DOMINICK'S DILEMMA
May 1, 2003 12:00 PM, Brannon Boswell
Owners of suburban Chicago neighborhood centers are pondering the fate of an important tenant — grocery chain Dominick's. Bought by Safeway in 1998, the chain's 113 Chicago-area stores account for $2.3 billion in sales and 22.3 percent of the metro grocery market, second only to Albertsons' Jewel Food. Faced with the chain's declining sales (down 3 percent in 2002), union conflicts and a loss of value in the Dominick's brand with consumers, Safeway has been trying to sell the chain for $700 million since December. Many of the chain's stores anchor suburban neighborhood centers, mostly owned by private developers, which face uncertainty as the chain changes ownership. “Everybody's wondering if the portfolio will be split up and purchased separately or if one company will take down the whole portfolio,” says Todd Caruso, managing partner with CB Richard Ellis Retail Services. Kroger is the top prospect analysts say. St. Louis-based Schnuk's Markets and Pewaukee, Wis.-based Roundy's Inc., which operates Pick ‘n Save stores, are also possible suitors. However the deal goes down, Caruso says Dominick's new owners will probably keep the brand alive. “They'll keep the Dominick's name but may want to make some type of splash — a new theme or a new venue,” he says.
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