Expansion, competition grows in Chicago

With the company in the process of opening a store in Oswego, Ill., Meijer is upping its stake in Chicagoland to 13 supercenters. Traditionally a battleground, Chicago will test Meijer’s store concept and ability to continue outside of its home state of Michigan in the face of intensifying competition.

Just this year,Target surpassed Meijer as the No. 2 supercenter operator. In fact, the upper Midwest is a hotbed of competition for food and general merchandise concepts. Target also has invested heavily in the Chicago market, where it operates 12 supercenters. But Chicago isn’t the only place where rivalries are flaring. Competition in Ohio is intense, too. Meijer has made major commitments to the Columbus and Cincinnati markets, but so have others. In fact, two supermarket operators are expanding combination formats in the Buckeye State. Kroger, of course, is making a major push of its Marketplace and new generation Food and Drug formats. Marketplace stores, at about 100,000 square feet, might be called light hypermarkets, with a larger proportion of food than a supercenter, but less apparel than European hypermarkets. Food and Drug units can incorporate many of the same departments as Marketplace, including Fred Meyer jewelry stores, but run fewer SKUs in its general merchandise. The Food and Drug stores do, however, have larger HBA sections in units that can reach 130,000 square feet. Columbus and Cincinnati have seen growth in Marketplace and Food and Drug units, but southern Ohio also has seen an expansion of bigg’s, a Supervalu-operated true hypermarket over 150,000 square feet.

Supervalu also operates significant general merchandise operations in its Jewel-Osco combo stores in Chicago, creating more competition from Meijer, which also can look over its shoulder and watch Wal-Mart barging in from the far reaches of Chicago’s suburbs. Even a handful of Kmart supercenters continue operation in Chicagoland.

Given the geography and dominance of specific roads, which Meijer and Target have marked out deliberately in their expansion, retailers will have to either sell low or stand out to attract consumers who have a plethora of choices for their weekly shopping needs. A last-man-standing situation seems to be developing in and around Chicago, which, according to research, is pretty much when Wal-Mart supercenters come to town anyway. Yet, no major market in the United States has experienced the intensity of direct competition among food and gm concepts as is evolving there. The market will be one to watch for Meijer—and retail—observers interested in how the future is likely to unfold in the sector.