Meet America's most wanted supermarket

This past June, the supermarket industry flocked to Chicago for the Food Marketing Institute’s Connect Conference. A highlight for many: a tour of the grocer everyone is talking about right now, Mariano’s Fresh Market.

Publix, H-E-B, Trader Joe’s and Wegmans have for some time been among America’s most admired grocers. But buzz is growing about Mariano’s.

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Since opening its first store, nearly four years ago, Mariano’s has emerged as one of the most aggressive grocers in its home market of Chicago. It has grown to 24 stores including 11 former Dominick’s supermarkets, bought in December. Five more stores are expected to open in the next year.

Mariano’s is a fresh-food emporium competitive with Whole Foods in both its offering and target shoppers. It is perimeter-focused with a big accent on prepared foods. Store features include a café, an open grill, catering, a sushi bar and wine tastings. Stores vary in size, from 48,000 sq. ft. up to 74,000 sq. ft.

“Mariano’s is a ‘retailer’s retailer’; that is, they do details very well,” says Bill Bishop, chief architect at Brick Meets Click, a Chicago-based retail forum.

“There are chalkboards listing the number of items available in produce and the number of those items that are organic. Kiosks are available at multiple, convenient locations for customers to automatically sign in to their loyalty program. They make fresh orange and carrot juices, and then highlight the juice as one of the unique characteristics of the store,” Bishop says.

Mariano’s excels in fresh. Bakery, deli and service meat departments are especially strong, as is the large cheese offering and prepared foods, from pizza to freshly prepared sandwiches.

“These features allow Mariano’s to do something that most other grocery stores can’t do today–to attract customers past traditional stores because they’re willing to make a little longer trip to Mariano’s,” Bishop says.

Mariano’s offers competitive prices on core grocery items in the centre store, where private-label lines receive preferential treatment in many categories. Most Mariano’s are in urban locations but, unlike Whole Foods, aren’t necessarily in affluent zip codes.

A recently opened store is in Ukrainian Village, a neighbourhood on the west side of downtown Chicago populated with eastern Europeans. Another store is to be built on vacant land in Bronzeville, the south-side neighbourhood considered the city’s black cultural centre.

The Ukrainian Village location has several unique features, including Squeez’d, a smoothie bar with a variety of made-to-order nutritional fruit and vegetable drinks; Spice Shop, with bulk spices, nuts, grains and granolas; partnerships with local purveyors, manufacturers and restaurants to procure local restaurants to procure local foods; and a grill station for eat and seafood selections prepared on-site.

Mariano’s owner is Roundy’s, a regional chain based in Wisconsin. Roundy’s has 168 stores and 114 pharmacies, with banners such as Pick ’n Save, Copps and Metro Market. The Chicago stores are named after its CEO, Robert Mariano, previously head of Dominick’s, one of two former top supermarkets in Chicagoland.

The Chicago market has been decimated in the last three years. Dominick’s was plagued by problems after Safeway acquired it, in 1998, and finally shuttered its last store, earlier this year. The region’s other big chain, Jewel, which operates about 175 stores, suffered through ownership by Supervalu and is only now beginning to create new capital investment.

“The Chicago market stores have become old and dated. What was once one of the better-stored cities has many tired stores,” says Frank Dell of management consulting firm Dellmart & Company.

This void opened the door for others. Both Heinen’s, a traditional supermarket operator; and Fresh Thyme, which sells natural foods, are adding stores; as are Walmart, Meijer, Costco and Whole Foods.

Even independent supermarkets such as Berkots and Brookhaven are building new shops. Still, Mariano’s is the chain everyone’s trying to keep up with.

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Mariano’s distinctive format is resonating with customers, and the company believes it can expand to 45 to 50 locations over time.

“We also believe the banner has legs and can travel to other geographies as well, but our plate is full with the opening of 16 Mariano’s stores this year. That is where our focus is today,” says James Hyland, vice-president of investor relations at Roundy’s.

Industry observers agree. Neil Stern, a partner at McMillan Doolittle, a Chicago-based retail consulting practice, says that “Mariano’s has very high levels of customer service, with a professional staff, piano players in the lobbies and jazz quartets on weekends. Combined with careful site selection, every store they have opened has been a winner.”