Major supermarket to leave Chicago

A major supermarket is set to leave the Chicago market in early 2014.

One of the top names in the grocery store sector is leaving the third-largest market in the country.

According to Crain's Chicago Business, 72 Dominick's supermarkets in metro Chicago will close shop in the early parts of 2014.

The shutdown of the chain, which had a 9 percent share of grocery sales in the Windy City, looks to have a ripple effect on a wide variety of commercial real estate throughout the area.

"If the Dominick's closes, then your pizza guy, your sandwich guy, those people that are feeding off the Dominick's traffic, are going to have issues," Allen Joffe, principal at Chicago-based Baum Realty Group LLC, told Crain's.

The dumping of the Dominick's supermarkets by parent company Safeway Inc., could cost roughly 6,600 people their jobs, most of which are union positions.

Safeway CEO Robert Edwards told the Chicago Sun-Times that leaving the Chicagoland market was necessary to "eliminate a noticeable drag on our financial results and a significant drain on our resources."

The company, which started and was based in Chicago, added it worked hard to fortify "Dominick's position in the Chicago market. While we have made some progress, it has not been enough to justify further investment."

Why Dominick's couldn't cut it
It's not the first time that Safeway closed Dominick's stores. From 2004 to 2007, the Chicago Sun-Times reported Safeway closed 26 of its Chicagoland Dominick's due to slow sales.

"The challenge with Dominick's was that they had a strong union, so their wage rates were above market average," Paul Weitzel, managing partner at Willard Bishop, told the Sun-Times. "And they just never got the foot traffic because their prices were high, but they had to maintain those prices to pay for their union structure. So they were kind of stuck. I know for years they looked for a buyer but couldn't find one, they just couldn't get their prices in line with their costs."

Bishop noted Dominick's had been putting money into their stores to keep them fresh and modern. He said Safeway began major renovations to turn Dominick's into a store similar to Whole Foods.

Kenneth Boyd, union leader of United Food & Commercial Workers Local 1546, contends that the organized labor structure is not to blame for the shutdown. Boyd said the news was "dropped like a bombshell."

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