As Chicagoans change their grocery shopping habits and depend less on brick-and-mortar stores, the city’s two biggest players, Mariano’s and Jewel-Osco, have announced plans to combine operations. Mariano’s parent company, Kroger, has agreed to purchase Jewel’s owner, Albertsons, in a deal reportedly worth $24.6 billion.
The combined company would create, pending governmental approvals, a grocery chain with more than 5,000 stores. Bloomberg reports that the companies plan to sell 375 companies in a spinoff. By marketshare, Kroger is the nation’s No. 2 grocer and with Mariano’s it operates 44 stores in Chicago. Jewel has close to 190 stores in the city. America’s No. 1 grocery store, by marketshare, is Walmart which has nine stores in Chicago. There are more than 5,000 Walmarts across the country.
The deal creates redundancies with nearby stores. Chicagoans would be reminded of the situation after Dominick’s Finer Foods, a grocer with an 88-year history, closed its final store in 2013. That triggered a real estate race with chains like Jewel, Marianos, and Whole Foods bidding for vacated stores. This could also be problematic in parts of the city with stores deemed underperforming. In May, Amazon-owned Whole Foods closed an Englewood store while opening a massive new River North location at the same time.
Mariano’s was founded in 2010 and has positioned itself for attention from chefs and restaurant lovers. The company has worked to stock barbecue sauces and other retail goods made by restaurant owners. It’s also been a fixture at Chicago Gourmet, the annual food and wine festival that takes place a Millennium Park, working with original Check, Please! host Amanda Puck. At one point, it housed cafes branded by Rare Tea Cellar, the gourmet food vendor for many upscale restaurants. That ambition seemed to wane after Kroger took over in 2015 with the giant yearning for synergy, making Mariano’s similar to its 2,800 stores across the country. Chicagoans saw the change; it’s a regular source of anger on neighborhood Facebook pages where Mariano’s shoppers yearn for the pre-Kroger days.
In an attempt to give those shoppers what they want, Mariano’s co-founder Bob Mariano last year opened Dom’s Kitchen & Market in Lincoln Park with a food court that includes world-famous Bonci pizza. Stores in Old Town and West Loop are also planned. Au Cheval founder Brandon Sodikoff is involved in design and restaurant offerings.
Meanwhile, Jewel — or more properly known by Chicago natives as “the Jewels” — has been around since 1899. It would acquire Osco Drugs in the 1960s, adding a pharmacy to many stores. CVS bought Osco’s standalone locations in 2007 and converted them into its brand. The Osco name lived on as in-store pharmacies at select Jewel locations. Jewel’s parent, Albertsons, which took over the company in 1999, has 2,200 stores across the U.S. with names including Safeway and Tom Thumb.
In recent years, both have expanded their prepared food selections with Jewel creating some buzz with its fried chicken, marketing a special called “Cheep Chicken Monday.”
But as national headlines focus on the threat of Walmart and Amazon, Chicago-area farmers markets have also enjoyed success during the pandemic, which increased sales. Independent grocers, many of which have strong relationships with farmers, have also seen upticks in business in recent months.
Likely, either Jewel or Mariano’s will join a Chicago grocery store graveyard that includes Dominick’s, Certi-Saver, Edmar, and Butera.