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Crain's Chicago Business reports that three companies have emerged as likely suitors for all or some of the 68 Dominick's stores in Chicago that Safeway has decided to sell.

According to the piece, Kroger is interested in at least 15 stores that it wants to convert to its Food-40-Less banner, already a presence in the market with 17 stores. Roundy's is said to be interested in 20 stores; it already has a dozen Mariano's stores in the Chicago market."

And, the story says, "the Jewel/Osco chain, whose parent New Albertson's Inc. announced yesterday it has bought four Dominick's, is hoping to land perhaps another 10. The chain, which ranks No. 1 in metro Chicago in grocery sales by a wide margin, is moving cautiously out of concerns that the Federal Trade Commission could raise antitrust objections."

Crain's writes that "analysts think that Safeway executives have been shopping Dominick's for the past three or four months to both competitors and to regional chains. Two likely candidates, Hy-Vee Inc. in West Des Moines, Iowa, and Schnucks Inc. in St. Louis, have expressed no interest in Dominick's before now."

Complicating matters is the fact that landlords that own Dominick's locations will want to buy out the leases so they can control who gets the stores. Small, independent retailers are seen as too small to buy batches of stores, though it remains possible that they could pick off a location or two. And finally, it is likely that at least a few non-desirable locations won't go to competitive food chains.
KC's View:
It will be interesting to see what happens to Dominick's. It sounds likely that a series of deals will be cobbled together that will lead to various companies taking over locations, converting formats, and looking to extend their connections to Chicago-area consumers.

Phil Rosenthal, a columnist for the , had a piece over the weekend about these connections, musing that people have an "intimate relationship" with their supermarkets:

"We're together regularly, maybe more than once a week. We keep lists so we can make the most of each visit. We clip items we see in the paper that we think will be appreciated. What we take away sustains us and satisfies our hunger. We touch it, taste it, smell it, feel it, drink it in, lick, chew and swallow ... That's why the demise of longtime Chicago supermarket chain Dominick's, heralded by last week's announcement by California-based parent Safeway that it is going to pull out of this market, has resonated with so many of us. It doesn't matter whether we're still taking long walks up and down its aisles or we've moved on with the memory of days when it better met our needs and desires ... Once that committed, engaged relationship takes hold, it's tough to break.

"Once broken, it's harder still to repair as chains such as National Tea and A&P learned here years ago, and Dominick's and Jewel have learned of late."

The expectation seems to be that Safeway is going into a retrenchment mode, that it is going to get rid of the stuff that is not making it any money or that does not offer great expectations. In the end, Safeway may be a smaller, leaner company, and perhaps a more profitable one. Better to be proactive about such things than to let events overtake you and have less room to maneuver.

And lessons learned? From all the email I've gotten (and you'll see some of it in "Your Views") and the stories I've read, it appears that Safeway's miscalculation was that it could impose its culture on Dominick's, which had the final result of distancing it from the customers with whom it should have been forming tighter, more sustainable relationships.