Coming as a shock to many grocery store shoppers, Safeway Incorporated announced Thursday that it is going to close its 72 Dominick’s supermarket chain in the Chicago area at the end of this year, according to a Thursday Chicago Tribune report.
It is not publicly known what will become of the 72 Chicago-area grocery stores. According to insiders at Safeway, the firm is trying to quickly sell as many of their stores as it possibly can. It is assumed that multiple buyers would be taking over every location.
According to the report, Dominick’s was bought for $1.2 billion in 1998, while having begun in the Chicago area as early as the 1920s. Regardless of its success in longevity, the supermarket has not been doing financially well for some time. In current times, shoppers are going to chains that stress low prices such as Wal-Mart and Target which have both extended its food offerings, as well as Aldi - or specialty stores like Whole Foods which concentrates on top-of-the-line products and better customer service than the big box supermarkets in the industry like Dominick’s.
While Dominick’s and Jewel monopolized two-thirds of the Chicago-area supermarket business in the 1990s, Dominick’s only had 8.7 percent of the market share this year. Yet, Jewel has survived by having 29.1 percent in the current year.
Thus far, Safeway has sold four of its stores to Jewel-Osco. They are the stores at 2550 North Clybourn Avenue and at 1340 South Canal Street in Chicago, as well as suburban stores at 14200 South Bell Road in southwest suburban Homer Glen and at 1340 Patriot Boulevard in northwestern suburban Glenview.
Robert Edwards, Safeway’s president and CEO, said that the Chicago market is fragmented with increased competition from newer companies, and therefore the Chicago stores are the worst performers in the entire company. He referred to Dominick’s as a liability and a money-loser. In the first nine months of 2013, Dominick’s reportedly lost $13.7 million before taxes.
Safeway will save as much as $450 million by closing the Chicago-area Dominick’s.
Jewel and Roundy’s are the two grocery chains that business experts expect to see profit from Dominick’s pulling out of the Chicago area. Chicago suburban Oak Brook is also where Dominick’s management officers are located.