Mariano Details Roundy's Plans for Chicago

ELLIOT ZWIEBACH

Robert A. Mariano is once again operating in Chicago — this time with his name on the front of the store.

Having spent 28 years with Dominick's in Chicago prior to joining Milwaukee-based Roundy's as chairman, president and chief executive officer in 2002, Mariano has engineered Roundy's expansion beyond Wisconsin and Minnesota into the Windy City with the opening last week of the first Mariano's Fresh Market.

That entry has been pending for four years, while Roundy's looked for the right site, Mariano told SN.

The store — in Arlington Heights, an upper-middle-income neighborhood 25 miles northwest of Chicago — is the first of between 12 and 15 stores Roundy's hopes to open in the Chicago area over the next five years, Mariano said.

At least four more locations are set to open in the next couple of years, he noted: a two-story urban store in downtown Chicago, scheduled to open next summer (which was supposed to open in 2008 as Roundy's first Chicago store but was delayed by redevelopment issues); a unit in Vernon Hills, near Arlington Heights, in late 2011; a store on Chicago's South Side, in an underserved food desert, scheduled to open in late 2011 or early 2012; and, if financing can be arranged, he said, an 80,000-square-foot store — the largest of the group — on the Near North Side of Chicago, whose opening date is uncertain.

“This is a very dispersed market, and we need to build recognition of the brand over a wide area,” Mariano said.

Local speculation persists that, if Safeway-owned Dominick's is ever put up for sale, Roundy's might be a potential buyer.

Including the Mariano's unit, Roundy's operates 155 stores under the Pick 'n Save, Copps Food Stores and Rainbow Foods banners in Wisconsin and Minnesota. Willis Stein & Partners, a Chicago-based investment firm, owns a majority stake in Roundy's.

Roundy's home base in Milwaukee is approximately 90 miles north of Chicago, along Lake Michigan. Product that is not supplied locally to Mariano's is being shipped from the chain's distribution center and commissary in Wisconsin.

Although several out-of-town retailers have failed in the Chicago market, local observers believe Roundy's has the potential to succeed.

The most recent entrants were Minneapolis-based Byerly's, which opened two units in the area in the late 1990s that ultimately closed, reportedly because of poor real estate decisions, observers said, and a single unit of Indianapolis-based Marsh, which opened in mid-2005, and closed, reportedly because of distractions at the corporate level.

“When Eagle came into Chicago, or A&P or Kmart, it was almost amusing [to see] how much those out-of-town operators didn't understand about the brands, packaging and cuts of meat Chicago shoppers prefer,” one observer told SN. “But that won't happen with Roundy's because of the experience in Chicago of Mariano and his management team.”

Another observer told SN: “Mariano will take this move very personally, and he won't let it fail. Like a kid playing a sport with his parents watching, Bob will be showing off in front of his hometown crowd, so you know he's going to give it 110%.”

FOCUS ON FRESH

The Mariano's Fresh Market in Arlington Heights is a 68,000-square-foot store that devotes approximately 25% of floor space to fresh merchandise, all of which is located on the left side of the store, with both of the store's entrances feeding into it.

The store's offerings include:

ONE-STOP SHOPPING

The store — built on the former site of a Chevrolet dealership — competes with several Jewel and Dominick's locations, Mariano said, plus a Whole Foods on the perimeter of the area.

Roundy's goal in Chicago is to establish Mariano's Fresh Markets as a one-stop-shopping locale, Mariano told SN.

“One local woman told me she has to make three trips a week for groceries — to Costco to stock up, Whole Foods for perishables and either Jewel or Dominick's for fill-ins. But now she said she can have it all at one store, which is what we intended based on advance customer research.”

With just one store, Roundy's is taking a soft approach to entering the Chicago market, Mariano said — running some TV spots on local cable outlets beginning the week before the first store opened and distributing door hangers.

The store utilizes a work scheme in which tasks are assigned storewide rather than by department.

“People are responsible for either logistics or replenishment across all categories of fresh or packaged goods that are coded, with those who work on logistics responsible for ordering across all departments and those who work on replenishment responsible for stocking across all categories — rather than working as a department manager or a clerk,” said Don Rosanova, executive vice president. “Using that approach, we believe we'll be able to utilize our resources more impactfully.”

Mariano said the company worked with Local 881 of the United Food and Commercial Workers Union to get flexibility in the work rules.

“We've charted new ground here, and the people who say unions are the problem are just making excuses. We've found that by talking to the union and explaining what we're trying to do, we've been able to come to a mutually beneficial agreement.”

Don Fitzgerald, the chain's group vice president, procurement and merchandising, said Mariano's utilizes conventional high-low pricing throughout the store, supplemented by everyday low pricing on high-volume items, “with strong values available in all departments.”

The store also offers a Mariano's rewards card — the first of its kind for Roundy's — that gives discounts to shoppers once they hit a certain level of purchases. For example, a customer who spends between $400 and $450 in a specific period gets $8 off one order during that period; $9 off for purchases between $450 to $500; $10 off for purchases of $500 to $550, and $11 off for purchases of $550 to $600.