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MetroEdge Forum Gives Inside Scoop on Grocers

What do major grocery stores evaluate when finding sites for new stores? How can communities succeed in bringing a grocer to their neighborhood? What are the most important trends in the industry that communities need to know about?

The bottom line is that to attract a major grocer, communities must do their homework, according to two expert presenters at a Nov. 5 forum co-sponsored by LISC/MetroEdge and State Farm Insurance, and hosted by The Cara Program.

Mike Mallon of Mallon & Associates (standing) gave the presentation along with David Baum of Baum Realty (seated at left).

Gordon Walek

Community leaders must know what the grocer wants, have an appropriate site selected, have solicited their alderman’s endorsement, and produce solid market research demonstrating the site’s potential in a clear and concise manner, according to Mike Mallon of Mallon and Associates, and David Baum of Baum Realty Group.

Mallon and Baum gave a detailed presentation on Chicago market grocery stores that included standard grocers like Jewel and Dominick’s, upscale markets like Whole Foods, discounters like Aldi, supercenters like Target, and harder-to-categorize stores like Pete’s Fresh Market and Trader Joe’s.

They highlighted recent market trends, such as Jewel and Dominick’s renovations, that appear to portend greater competition for grocery dollars, particularly as Wal Mart expands. Perhaps not surprisingly, they said, credit for such deals is harder to come by these days than it was a few years ago.

The 25 or so people in attendance represented a wide range of New Communities Program and Great Neighborhoods Program lead agencies but also included staff from organizations like IFF (formerly known as the Illinois Facilities Fund), the Consortium to Lower Obesity in Chicago’s Children, the Rogers Park Business Alliance, and the City of Chicago.

“Most folks in the room don’t communicate regularly or at all with people like [Mallon and Baum]. There was a tremendous exchange of knowledge,” says Jake Cowan, business manager with LISC/MetroEdge, who moderated the forum. “They want more and better grocery store access. As NCP lead agencies, they’re responding to the community need and thinking about how they can support development.”

The forum gave community groups who don't ordinarily interact with people in the commercial real estate industry a chance to ask questions, says Jake Cowan (left), business manager with LISC/MetroEdge, talking with Mallon and Joel Bookman (center), director of programs for LISC/Chicago.

Gordon Walek

Attendees had tons of questions, like, “What about a two-story Jewel in my community?” Cowan says. Mallon and Baum explained such a store is harder to build and requires even stronger demographics than a typical store.

“Then they looked at smaller-scale operators,” he says. “Where are they locating? What are the trends? And then, how does Wal Mart fit into the picture? There was discussion about what it takes to do the deal, and what these operators are looking for.”

Mallon and Baum presented documentation retailers prepare in evaluating sites, such as customer-spotting maps that show where a particular store has the greatest market share; competition and trade area maps that plot out the sites of competing stores within a given radius; and demographic profiles that show total population and number of households broken down by race and ethnicity, median household and per-capita income, and grocery dollars spent per week.

In early 2011, LISC/MetroEdge will pivot from this technical, how-to information to a second forum that will provide a more narrative account of “war stories” from two or three New Communities Program lead agencies that have successfully attracted major retailers, Cowan says.

The other likely outgrowth of the Nov. 5 forum will be the convening of a group of NCP lead agencies to work on a cross-neighborhood initiative.

“If Humboldt Park, Englewood and South Chicago all had sites, David Baum could help us prepare a professional-looking template for pitching the sites that would be industry-specific,” he says. “We might take a package of sites and present them to developers and grocery-store operators. We will invite that audience to come back together for a working session as soon as we can.”

For a quick summary of the grocery store analysis, please click here.

Posted in Economic Development, MetroEdge/RetailEdge

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Local Initiatives Support Corporation Chicago connects neighborhoods to the resources they need to become stronger and healthier.

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