Dominick's Supermarkets feeds residents of the Windy City. The company is the second-largest supermarket operator in the metropolitan Chicago area (behind the SUPERVALU-owned Jewel-Osco supermarket chain). Dominick's has about 75 stores, including more than 50 large Lifestyle-format stores with upscale deli and bakery departments and expanded produce areas, floral departments, and in-store cafes. The rest are mostly conventional supermarkets. Dominick's also operates a commissary that produces its prepared foods. With roots in Chicago since 1918, Dominick's was acquired by supermarket giant Safeway 80 years later. Safeway has since tried to sell the chain but has failed to find a buyer.
Historically, Chicago has been a two chain market, with Dominick's and Jewel-Osco dominating the grocery landscape and charging relatively high prices. (Both chains employ unionized workers.) But that's changing fast as new competitors, including non-unionized Wal-Mart Supercenters and limited assortment ALDI, enter the market and exert downward pressure on prices. To compete, Dominick's launched an "everyday lower prices" program in 2009 and launched a digital coupon program in fall 2010 called Just For U. (Just For U, which appears as an icon on Dominicks.com, leads shoppers into a portal where they can download savings from numerous manufacturers and in-store deals onto their Fresh Values loyalty cards.) Rival Meijer, another relative newcomer to the Chicago market, launched its version of digital coupons in summer 2010. To compete at the high end of the market, Dominick's has been busy remodeling stores to conform to its successful Lifestyle format, which is designed to compete with more upscale operators, such as Whole Foods and Mariano's Fresh Market (owned by Roundy's Supermarkets).
While Wal-Mart has just one store in Chicago's Austin neighborhood, it has plans to open dozens more by 2015. (In the greater Chicago metro area, there are about 60 Wal-Mart Stores.) It has also quelled fierce opposition by unionized local grocery workers by agreeing to exceed the state's minimum wage and hire local residents.
But while its rivals are expanding, Dominick's -- which numbered more than 110 stores and $2.6 billion in sales when acquired by Safeway -- has been been shrinking. After several rounds of store closings in the mid-2000s, its store count is holding pretty steady at between 75 and 80 stores. (In late 2011 the company closed another three stores.) Since joining Safeway, the chain's market share has declined from 28% to about 12%. (By comparison archrival Jewel-Osco enjoys a commanding 35% share of the market.)
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