After pause, Amazon resumes suburban grocery store rollout. But will it catch on?

It was the worst kept secret in Arlington Heights over the last three years — the smiling arrow signage and green color scheme on the building facade might have given it away — but at long last, a new Amazon Fresh grocery store is open.

The 50,000-square-foot big box at 325 E. Palatine Road, which officials cut the ribbon on Thursday, could be a sign of what’s to come in the suburbs as the e-commerce giant resumes its expansion into the brick-and-mortar grocery business.

The first Amazon grocery store in the Chicago market opened in late 2020 in Naperville, followed shortly by Schaumburg. The Arlington Heights store marks the 10th in the company’s Illinois portfolio, out of 44 nationwide.

But the rollout has been more gradual than expected, while the retailer tries to find its place in the competitive grocery market locally and nationally.

“It looks as though they’ve turned the switch back on,” said David Bishop, partner at Barrington-based Brick Meets Click, an analytics and consultancy firm to the grocery industry. “Does that mean that they’re going to ramp it up and really accelerate? We don’t know. We still have a general question mark on the format. Because it still doesn’t yet seem like it’s caught on with the mainline consumers.”

The new store in Arlington Heights’ Town & Country Shopping Center — virtually indistinguishable from the Dominick’s and Joe Caputo & Sons stores that were there until 2015 — resembles the refreshed Amazon Fresh locations in Schaumburg and Oak Lawn that held grand reopening events last year.

Store features include Dash Carts — high-tech shopping buggies equipped with scanners and sensors that detect what items are being placed inside — in lieu of the company’s original Just Walk Out technology, a complex system of cameras and sensors that allowed for cashier-less transactions.

Another new addition is self-checkout lanes — in addition to traditional lines — and a warmer interior aesthetic and store layout that Bishop believes will be more appealing to female shoppers.

“The challenge the store had initially was that it seemed to lack a soul,” said Bishop, who wrote a compare/contrast report following visits to the Schaumburg location in April 2021 and July 2023. “It was very functional, but it wasn’t very aspirational. It was built almost around technology, it seemed, although technology wasn’t always enhancing the shopping experience.”

In an announcement of the new Arlington Heights location Thursday, Amazon officials touted the store’s assortment of national brands, produce, meat, seafood and prepared foods.

But what sets Amazon Fresh apart, they said, is the “ability to merge the convenience of online grocery shopping with an elevated in-store experience.” The company announcement noted its grocery delivery and pickup options, and in-store technology like the Dash Cart, Alexa kiosks and Amazon One — in which shoppers can pay by scanning the palm of their hand.

“Amazon already has a large online grocery business and millions of products available for fast delivery, but if you want to serve as many grocery needs as we do, you have to offer customers great selection, value, and convenience — not just online, but in physical stores too,” company officials wrote. “We remain committed to grocery, and will selectively open new Amazon Fresh stores as we see positive customer feedback on the new format, as well as continue to open new Whole Foods Market stores.”

A company spokeswoman declined to detail how many other store openings are anticipated in the Chicago suburbs. But a job posting for full- and part-time grocery associates appears online for another Amazon Fresh whose opening has been similarly delayed — this one at 16017 S. Harlem Ave., in Tinley Park.

Just as the first Amazon Fresh in Illinois was opening in Naperville in late 2020, the Arlington Heights village board awarded nearly $1.4 million in tax increment financing dollars to help pay for upgrades and site improvements that would bring a grocery store — its name undisclosed at the time — and a Raising Cane’s fast-food eatery to town.

Shopping center owner Visconsi Cos. used the public funds for infrastructure work and improvements to the physical shell of the building in 2021, then handed the keys over to Amazon to do its interior build out. Exterior signage for Amazon Fresh went up in June 2022, but those signs were taken down by the spring of 2023 amid the corporation’s nationwide pause on new grocery store openings.

Still, local officials were confident of the store’s eventual opening since Amazon didn’t execute an exit clause in its lease with Visconsi.

“We knew probably a year ago — maybe even longer — that it was in the works, but it was just going to take some time,” said Charles Witherington-Perkins, Arlington Heights’ director of planning and community development. “They’ve taken the time to kind of evaluate what they initially rolled out with, and make adjustments and changes to be as successful as they can in the marketplace. That’s the approach that they’ve taken, and that’s probably the right approach.”

Perkins believes the village will get a good return on its investment of TIF subsides because of the sales taxes the store will generate for village coffers. While village hall doesn’t disclose precise figures of sales taxes generated at individual businesses, Perkins said the grocery sector is “pretty significant.”

The Rand-Palatine-Arlington Heights roads area in particular — home to five major retail strip shopping centers with outlots — is a “huge economic hub” for the village, generating about 30% of sales tax revenues excluding auto sales, Perkins said.

Even beyond sales taxes, he said the TIF incentive has helped stabilize and spur redevelopment of the Town & Country Shopping Center — a former 1970s-era indoor mall that had six movie screens and an interior courtyard — with additional new stores.

But will Amazon Fresh provide a steady stream of foot traffic to give a boost to surrounding businesses?

“It remains to be seen how consumers really are going to respond to it, because the question is: What’s going to draw you to that store other than proximity?” said Bishop, the grocery consultant. “If you were to watch or listen to Amazon, you would think they’re trying to draw people to their store by showcasing the Dash Cart and all the technology. But most people don’t shop based on technology. They shop on what they are looking for, fair prices, quality products, good customer service.”

“And Amazon may check a few of those boxes, but they don’t check them all.”