“Upscale neighborhood markets do a really good job of reflecting the local community,” said Wade Hanson, consulting practice director at Technomic, a marketing consultancy that works with the restaurant industry. “They meet consumer convenience needs. They are aimed at the consumer who wants something “new” or unique. And they exude an incredibly welcoming atmosphere. »
Beyond competition, the niche could face headwinds as inflation bites and customers pinch pennies; staffing issues persist in a tight labor market; and potential customers continue to work from home.
The roots of the movement date back to when The Goddess & Grocer opened its first location in 2005 in Bucktown. Owner Debbie Sharpe opened a store that mirrored neighborhood delis in her hometown of Melbourne, Australia, offering prepared meals – salads, sandwiches, soups, pastries, full dinners – with quality ingredients, as well as packaged goods like and a curated assortment of wine, beer, and soft drinks like natural soda and kombucha. Today, there are four Goddess stores around town in areas with heavy foot traffic and high residential density.
Sharpe sees new brands as a positive.
“I don’t see it as a competition,” Sharpe said. “Rather, something that helps drive consumers towards this type of business model.”
Foxtrot CEO Mike LaVitola said the chain is focusing on its own growth rather than market entrants. Foxtrot nearly doubled the number of its stores in Chicago over the past year, from eight to 15, he said. The chain has expanded to Dallas and Washington, DC, with Austin, Texas opening next.
“Our local drive is driving our expansion into new markets,” LaVitola said. “We’re obsessed with delivering great food, featuring local vendors wherever possible, then mixing everyday essentials with a sense of fun and discovery.”
Stocking the shelves with exclusive and offbeat products – cheeses from Wisconsin, canned ready-to-drink cocktails from Minneapolis, trendy products from Spain or Portland, Ore. – is part of what sets high-end convenience stores apart from the ubiquitous 7-11 and Circle Ks.
“Our goal is to find products that people relate to, as well as fun options that they’re less familiar with, but we’ve seen grow in popularity,” said Laine Peterson, general manager of Canal Street Eatery & Market.
Canal Street opened on the ground floor of the BMO Tower at 320 S. Canal St., next to Union Station, in August – a difficult time, when many workers had not yet returned to the desk. Although there was decent foot traffic, the team also met with janitors from nearby buildings to spread the word.
The pace of getting back to the office after the pandemic is something all downtown businesses have to deal with, especially if the economy goes into a recession, Technomic’s Hanson said.
“The number of people in Chicago going to their office each morning remains at least 25% below pre-pandemic levels,” he said. “There are likely to be challenges in a market in recession. With the average household spending $500 more per month on gas and groceries due to inflation, the price in many high-end markets could become prohibitive.”
Among other industry hurdles, Foxtrot cited economic trends and the current funding environment last month when he fired nearly 3.5% of its employees. Beatrix Market, which has four locations and is owned by restaurant operator Lettuce Entertain You Enterprises, has struggled with staffing and supply issues.
“We have certainly felt some of the supply chain and labor challenges facing the hospitality industry and while we have not fully recovered, we are seeing a more positive turnaround,” said Marc Jacobs, Executive Partner and Division President at Lettuce. “We continue to build work strategies that work for the three-day office workweek, sourcing specialty ingredients and securing special take-out packaging, and attracting talent.”
As high-end convenience stores proliferate, they’re targeting some of the same customers as a new player in Chicago’s grocery scene: Dom’s Kitchen & Market, a smaller-scale upscale grocer from the founder of Mariano’s that plans having 15 slots by 2025.
What it will take to survive as more high-end markets open up, Hanson said, is a clear vision, a reasonable value proposition and alignment with customer expectations and needs.
“If this market can capture a fraction of the sales from cafes, convenience stores and small grocery stores,” Hanson said, “we’ll have a number of very successful concepts.”