Dominick's stores to check out of Chicago market by 2014

Safeway Inc. plans to sell its 72 Chicago Dominick's stores by 2014 because the grocery chain is losing money.
October 11, 2013 4:17:15 PM PDT
The futures of thousands of Dominick's workers are in jeopardy following news that Safeway Inc. company will sell or close its 72 stores in the Chicago area by 2014 because the Dominick's chain is losing money.

Safeway, which announced in June it was closing its Canadian stores, operates 1,406 stores across the nation and has been in the Chicago area for 95 years. Safeway lost about $35 million in the first nine months of 2013.

A Dominick's store in Des Plaines has lost its luster, literally. The fading paint on the letters of the marquee is symbolic of the chain's demise.

"I don't know what they had in mind corporate-wise. I don't know what their strategy is, but apparently, it's not going to be in the retail grocery business," said Mark Walsten, Des Plaines Economic Development chair.

Walsten also said there was interest from Joe Caputo and Sons, which recently bought the strip mall that the Dominick's now anchors.

"It is an urgent situation. We don't like seeing empty stores," said Walsten.

While the Dominick's in Des Plaines may have a taker, uncertainty looms over many other locations. Competitor grocery chain Jewel-Osco has purchased four of the Dominick's locations: 1340 S. Canal Street, 2550 N. Clybourn Avenue in Chicago, 14200 S. Bell Road in Homer Glen, and 1340 Patriot Boulevard in Glenview. Safeway is scouting out buyers for the other Chicago-area locations.

Retail analyst Matthew Smith says don't expect any single chain to gobble up the rest. He says many stores could remain empty for some time.

"Six thousand people will be out of work, which is a lot, and yeah, there will be some people who will be underserved, " he said.

According to Smith, at one point, Dominick's had a 25 percent share of the grocery market in Chicago, and that figure is now closer to 10 percent, as bargain shoppers turn to Walmart, Target Aldi and other discount grocers and high-end consumers favor Whole Foods and retailers like Mariano's.

"It's no longer one-stop shopping. You go to Target, you go to Sam's club and come here for special things and go over there for your other special things," shopper Amy Belz said.

"A lot of different players come to Chicago as they have seen the buyers of Jewel and Dominick's not really stay on top of innovation," said Smith.

At the four Dominick's stores that will become Jewell's grocery stores, the transition has already begun. However, the Dominick's sign will stay up until January.

Reports say Mariano's as well as the Food 4 Less chain, which is owned by Kroger, could be among the retailers that purchase a substantial number of Dominick's stores. Those chains declined to comment Friday.

A spokesperson for a union representing Dominick's workers tells ABC7 Chicago workers have been asked not to speak with the news media.

"We believe this is a clear violation of these workers' First Amendment rights," Eric Bailey, UFCW Local 154, wrote in a statement. " It is bad enough that Safeway did not have the common decency to notify workers that their stores were being sold out from under them. To infringe on workers' right to free speech is a slap in their face.

Meanwhile, a representative for the union that represents Jewel clerks also released a statement that read, in part: "'Local 881...will continue to represent these Dominick's employees once the transaction with Jewel has been completed,'" President Ronald E. Powell said. " As for the other Dominick's store represented by Local 881, Powell said, "'We don't know yet the status of those stores. But, once we know who the new owners are, Local 881 will sit down and negotiate a collective bargaining agreement that will be fair to the new employers and, importantly, will fairly compensate the employees who will be charged with building the business.'"

Employment services company Challenger, Grey and Christmas said that service industry is slow overall in the Chicago area. So, finding work could be difficult. In the best situation, those stores will be picked up by another big chain.


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