Amazon Fresh expansion possible in city, suburbs
Analyst believes the company could double the number of outlets here for its grocery concept, which adds high-tech features to the shopping experience.
Amazon, which has disrupted traditional retail nationwide and aggressively expanded its distribution hubs in the Chicago area, could be poised to expand its chain of tech-influenced grocery stores here.
There are four Amazon Fresh stores open in the suburbs. In a public record, there’s a hint that another will open soon in Norridge. A developer said he plans to bring Amazon Fresh to the city’s Northwest Side, while more outlets are possible in Morton Grove and Chicago’s North Side at the busy corner of Lawrence and Western avenues.
Amazon already owns the Whole Foods chain, but its Fresh stores are aimed at a different market. Customers can sign in on an app and shop without visiting the checkout line, with each item registered when placed in “dash carts.” The stores have stations where shoppers can ask questions of Alexa, its voice interaction service.
Grocery industry analyst Bill Bishop said Amazon easily could expand to eight or nine stores here, with perhaps 80 sites across the country. The company lists 13 locations, mostly in California. The Chicago-area stores are in Bloomingdale, Naperville, Oak Lawn and Schaumburg.
Bishop said Amazon Fresh may never be as big as market leaders such as Jewel and Mariano’s. But Bishop, co-founder of Barrington-based consultancy Brick Meets Click, said the company uses the store’s physical presence to promote its online grocery shopping.
“They’ve been doing a real good job of locating stores where there’s above-average median income but a lower cost of opening,” he said. Bishop said the Fresh stores often occupy space another retailer has vacated.
Its potential Norridge site is at 4201 N. Harlem Ave., a plaza that used to contain a Kmart. The property’s leasing agent wouldn’t comment. Brian Gaseor, Norridge building commissioner, said, “The rumor is out there, but nobody’s telling us anything.” The company typically requires developers, real estate brokers and others to sign nondisclosure agreements to keep its plans secret.
But a building permit application sought for the property offered a hint, saying it was for a business called Mendel Norridge Harlem. Trade publications reported Amazon has used the Mendel name as a code for its Amazon Fresh projects elsewhere. Some Amazon employees use the term “Mendel project” or something similar in their LinkedIn profiles.
Similarly, news reports have suggested a Fresh store as likely for Morton Grove, in a development called Sawmill Station at Dempster Street and Waukegan Road. Zoe Heidorn, the village’s land use planner, declined to talk about Amazon Fresh.
Amazon spokeswoman Laura Hayes late Wednesday confirmed the Morton Grove location but refused to comment about other pending or possible sites or about the term Mendel. Some speculate it’s a reference to 19th century mathematician and geneticist Gregor Mendel.
The potential city site at Lawrence and Western would call for Amazon occupying a two-story building, currently with a Fifth Third Bank, on the northwest corner. John McLinden, managing partner of Hubbard Street Group, confirmed he has a nondisclosure agreement with a grocer.
“It’s a great corner. We’re going to do something really special there,” he said. His plan could include affordable housing, but he said he needs an adjoining parcel he’s been unable to acquire.
The corner is on the edge of the 40th Ward, represented by Ald. Andre Vasquez, who noted concerns of other grocery store owners about incoming competition. “My assumption is if the developer doesn’t want to tell us, maybe it’s Amazon Fresh,” he said.
Vasquez called the potential store a “very large negative” about the project, but one that could be balanced if the developer can add affordable housing that the area sorely needs. As a backup, he’s proposed an ordinance to downzone the property, limiting what can go in there. “This lets the developer know the community has skin in the game,” Vasquez said.
On the Northwest Side, GW Properties has told neighbors that Amazon Fresh is a confirmed tenant for a plaza and housing it hopes to build at 3955 N. Kilpatrick Ave. The Portage Park project would be built on a former Peoples Gas site and has received community criticism for a suburban-style layout with a large parking lot and a curb cut on busy Irving Park Road.
Mitch Goltz, principal of GW Properties, said he was able to confirm Amazon Fresh as a tenant but couldn’t provide details under his own nondisclosure deal. “We’re working through the community process and will be presenting something soon,” he said.
Bishop said traditional retailers shouldn’t worry much about Amazon’s use of technology in grocery stores. “They are way too far ahead of their time with the tech element,” he said, explaining that in his visits to Amazon Fresh stores, he’s seen few customers use the “dash carts” or Alexa. The carts sometimes miss items put into them, are only for two bags and can’t be rolled out to the parking lot, he said.