fall within the aforementioned boundaries.
By category, the study defines three segments of the grocery market: full-service, gourmet and
discount and further categorizes grocers as major players or independents. The current study data
covers activity between September 1, 2013 to July 31, 2015.
Mid-America Real Estate Corporation is a member of Mid-America Real Estate Group, a
ChainLinks affiliate headquartered in Oakbrook Terrace, Ill. The company is the Midwest’s leading
full-service retail real estate organization with offices in Chicago, Milwaukee, Minneapolis and
Detroit. For more information, call (630) 954-7300 or visit www.midamericagrp.com.
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LINKS:
Sub-Market Activity Chart (PDF)
Urban Grocery Activity (PDF)
Urban Percent of Market Category (PDF)
Trade Areas Map (PDF)
Mid-America website: www.midamericagrp.com
PRESS CONTACTS
Emily Dutson
Corporate Marketing Director
Mid-America Real Estate Group
edutson@midamericagrp.com
(630) 261-6962
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