Roundy's CEO Sees Bigger Opportunities in Chicago

ELLIOT ZWIEBACH

MILWAUKEE — As Roundy's prepares to enter the Chicago market next year, the opportunities for growth there are greater than the company had originally thought, Bob Mariano, chairman and chief executive officer, told SN last week.

When the company disclosed plans a year ago to expand to Chicago, Mariano was talking about opening 10 to 12 locations over a three-year period. Now he's anticipating 15 to 25 stores over the next several years “because the opportunities there are larger than we anticipated,” he told SN.

Roundy's will open its first Chicago store in the spring of 2009 and a second location later that year, he noted, though Mariano said the company has not decided which of two designated sites will open first. Roundy's originally expected to open its first Chicago store sometime this year, Mariano said, but issues involving redevelopment have pushed the opening back a year.

The company operates 153 stores, encompassing 95 Pick 'n Saves and 27 Copps Food Centers in Wisconsin and 31 Rainbow Foods in Minnesota. Sales for 2007 were an estimated $3.7 billion.

The chain will grow slowly next year and in 2010, Mariano said, “and then you'll see us accelerate the pace in years three, four and five.”

The name for the Chicago stores has yet to be selected. The company has been conducting focus groups to come up with a name, “and it's down to two names,” Mariano told SN.

However, he's not sure when a choice will be made or when the company will disclose it. “It won't be for a while, and we might not unveil it until we open the first store,” Mariano said.

Roundy's is looking almost exclusively at new store sites, he said. Mariano acknowledged that the company will consider potential acquisitions, but declined to discuss that prospect in more detail. He also declined comment on whether Roundy's was interested in acquiring sites from Dominick's that might become available. Mariano was chairman and CEO of Dominick's before Safeway acquired it in 1998.

One of Roundy's first two Chicago stores is planned as a two-story market covering a total of 80,000 square feet near DePaul University, in the city's Gold Coast section on the former site of the New City YMCA. Roundy's has already broken ground on that store.

The other store, which could open sooner even though construction has not begun, is located some three miles away at Halsted and Monroe. That store will measure 60,000 square feet.

Mariano said he is confident the stores will appeal to Chicago consumers.

“Among the features that will distinguish those stores from Roundy's in Wisconsin and Minnesota will be an expanded meal replacement offering, including in-store dining,” he said. “We have some of that at other stores, but it will be on a much grander scale in Chicago,” Mariano said.

He would not disclose other unique characteristics, “but it will definitely feel like a Chicago store in a Chicago neighborhood,” the city native told SN. “It will be very much what people in those communities would expect.”

Both of the first two locations will be unique, with the New City store operating 20,000 square feet at street level and 60,000 square feet on the second level, where the parking lot will also be located; the other store will be located on the second level of a building, though it will have an entryway at street level.

Multi-level stores are not unusual in a densely urban city like Chicago, Mariano noted. “Given the nature of the city, there are up-and-down stores all over, and people are used to moving from one level to another,” he said.

Both Jewel, a Supervalu-owned banner, and Dominick's operate two-level supermarkets, he pointed out.

Mariano said it's been “a lot of fun” going back into the Chicago market, “though things have changed there over the last 10 years. But what customers are looking for, and the reasons they choose a particular store, remain the same.”

He said Dominick's and Jewel have always been competitors there, “and the independents have gotten stronger, and so has Whole Foods since I left. But it's always been a competitive food market, though it's not an easy market to operate in, nor do I underestimate the incumbents there.”

A year ago, he told SN he might be interested in hiring back people who had worked for him at Dominick's when Roundy's begins opening stores in Chicago. Asked about that last week, Mariano said some of those people had contacted him expressing interest in working for him when he's back in Chicago.