What retailers are expanding today? Think food, coffee and cheap

Dollar stores remain popular choices for consumers.

Dollar stores remain popular choices for consumers.

by Dan Rafter

What retailers have expansion plans in the Chicago market? Look toward those offering a quick lunch or morning coffee.

Randy Blankstein, president of The Boulder Group in Northbrook, Illinois, said that those tenants that have been expanding in the greatest numbers in Chicago and its suburbs are primarily in the restaurant space. In the Chicago area, such tenants include Starbucks, Dunkin’ Donuts, Burger King and Wendy’s.

This doesn’t mean, though, that only restaurants are expanding in this market. Outside the restaurant space, Aldi, Mariano’s grocery stores, Mattress Firm, LA Fitness and Sherwin Williams have all been expanding at a quick pace in Chicago and its suburbs, Blankstein said.

What is behind the success of these retailers? Blankstein said that each retailer that is expanding has its own specific story.

Aldi, he said, is going after price-conscious consumers, and offer a concept that is under-represented in the Chicago area. Mariano’s is taking over a niche left by the closure of Dominick’s, while LA Fitness is trying to consolidate what remains a very fragmented fitness space into bigger, more institutional-size gyms.

Dunkin’ Donuts is looking for a greater number of free-standing locations, Blankstein said, and is moving more of its locations out of strip centers. This chain wants to be a bigger competitor to Starbucks. As Blankstein says, Dunkin’ Donuts would like to be the clear number-two competitor to the coffee chain.

“From an investor’s standpoint, these retailes make sense because they are ecommerce resistant,” Blankstein said. “You can’t really get a Dunkin’ doughnut online.”

Blankstein said that dollar stores are also strong performers today, mainly because they offer so much convenience to consumers.

“Smaller and more convenient is a big trend today,” he said. “That is why you are seeing such a big expansion in dollar stores. Customers there don’t have to deal with the crowds of a big box store. Customers are looking for stores that are closer and quicker. It’s the convenience factor of being able to pick up a few things on the way home from work in a smaller location that allows for a faster transaction.”

Blanstein said that he is also seeing continued expansion in the drugstore space. Many retailers in this space, though, aren’t breaking into new markets. Instead, they are going after better locations – corner locations – in markets that they are already serving.

A CVS, for example, might move from a strip-center location to a corner location at a busy intersection.

“It’s no longer just about breaking into new markets,” Blankstein said. “It’s about finding even better locations in these markets. That has been the majority of relocations in the drugstore space in the Chicago area during the last few years.”

 

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