Dominick's Supermarkets feeds residents of the Windy City. The company is the second-largest supermarket operator in the metropolitan Chicago area (behind Jewel-Osco). Dominick's has about 70 stores (from a peak of 130 in the late 1990s), 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 is a division of supermarket giant Safeway, which has put the chain up for sale.
Under Safeway's ownership, Dominick's store count has declined and the chain has lost considerable market share. Indeed, it is its parent's worst performing division. Safeway, which acquired Dominick's in 1998, hopes to exit the Chicago market by early 2014. (Previously, Safeway announced plans to sell Dominick's in 2002, but took the chain off the market the following year when the deal foundered due to labor issues.) To that end, Safeway has stuck a deal to sell 11 Dominick's stores for $36 million to Roundy's, which is looking to expand in the market, and also sold four stores to rival Jewel-Osco's owner in fall 2013. The decision to sell comes as the Chicago market is becoming increasingly competitive. Also, in a bid to maximize shareholder value, Safeway has disposed of several non-core assets of late, including its Canadian division, Canada Safeway, Genuardi's Family Markets in the Philadelphia region, and now Dominick's.
Historically, Chicago was 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 has changed as new competitors, including non-unionized Wal-Mart Supercenters and limited assortment ALDI, entered the market and exerted downward pressure on prices. To compete, Dominick's launched an "everyday lower prices" program and a digital coupon program 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.) 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).
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