Kroger, Roundy's, and Jewel-Osco Emerge as the Most Likely Buyers of Dominick's

Monday, October 14, 2013

Story By:

Christofer Oberst

Reporter at AndNowUKnow.com
2020 L St. Suite 320
Sacramento, CA

PLEASANTON, CA - Following news of Safeway’s intention to exit the Chicago market in early 2014, three grocery chains have emerged as the most likely buyers of the majority of the 68 remaining Dominick’s stores being offered for sale.

Safeway has already sold four of its Dominick’s locations to New Albertsons, Inc., which operates Jewel-Osco grocery stores. Although the chain is looking to purchase another 10, Jewel-Osco is staying cautious out of concerns that the Federal Trade Commission could raise antitrust objections, according to Crain’s Chicago Business.

Anonymous sources are also suggesting that Roundy’s Inc. of Milwaukee, the owner of a dozen Mariano’s stores in metro Chicago – with another 7 under construction – has expressed interest in 20 Dominick’s. More than a year ago, Roundy’s offered to buy 29 local stores, but Safeway rejected the bid as inadequate.

And finally, Cincinnati-based Kroger Inc. has indicated interest in at least 15 Dominick’s and intends to put its Food 4 Less banner on the stores, Crain’s Chicago Business reports.

Nevertheless, despite the considerable interest these three retailers have in acquiring these stores, there is also the possibility that landlords may be seeking to buy out leases so they can control the choice of replacement tenants. For example, Inland Real Estate Corp. of Oak Brook owns 7 properties where Dominick’s leases space and three others where the grocer is an anchor, but owns the stores itself. Scott Carr, Inland’s chief investment officer, suggests that there is no doubt that the loss of an anchor tenant will have an impact on traffic at a center.

While real estate brokers expect to see grocers fend for the best Dominick’s locations, some of the lesser areas are likely to be sold off for other retail use. “The Dominick’s in Park Ridge at Cumberland and Higgins is an excellent location – a superb corner and a fairly new store,” says Michael Bell, president of Pentad Realty Inc. in Chicago. “Mariano’s is almost certainly going to be interested in that one, and others will be, too.”

Other grocers, such as Whole Foods Markets, are more focused on buying smaller sized stores of less than 30,000 square feet around Chicago and are currently not considering the 60,000 square foot floor plan that is common for Dominick’s. Jon Hauptman, an analyst with supermarket consultancy Willard Bishop LLC in Barrington, says, “Mariano’s is one of the only retail chains doing well with 65,000 foot prototypes these days. Other grocery retailers are being more focused in much smaller spaces.”

Stay tuned to AndNowUKnow as we follow continuing coverage on Safeway’s sale of Dominick’s.

Safeway

Crain’s Chicago Business