Chicago-area shoppers will likely see Jewel, Mariano’s and Food 4 Less signs replacing many Dominick’s banners, experts say.
But some shoppers will have no supermarket option because landlords will subdivide certain Dominick’s sites into space for health clubs, pet stores, discounters and smaller grocers, the Chicago Sun-Times reports.
Dominick’s 72 stores are believed to be about 80 percent leased and 20 percent owned by parent company Safeway, based in Pleasanton, Calif. The 17 stores inside Chicago city limits are more evenly split between owned and leased, local real-estate sources say.
“Any competitor already in the market is likely to find the (Dominick’s) stores attractive,” said Ken Perkins, a Morningstar analyst. “The locations are good.”
Michael Bell, president of Pentad Realty Inc., said sources tell him that Jewel’s parent company, New Albertsons, Inc., wants more than the four Dominick’s stores it announced it had bought late Thursday.
The catch is that Jewel is already the dominant supermarket here, so it must beware overstepping its bounds and raising the ire of the Federal Trade Commission, Bell said.
Bell said his sources told him that Mariano’s supermarket company bid for 29 Dominick’s stores about a year-and-a-half ago, but Safeway had no interest in selling at the time.
Kroger, the Cincinnati-based parent company of Food 4 Less, could be interested in as many as 16 Dominick’s stores for its discount format, Bell said.
Smaller, independent stores such as Tony’s Finer Foods, Pete’s Fresh Market and Cermak Produce might pluck a few sites, too, Bell said.
Spokespeople for the likely big-retail bidders have declined to comment.
Dan Tausk, principal at Mid-America Real Estate Corp., said landlords of the leased Dominick’s may find it more lucrative to buy back the leases and parcel out the space to “hot” retailers that require smaller spaces.
No one is saying what will happen to the Starbucks coffee outlets and the Chase and U.S. Bank branches inside Dominick’s stores. Dominick’s stores house 56 Chase bank branches and 16 U.S. Bank branches, sources say.
Terry Keating, managing director at Amherst Partners corporate consultancy in Chicago, said bank branches are fading away at most supermarkets because of the growing number of ATM machines and the popularity of mobile and online banking.
Meanwhile, union leaders who represent Dominick’s 6,600 workers on Friday decried Safeway’s sale of the stores as “corporate greed” because the sale will be used to partly offset Safeway’s tax payment incurred in selling off its Canadian stores.
Safeway bought Dominick’s in 1998 for $1.2 billion plus debt. At that time, Dominick’s had 116 stores and $2.6 billion in yearly sales.