During the Christmas holiday in 1978, as part of the process of wooing my wife-to-be, I visited Crystal Lake, Ill., a town about 50 miles northwest of downtown Chicago. This has since become an almost annual event for me for the past 35 years, and the changes I’ve seen in that town since I entered the food industry in 1983 provide a great “pocket history” of the retail food business and give me real hope for the future of independent food retailers.
Back in 1983, there were three places to buy groceries in Crystal Lake: Jewel, Dominick’s and Eagle. While the Eagle store was poorly run, between the three of them, the stores accounted for more than 95 percent of the groceries bought and consumed in the town.
By 1990, Eagle had left town, and the only grocery options were Jewel and Dominick’s. But it was a consumer paradise. Despite the seeming lack of consumer choice, both Dominick’s and Jewel were spectacularly well-run stores. They had added produce and prepared food options that drove consumer volume and loyalty, and they were competitive enough with each other to keep prices reasonable and service levels high.
During my visit in 2000, I saw that the seeds of change had been sown. While almost everyone in Crystal Lake shopped at Jewel and Dominick’s, other options had emerged. A small but inexpensive Aldi store had opened, and Walmart had replaced its discount store with a Supercenter. Costco had opened a store in town as well. Also, Jewel and Dominick’s had new owners: Supervalu and Safeway, respectively.
By 2008, there had been more significant changes. Jewel and Dominick’s were no longer innovating, their prices were now significantly higher than some alternatives, and they didn’t offer anything fresh or new — their stores felt stale. At the same time, Walmart had been joined by both SuperTarget and Meijer, which each provided more upscale mass-merchandise alternatives, and more consumers began shopping at Costco, which was booming.
However, two independent grocers — Joseph’s Marketplace and Joe Caputo & Sons Fruit Market IGA — had opened their doors. Joseph’s and Caputo’s provided excellent upscale alternatives to Jewel and Dominick’s, while Costco, Meijer and Target provided inexpensive alternatives. Finally, both Walgreens and CVS had added stores and greatly enlarged their grocery selections, becoming the go-to alternatives when just a few items were needed.
Joseph’s and Caputo’s are independents that opened in a chain-dominated market, each delivering a unique, interesting and compelling shopping environment. Joseph’s has a huge Hispanic section serving Crystal Lake’s growing minority community, while also featuring an extensive gourmet deli and excellent customer service. Caputo’s features a gigantic produce department loaded with unusual options, a great selection of hard-to-find consumer brands, and some interesting technology like a deli-ordering kiosk, which allows you to place your order on arrival and be texted when it’s ready. Each of them provides enough “wow” in the shopping experience to bring consumers back and create customer loyalty.
This past holiday season, I visited with my mother-in-law, who will now only shop at Joseph’s because she loves the unusual prepared foods and interesting frozen options, and my sister-in-law, who’s making ends meet by shopping at a combination of Target, Meijer and Caputo’s. Neither of them had been inside Jewel or Dominick’s for years, but that didn’t matter, especially to Dominick’s, which closed for good on Dec. 28. And in an ironic twist of fate, Caputo’s bought four Dominick’s stores in January.
Dominick’s and Jewel had evolved, in less than 20 years, from complete dominance to complete irrelevance. And no one had really noticed — except, of course, the owners of Joseph’s and Caputo’s, who had created successful businesses following an approach that, according to the popular wisdom of 1990, was destined to fail.