At least in PostgreSQL you can use the column number in the resultset in your GROUP BY clause:
SELECT
itemName as ItemName,
substring(itemName, 1,1) as FirstLetter,
Count(itemName)
FROM table1
GROUP BY 1, 2
Of course this starts to be a pain if you are doing this interactively and you edit the query to change the number or order of columns in the result. But still.