In a bid to confront mounting food insecurity, the City of Chicago announced last year that it was exploring the creation of a municipally-owned grocery store, an unprecedented move for a major American city. The proposal was a response to the persistent exodus of private grocers from the city’s South and West Sides, where decades of disinvestment have left entire neighborhoods with few reliable options for fresh, affordable food.

But by February, the city shifted course. Citing difficulties in securing a qualified operator, a requirement for state funding, officials under Mayor Brandon Johnson revealed that the city will instead pursue a public market. The new plan envisions a space that provides basic groceries while supporting local farmers and small vendors.

For now, it is grassroots, community-driven markets that are filling the void. Often under-resourced but deeply embedded in their neighborhoods, these efforts have proved to be among the most nimble and enduring responses to a crisis that large grocery chains have repeatedly failed to address.

Building from the ground up

In Englewood, a neighborhood long neglected by traditional food retailers, the nonprofit Inner-City Muslim Action Network (IMAN) opened the Go Green Community Fresh Market in 2022. The small-format store isn’t just a place to buy groceries. Unlike for-profit supermarkets, Go Green blends retail sales with social programs and workforce development. Its supply chain is hyper-local, and its mission is to meet the specific needs of a neighborhood abandoned by national chains.

Three years into its operation, the store’s impact is striking. It has attracted more than 6,700 rewards members, partnered with over 25 vendors of color, and facilitated 52,000 redemptions of its “Distinguished Resident Discount.” The store stocks fresh produce and subsidized staples like eggs, bread, and greens — all while paying full-time employees living wages with benefits.

“We need to disrupt a food system that consistently fails low-income communities,” says Sana Syed, chief growth and strategy director at IMAN. “People want the dignity of choosing their own food. That requires rethinking who owns and operates food infrastructure.”

A system that doesn’t work

IMAN’s approach stands in stark contrast to the persistent struggles of traditional grocery retailers in disinvested urban neighborhoods, where high overhead, razor-thin margins, and unpredictable demand have made profitability elusive.

Take Yellow Banana, the Ohio-based operator of Save A Lot franchises. In 2022, the company pledged to rehabilitate six low-cost grocery stores on Chicago’s South and West Sides, backed by $13.5 million in city subsidies and another $13 million in federal tax credits and private investment. Two years in, only one store had reopened. The rollout has been beset by delays, structural issues and supply chain setbacks.

Despite employing traditional cost-cutting levers — such as low-cost private-label goods, centralized purchasing, and minimal store footprints — Yellow Banana has struggled to win back customer trust. The company has faced community backlash over previous store conditions, lawsuits from former employees, and challenges managing redevelopment in neighborhoods long neglected by national chains. In a recent letter to city officials, CEO Joe Canfield acknowledged the company’s shortfalls and vowed to “reset” operations. However, the company’s ability to meet its obligations — and restore food access in these communities — remains in question.

This failure underscores a broader pattern. Traditional grocery chains — particularly national for-profit operators — struggle to succeed in neighborhoods with lower incomes, aging infrastructure, and inconsistent demand. Supermarkets’ profit margins often fall below 2%, and are driven by efficiency metrics that leave little room for resilience, according to data from the Food Industry Association.

Over the years, major grocery chains have exited Black and Latino neighborhoods in Chicago. Walmart, Aldi, Target, and Whole Foods have all shuttered stores across the South and West Sides, leaving residents with fewer options.

When Whole Foods opened its Englewood location in 2016, the chain’s first on the South Side, it was hailed as a milestone for the community. The store anchored a larger commercial development at the corner of 63rd and Halsted Streets, a site that had been carefully primed for revitalization.

In 2014, the City Council approved $10 million in tax-increment financing (TIF) — a funding tool to subsidize development or infrastructure needs — to ready the city-owned land for development, covering everything from environmental remediation to infrastructure improvements. Once those upgrades were completed, the city sold the land to the developer of the Englewood Square complex for just $1, according to a spokesperson for the Department of Planning and Development.

As Whole Foods shuttered the Englewood store in 2022, many residents felt a deep sense of betrayal. In a statement, a Whole Foods spokesperson said the company “regularly evaluates the performance and growth potential of each of our stores” and that the closure was necessary to “position Whole Foods Market for long-term success.”

In 2023, Walmart shuttered two more stores in the South Side neighborhoods of Chatham and Kenwood, citing insufficient profits, theft, and security concerns.

While closures are often blamed on theft or lack of profitability, those reasons rarely tell the full story.

“Property crime tends to be higher in wealthier areas with more density,” says Marynia Kolak, associate professor at the University of Illinois Urbana-Champaign, noting that grocery chains often use theft as a blanket rationale to justify store closures in lower-income neighborhoods, despite similar or worse issues in affluent ones.

In her research, Kolak has found that closures in neighborhoods like West Pullman, South Shore, or Englewood often reflect broader corporate dynamics — especially an overreliance on a growth model that prioritizes performance benchmarks over long-term community investment.

“Supermarkets operate on a for-profit growth model,” she says. “Doing well is not enough. They’re constantly comparing performance across all locations, and if a store loses tax subsidies or slightly underperforms, it gets cut.”

This optimization strategy often overlooks local needs. While neighborhoods on the South and West sides may not generate the same dollar-per-square-foot return as stores in Lincoln Park or the Loop, they serve essential functions. And, Kolak notes, many of the assumptions about consumer demand in these communities are wrong.

“There’s a strong desire for quality food, not just the cheapest calories,” she says. “There’s real frustration when chains leave — especially after receiving subsidies and city support — and are replaced with nothing.”

The city’s efforts to subsidize larger chains like Yellow Banana through TIF or New Market Tax Credits aren’t inherently flawed, Kolak adds. But the problem arises when public investments are overly reliant on a single corporate partner without sufficient safeguards, accountability, or support for grassroots alternatives.

“It becomes a spreadsheet game,” she says. “Incentives dry up, the store leaves, and the same communities are left without access again.”

Despite the outcry, little has changed on the ground. In West Garfield Park, a reopened Save A Lot has drawn complaints over expired food and unsanitary conditions. In Englewood, the former Whole Foods site remains vacant despite city efforts to attract a new operator.

A new blueprint for food access

While corporate grocery chains retreat, community-led efforts are quietly proving their worth.

IMAN’s Go Green Fresh Market emerged from years of groundwork. The organization’s “Corner Store Campaign” previously partnered with more than 40 local corner stores — many owned by immigrants and refugees — to improve food options and store conditions. After a partner store burned down, IMAN decided to purchase the storefront and launch its own market, using a mix of collateralized real estate and support from mission-aligned foundations to finance the venture.

Today, the store operates under a hybrid structure: earned revenue from sales, grant funding to support social programs, and targeted subsidies that keep prices low.

According to Syed, the grocery store has become a catalyst for neighborhood revitalization. The adjacent Go Green Plaza is a community arts and organizing space, and the broader project has sparked job creation, beautification, and neighborhood safety improvements.

On the West Side, Forty Acres Fresh Market is following a similar path. Founded in 2018 by Elizabeth Abunaw, the venture began as a series of pop-up markets and produce delivery services aimed at expanding access to fresh, affordable food in neighborhoods long underserved by traditional grocers.

In partnership with the Westside Health Authority, Forty Acres secured $185,000 in 2019 in early-stage support from the U.S. Department of Agriculture’s Healthy Food Financing Initiative. The funds helped sustain the market’s pop-up operations while supporting market research and architectural planning for a permanent site. In 2022, the City of Chicago awarded the project a $2.5 million grant through the Chicago Recovery Plan, paving the way for a 9,000-square-foot brick-and-mortar grocery store, complete with commercial refrigeration and upgraded electrical infrastructure.

Built on a for-profit model, Abunaw said the market centers equity and access. It offers subscription produce boxes with high-quality fruits and vegetables and accepts SNAP benefits and local food access coupons alongside traditional forms of payment.

Today, the business has more than 150 regular delivery subscribers.

“These small businesses often outperform the big players in creativity, sourcing, and resilience,” Kolak says. “Many use community-supported agriculture models or tap into cultural food traditions that resonate more deeply with the communities they serve.”

Chicago’s new approach

Chicago had the chance to lead the nation with its proposed municipally-owned grocery store. A feasibility study estimated the project could be launched on city-owned land for just $2.7 million and even generate a modest profit. But without a qualified operator, the city never applied for the needed state funding.

Instead, officials are now focusing on a more flexible model: a public market that will sell basic groceries and offer stalls to independent vendors and local farmers. The project may also include a grocery incubator and targeted funding for small retailers—part of a broader push to stabilize food access and spur innovation.

Among those preparing to participate is Abraham Lacy, president and CEO of the Far South Community Development Corporation, which plans to submit a bid to host the new market. His organization addresses food access through comprehensive regional development. At the former site of an Aldi store — which served the Far South Side for two decades before closing — Lacy is spearheading a redevelopment effort to transform the area into a mixed-use project featuring retail, housing, and a new grocery anchor.

For Lacy, the public market is a strategic move. He envisions a flexible, community-driven space that functions as both storefront and incubator, blending vendors, pop-ups, and prepared food stalls into what he calls “a collage” of food access points.

“Grocery stores can’t operate in a vacuum,” he says. “You have to build around them — housing, transit, economic development — so they’re not coming in as isolated services, but part of something larger.”

Lacy believes public-sector involvement is critical to making these efforts viable. “We shouldn’t be afraid to subsidize not just the space, but the margins,” he says. “The for-profit market hasn’t solved this, so the public sector has to spark it. Eventually, the private market can take over — but we have to get it started.”

This post was originally published on Next City.