Things Placed In Front Of The Magazine Rack: Requiem For A Chain

When I arrived in Chicago in the early 1980’s, national chains A&P and Kroger had tried unsuccessfully to penetrate the supermarket arena and been rebuffed by local favorites Dominick’s and Jewel. It wasn’t until the 1990’s when retailers began to consolidate in earnest that these local chains were purchased by national brands.

Dominick’s was first acquired by Yucaipa, and then a few years later by Safeway.

What has happened since, is a business school lesson in why sometimes national brand retailers don’t know better than locals and why economies of scale and consolidation often don’t work as advertised.

The chain, as owned by a Chicago family had a Chicago heart and feel. It was a source of local pride. The chain, as owned by Safeway, was just another “banner”. At least at the corporate level.

There's nothing in front of this rack now.
There’s nothing in front of this rack now.

The buzz about Dominick’s since the Safeway acquisition has been pretty consistent over the years. People still liked the stores, but they just weren’t the “same” nor as “good” as the original owners. Is that fair or accurate? Probably not, but that attitude certainly laid the seeds for what happened last month.

Supermarkets have a way of becoming a part of the neighborhood they serve. Chicago Tribune’s John Kass wrote an eloquent column about this when notice was given about the chain’s closure.

This was certainly true of the one near us. There were two things, really, that made it that way. One was simple, it had been there well before Safeway bought the chain. The other was more personal: The employees. Many of them had worked there for twenty years or more. I knew the cashiers, the produce stockers and many of the stock employees by name or by sight. They are (I say “are” because the store will remain open for two more weeks) friendly, personable, hard-working, and polite. They have roots in the community and many of them live nearby. One cashier spoke about how she went to a seminar to learn how to write a resume. She had worked at the store for her entire career and never needed one.

The regional chain Roundy’s has acquired eleven of the stores for their Mariano’s “banner.” Mariano’s is the brainchild of former Dominick’s executive Rob Mariano. The stores are high-end, very popular, full of fresh produce and unique brands. Our neighborhood store was not one of the lucky eleven. There were 77 Dominick’s stores remaining at the time of closure.

In case you were wondering about magazines, the Mariano’s stores I have been in have beautiful fixtures. But the mainlines are small mainline racks and there is not a lot of checkout space.

Our neighborhood store was supposed to be closed on December 28th. But it has been given a reprieve until January 25th and restocked with what looks like left over stock from other stores. The employees are still there, but up in the air about whether or not the extension means some other company is looking to acquire their space and give them a chance at remaining employed.

In the meantime, for the first New Years in a long time, there is nothing in front of the mainline rack. Nothing blocking the checkout racks. There are no magazines, books, or newspapers in the store at all.

If Heinen’s or Roundy’s or some regional chain like Sunset or Garden Fresh acquires the store, what will happen to the 20 foot mainline and tower racks? What will happen to the new checkouts that were installed last year?

For the first time ever, no Plan-O-Gram snark....
For the first time ever, no Plan-O-Gram snark….

I have no answer to that question.

The Sound of a Piano Dropping

Yes, that was a piano falling. From about the fourth story, I should think. And it’s the musical accompaniment to the year that is ending today. The year ended with a thud when we received notice that the Albertson’s LLC chain will move from Source Interlink to The News Group effective April 2014.

In some ways this means not very much. The copies shift from one warehouse to another. A different colored truck makes the delivery. The credits go to a different line on a worksheet.

But for the local Chicago warehouse, where we have already lost  over 75 Dominick’s stores as Safeway closed that banner of their chain this month, more losses will mount. As for Safeway, to date only 11 stores have been picked up and will be re-branded by the Marianos division of Roundy’s. Mariano’s is a high-end chain with small mainlines and not an enormous amount of checkout space. The rest of the stores are awaiting word on whether or not someone else picks them up. It’s possible that most of them will be re-opened because in the Chicago marketplace we have many small regional grocery chains. From what is out in the news, some have expressed interest but so far no commitment that I am aware of.

In the meantime, a big hole in our sales.

It also means that the primary traditional grocery chain, Jewel/Osco, moves to News Group and will no longer be serviced by a Chicago magazine wholesaler.

This is clearly TNG’s “push back” on Source snatching national contracts for CVS and Rite Aid. It doesn’t match the volume, but it is interesting to see. You have to wonder: What’s next?

If you’re a Chicago “veteran” like myself, it’s shocking to see the former Dominick’s chain disappear. It’s equally odd to contemplate the thought of a long-established chain like Jewel/Osco moving to another magazine distributor.

This is clearly an announcement to anyone in this business that if you’re not willing to adapt to all of the market changes that have accumulated over the years, a piano will surely be dropped on your head.