Tuesday, October 15, 2013
Last Thursday, a couple of longtime PFS friends clued me in on some important breaking retail news from Chicago, before I noticed it in the business headlines myself. Dominick’s Finer Foods, the number two traditional supermarket chain in Chicago, is being put up for sale by its owner of the last fifteen years, Safeway.
That night, I put up a few comments on Facebook about it, ending with “This will be interesting to watch.” By the next morning, however, having read some more articles about it, I realized what was really going on - and my heart sank. The “interesting to watch” comment seemed regrettable, almost flip now, as it became clear that the possibility of the Dominick’s name going away for good is very real.
In a way, I find this almost as hard to swallow as the demise of the great Marshall Field & Company name. I’m certainly not intending to compare the stature of the two (a fairly ridiculous idea), but am strictly speaking from personal feelings. Growing up, I set foot in a Field’s store maybe two or three times a year, whereas we shopped at Dominick’s all the time. Every week. For years.
Dominick’s, founded in 1918 by Dominick DiMatteo with a single, small market at 3832 W. Ohio Street, grew very slowly in the first 40 or so years of its existence. Things started to accelerate in 1950 with the opening of a full size (for the time, that is – 14,000 square feet) supermarket on North Avenue. By 1963, there were still less than 10 stores, but by decade’s end they were rapidly growing through acquisition, picking up three stores from E.J. Korvette in 1965 and 18 more from Kroger when they excused themselves from the Chicago area in 1970.
One of the greatest things about Chicago is its tremendous ethnic diversity, which of course extends to food. Dominick’s stock-in-trade was its vast offering of ethnic foods – certainly Italian cuisine (owing to the founder’s Sicilian heritage) from the start, and a particular emphasis on Jewish foods, but it soon encompassed culinary offerings from all over Europe, Asia, and Latin America – a true point of differentiation, in the early years, from its competitors.
In 1968, Dominick’s became a division of Cleveland-based Fisher Foods, operators of the Fazio’s supermarkets. From that point forward, newly built Dominick’s units popped up seemingly everywhere across Chicagoland. The Fisher-Fazio “Heritage House” brand became a staple of area households, including ours.
By the mid-1970’s, the Chicago grocery market centered around two key players - #1 Jewel and #2 Dominick’s. Once-upon-a-time market leaders National Tea Company and the fast-fading A&P were all but vanquished (both were gone from the area by 1978), and everyone else was pushed to the margins.
In 1981, the DiMatteo family bought the company back from Fisher Foods, and would continue to operate it for the next decade and a half. The second DiMatteo era saw explosive growth for Dominick’s, gaining ground on Jewel nearly every year, ultimately surpassing them in terms of sales and profitability per store.
But in 1993, Dominick DiMatteo Jr. passed away (Dominick Sr. had died in 1981), and it soon became clear that the family had interest in selling the business. In 1995, Dominick’s was acquired by The Yucaipa Group, the Los Angeles-based investment firm headed by Ron Burkle, who singlehandedly reshaped the West Coast grocery industry in the 1990’s, buying and later reselling such venerable banners as Ralphs and Alpha Beta, among others. (Ron’s still at it in a big way - purchasing a large stake in A&P from their bankruptcy in 2012, and buying the Fresh and Easy chain from the British retail firm Tesco just recently.)
In 1998, Burkle sold Dominick’s to Safeway, the Pleasanton, California-based supermarket titan. As is often the case, the match looked great on paper – for Dominick’s it meant joining a highly respected, deep-pocketed company, ready to add rocket fuel to their already impressive growth. For Safeway, it meant an instant leadership position in one of the country’s most important markets - and a new frontier.
Almost from the start, though, it was a calamity. The shift of decision-making power from Chicago to the parent company led to a disastrous misread of Chicagoans’ innate buying characteristics – a strong preference for local brands, and a tendency to be underwhelmed by trends emerging from either coast. There was little affection for the Safeway house brands that now filled Dominick’s shelves, despite their storied histories and acceptance in Safeway’s core West and East Coast markets.
By the time substantial steps were taken to remedy the problems, Dominick’s was in steep decline. Now, they were a very distant #2 in the market compared to Jewel (itself no stranger to struggles in recent years). On the top of that, the door was now open for smaller locally-owned chains to grow nice footholds in the market, including Caputo’s and Tony’s, for example, who have placed a strong emphasis on local and ethnic foods, swiping pages right and left from Dominick’s discarded playbook. Added to the mix are the more recent competitive forces affecting traditional grocers in many areas – Whole Foods from the prestige end of the market, and Walmart and Aldi from the price end.
Within a few years, rumors began to fly of a possible selloff of Dominick’s (including a potential re-sale to Burkle in 2003 among them), but until now Safeway held on, the store count dwindling from a peak of 130 units to the current 72.
Now Dominick’s truly is up for sale, and in all likelihood it will be split up among several buyers. Jewel will be taking over four locations, two in Chicago, one each in Homer Glen and Glenview. Kroger is reportedly looking at several locations for their Food4Less banner – their successful, if low-key, reentry into the market. (Dominick’s alumnus-operated) Mariano’s Fresh Markets, a division of Wisconsin-based Roundy’s, is interested in some locations, according to news reports. Other units might sit vacant when all is said and done.
With this in view, I thought it might be a good time to look back at the glory days of Dominick’s, via a photo-tour of what was arguably their most architecturally interesting store. Opened in 1964 in near-north suburban Evanston, at 3333 W. Central Avenue, the store had many striking features. Chief among them were a 26-foot high cylindrical tower (finished in red-orange tile on the exterior and walnut strip-paneling inside, housing an exquisite Customer Service area), and a Japanese-style rock garden. There was also an unusual walkway awning, and the whimsical feature of stylized “cutout” figures mounted to the brick wall, forming a “line” of sorts leading into the store.
Designed by the Chicago architectural firm Teutsch-Lucas Associates, the store design was conceived in part to take best advantage of the odd dimensions and slope of the corner lot it was situated on, and to present an attractive image to a high traffic, a high income area. The rest of the interior was typical of Dominick’s very high design standards. Those familiar with the Dominick’s of old will notice the lack of “Heritage House” branded goods, as these photographs were taken a couple of years before the Fisher Foods buyout. You might also notice, however, the “Country’s Delight” dairy products, a product of Certified Grocers. Certified was also the licensee for “Raggedy Ann” brand canned goods, another popular brand at Dominick’s in the pre-Fisher Foods days.
This store was featured by Progressive Grocer twice – in the May 1965 issue and again a few years later in their book “Progressive Grocer’s Outstanding New Super Markets”, from which these pictures came. I first saw a picture of this store on the “Bright Lights, Dim Beauty of Chicago” blog from Didi, another longtime friend of PFS. On a 2009 trip to Chicago, I was able to swing by the store, which has been a CVS for years now. The interior, as you might expect, has drastically changed, but some of the charming exterior features remain.
Reflecting one more time on Dominick’s plight - I guess the best thing at this point would be for a local, family-owned concern to pick up a few of the stores and continue to operate them under the Dominick’s name. With the right combination of passion and commitment to the local customer, you never know what great things might grow from that. It could happen. It’s been done before.