Tuesday, October 15, 2013

The Dynamic Dominick's














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.

33 comments:

  1. You wonder why the DiMatteo Family even chose to sell it?

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    1. I think the first time around, Mike, they thought Fisher Foods would be a good partner (leaving Dominick Jr. in charge), and that Fisher's resources would help them grow by funding more store construction. Plus Dominick's would have the increased buying power of a larger organization. The DiMatteos bought it back when Fisher ran into trouble in the early 80's.

      The second time they sold it was when Dominick Jr. passed away. Reportedly his heirs didn't have the same level of interest in running the business.

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  2. I'm hoping for the same, Dave. Barrington was blessed with a Heinen's (from Cleveland) last year, and another one is going to Glenview soon. I'm hoping that the Heinen family looks at a few of the Dominick's as possible locations for additional stores in Chicago. Thanks for the memories, and the tribute.

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    1. Thank you, Adrienne.

      I've heard great things about Heinen's, and look forward to checking out one of their stores in person someday! A couple of years back I bought a 1950's-era slide of one their Cleveland stores with an awesome arched-roof design. Need to put it up here sometime.

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  3. I can't help but think of the first time I encountered Dominick's after the Safeway takeover. I believe it was early 2001, and I set foot in Dominick's...and it was a Safeway. They erased Dominick's. Hope there is a future for Dominick's.

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    1. Sarah - That's pretty much what happened - there was a very different feel to the stores after that, which for me, living away from Chicago for years now, can't help but notice every time I step into one. Almost like a personality transplant.

      I hope there's a future for them as well!

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  4. Excellent article, Dave. Like your parents, my parents were a Dominick’s family. In 1991, my parents moved to Rogers Park. We were just one block away from the Ridge/Damen location which years later I would find out was a former Kroger. The sign on the outside of the building facing Ridge would light up at night and for years the last couple of letters did not light up. It was an odd location really. Settled between a JJ Pepper (ex Chicken Unlimited), an apartment building and an electric company it sat there for years and years and my mother and I would walk there every couple of days to buy bread. The white and orange sign on the Damen side was forever missing a D and for years and til this day for all I know just read Ominick’s. I used to joke with mom that we were going to Ooooominick’s. I remember when we first moved to the neighborhood there was video rental inside the store and that disappeared quickly.
    My parents would alternate where they grocery shopped. Sometimes it was there and sometimes the Jewel at Western and Howard which was a 60s era store and always seemed positively ancient. But not Dominick’s. Dominick’s was always nice and clean and updated. I spent a lot of time at that Dominick’s. We would get fresh fruit in summer. Books and magazines when I wanted something to read. Items from the bakery. Every year my parents bought me a birthday cake from Dominick’s. Some of them were the best I ever had. That tradition continued until I was well into my adulthood and until mom passed away last year.
    The people who worked there were especially nice people. There was the one man who once or twice let my mom go with her items anyway when she was short a few cents. And my mother would come back much later and pay him back which surprised him. There was the lady who mentioned that she had seen me playing softball with my friends at the playground of my school because she lived right by there. My mother cooked turkey for Thanksgiving every single year with the Dominick’s branded turkey which to me was still the best ever. By the time Safeway came calling I was in college and never went grocery shopping with my parents. I started to go again when they moved near the location in Lincolnwood which is a Safeway era store with a Starbucks. It replaced an existing store at the corner of Pratt and Kedzie that was sold to a developer and knocked down. Somehow it just did not feel the same. Big sterile store with foreign Safeway branded products. Nothing wrong with SW products at all. They have great stuff. It just was not Dominick’s. And the Thanksgiving turkey never tasted the same again. Service was still great but the store was always empty. Always. It just did not feel like the store I had grown up with. I know the Ridge location was shut down for a few years and remodeled and reopened. Maybe I can make it over there before they close it and get photos.
    If there is one thing I can say, I will say Safeway, you really messed up a perfectly great grocery store. What were you thinking? I hate change.

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    1. Ooominick's - cute! :)

      Thanks so much for sharing those great memories, Didi, and I'm glad you liked this piece.

      I'm not opposed to change, but like you, I hate this kind of change.

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  5. Do we know that exact year these were taken?

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    1. Sometime during the winter of 1964/65, Mike.

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  6. I remember that old-style lettering of the logo back then.

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    1. I sure do as well, Tom, from many of their locations. Brings back tons of memories.

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  7. I was surprised driving down Kedzie Ave. in the 90's and seeing that Dominick's still sporting that old cursive logo.

    Hadn't seen that since the late 80's up till that point.

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  8. Interesting - I see Certified was a Dominick's supplier - as they still survive and thrive in Chicago as supplier to many of the independent's like Caputo's, Butera, Super Tony's and also member stores of the co-op own somehow the Ultra-Foods stores discount chain that replaced many Cub Food stores + Strack and Van Til - which as I understand was an Indiana Chicago suburbs family chain.

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    1. My understanding is that Dominick's was with Certified (and was their biggest component) until with Kroger's exit in the late '60s (Dave has it as 1970 and that might be right too). At that time Dominick's not only bought the Kroger stores, but their warehousing operation in (I think) Northlake. With their own supply chain they of course pulled out of Certified. This info was from some Treasure Island (also a Certified component) people in the early 90s.

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  9. Another thing that happened is at some point Hienemine's Bakery exited Dominick's.

    Their bread was better than Dominick's own.

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    1. I loved everything from Heinemann's, especially their "Cookie Magic" cookies and their coffee cakes. It's been weird seeing Heinemann's products at Jewel in recent years, as I always associated them so closely with Dominick's growing up. I've bought several of their coffee cakes from Jewel to take home with me on plane flights in the past ten years!

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  10. Randalls is becoming more irrelevant as well. Acquired in Houston at around the same time as Dominick's, as Safeway took over, the store changed old standbys to Safeway brands. Shoppers, taken aback at the lower quality but still top price (it was a more expensive grocery store), left in droves as the market share plummeted to around from 20% to around 7% (and that number was from 2006). Having H-E-B move into the market at around the same time didn't help.

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    1. Think Randell's could be next in line?

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    2. H-E-B is one of the best-run chains in the country. Very tough competition, even if Randalls were at the top of their game.

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    3. Randalls has had several rounds of store closings since 1995, even before Safeway bought the chain in 1999. It seems like Randalls was outperforming both Safeway/AppleTree and Kroger in the 80's, but has been very much struggling ever since H-E-B entered Houston in 1992 (which ironically was by refurbishing former Safeway/AppleTree stores, most of which have since been completely demolished and replaced by larger H-E-B stores.

      Rumors are that Rouses, a supermarket chain from rural Louisiana that has relatively recently made the bold move of entering New Orleans (by taking over former A&P and Albertsons stores) is very interested in a takeover of Randalls. However, the legendary Florida chain Publix is said to be looking at the Safeway-owned Tom Thumb stores in Dallas, which were bought by Randalls around the same time as H-E-B entered Houston. Randalls and Tom Thumb both have more upscale stores called "flagship" in richer urban areas, but it seems all the Randalls and Tom Thumb stores still open have been remodeled into the Safeway lifestyle format anyway, which itself is meant to be upscale.

      Louisiana is a very competitive state for grocery sales, but it seems Rouses and Walmart are the only big competitors in the state today. Albertsons is still in a few small towns but left New Orleans in the past decade, and Kroger has a few scattered stores but has avoided New Orleans, and exited Baton Rouge in the late 80's. Safeway was in Shreveport but also disappeared in the late 80's, and H-E-B had one store in Lake Charles but it closed in the early 2000s. A&P left Louisiana sometime in the past five years, but most of its stores in the state were very old and small (corner stores from the 1920s and 1930s) and in the immediate New Orleans area.

      Weingarten's, a Houston-based supermarket chain, had stores in Louisiana and Arkansas in the 60's and 70's. Grand Union bought a number of the Houston stores in the late 70's, but I'm not sure if any of the rural Texas or Louisiana/Arkansas stores were sold to GU or not. Safeway bought these Grand Union stores in the early 80's, but pulled out of Texas and Louisiana in the late 80's, forming AppleTree.

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    4. AppleTree was never in Louisiana, and I don't think GU ever actually rebranded anything from Weingarten's (which is still around, they went into the real estate business).

      HEB didn't pick up any AppleTree stores in their bankruptcies (directly, at least, not in Houston)

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  11. As for "picking up stores", very few "saved" names have done all that well. AppleTree was saved from total oblivion in 1994 by a businessman picking up the last stores. It went from a Safeway spin-off with nearly 100 stores, a milk plant and a distribution center to maybe half a dozen, and then it imploded to maybe 6 stores that continued to shed. Sure, two stores remain under different names and the same employees, but the chain died with a whimper nonetheless.

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    1. It would take someone exceptional to run them, especially in the always brutal Chicago market. I agree, it's a very tall order.

      And in any case, someone with the drive and ability required to pull it off would probably insist on putting their own name above the door.



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  12. Roundy's Mariano's subsidiary is run by former Dominick's people, as Dave noted. I have hopes that they will take over the three Dominick's stores near my house. The word I am hearing from the industry though is that the Mariano's people were on record as being "on a mission to destroy Dominick's", and in return Safeway will be irrational in not selling any stores to Roundy's. I hope that report is wrong and Safeway will sell to any buyer that makes sense, regardless of spite.

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  13. It's over, Dominick's is going away forever, though it's been gone in all but name.

    I am curious to see the fate of Randalls, however.

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  14. Dave,

    As of mid-October of this year, Canada Safeway announced they're being taken over by Sobey's of Stellarton, NS. This will end more than 80 years of Safeway in Winnipeg.

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  15. Dave,
    We have heard from store employees that the local Dominicks in Norhtbrook, IL will be sold to the Caputo operation. Media reports are saying that Whole Foods has an interest in a few locations.

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  16. Just saw on the Fuzzy Memories site (where they had a 1984 Dominick's commercial as their featured ad) that apparently December 28 is the last day for Dominick's

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    1. 28th for stores not sold (or those are going to remodled (either the 4 by jewel or 5 of the 11 by marianos(6 of the 11 will be closed later in 2014)

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  17. 8 stores WILL remain open till at least mid January as Dominicks.

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  18. You forgot about them picking up a bunch of Eagle stores when they exited the market in the mid-60s and again in the mid-80s.

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  19. I can't believe Safeway was able to ruin one of Chicago's most elite grocery store chain Dominick's. When they bought Dominick's it was tied with Jewel for 1st in Chicago with nearly 130 stores. They were able to cut it down to only 72 stores. They tried to fix the damage by creating there own lifestyle stores with a star buck's and there own "Signature Café" but it was already to late people lost there sense for what a traditional Dominick's was the one's I used to go to as kid back in the 90s. Now they closed all the remaining store's bringing one of the most famous banner's that has every been in Chicago, and they gave Jewel the number one spot until another banner comes along. Thanks Safeway now go run your California stores.

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