Whole Foods Acquired Seven Shuttered Chicago Area Dominick’s Stores

Whole Foods Acquired Seven Shuttered Chicago Area Dominick’s Stores

Whole Foods Market has acquired seven shuttered Dominick’s stores — four in Chicago and three in the suburbs — and will open them in a year.

“Whole Foods Markets takes 12 to 15 months, on average, to open a store, so [the wait time] is not unusual,” company spokeswoman Allison Phelps said Friday. “Each store is unique to the community and we take our time making sure it reflects that and is a special place for each neighborhood.”

Terms of the deals were not disclosed, but details are expected to be released when Austin, Texas-based Whole Foods reports earnings on Feb. 12.

The stores are at:

—Edgewater, 6009 N. Broadway

—Lincoln Park, 959 W. Fullerton Ave.

—Streeterville, 255 E. Grand Ave.

—West Loop, 1 N. Halsted St.

—Elmhurst, 215 S. Route 83

—Evanston, 2748 Green Bay Road

—Willowbrook, 6300 S. Kingery Highway

An existing Whole Foods store that’s just around the corner from the Willowbrook site will no longer serve as a Whole Foods, but no further information was available.

Phelps said Whole Foods chooses sites based on availability, population density, cost of the real estate, and the neighborhood’s levels of education, income and interest in natural and organic foods.

In addition to the seven former Dominick’s stores, Whole Foods Markets is scheduled to open three more stores in the Chicago area by 2017. The new stores join five existing Whole Foods stores in Chicago and 15 in the greater Chicago region.

The three Whole Foods stores opening by 2017 are in the Englewood and Hyde Park neighborhoods and suburban Lake Forest.

Former Dominick’s workers are encouraged to apply for jobs at any Whole Foods, including existing stores, Phelps said.

Source: Chicago Sun Times Sandra Guy January 31, 2014

Trader Joes

Hot 100 Retailers The Nation’s Fastest-growing Retail Chains

Many of the nation’s hottest retailers are either on a growth tear or coming off a major acquisition — which may be a good thing or bad long term, if too much baggage was included in the transaction. Next year’s Hot 100 report will likely tell tales of what happened to several of this year’s leaders. Various scenarios are well-represented at the top of this year’s STORES Hot 100 Retailers report, with Bi-Lo Holdings, a collection of struggling supermarkets, ranking No. 1, followed by Michael Kors, one of the hottest brands in clothing.

While the economy is improving, the outlook isn’t overly rosy, notes Bryan Gildenberg, chief knowledge officer at Kantar Retail.

“We are looking at retail growth over the next five years as roughly the same as the rate of inflation, about 4.5 percent, but that isn’t to say everyone will be growing equally,” Gildenberg says. “We see non-store and online growth of 11.4 percent and the bricks-and-mortar segment growing at 3.5 percent … [and] losing market share. Right now, non-store accounts for approximately 7 percent of non-automobile consumer sales, but we see that doubling to 14 percent by 2020.”

Food for thought
B i-Lo emerged from Chapter 11 in May 2010 after operating for 14 months under bankruptcy protection. Controlled by private equity fund operator Lone Star, it acquired the remnants of the Winn-Dixie chain in December 2011. Bi-Lo was the smaller of the two entities, hence 2012’s triple-digit sales increase.

This spring Bi-Lo also acquired three groups of supermarkets from Delhaize Group: 72 Sweetbay stores in Florida; 72 Harveys markets in Georgia, Florida and South Carolina; and 22 Reid’s Groceries in South Carolina.

Grocery retailing is a $450 billion business and supermarkets “have always been a bit of a mirror as to what is happening in retailing in general,” says Gildenberg. He sees further contraction among traditional supermarket chains while specialty supermarkets will grow as they “get their value message across to the consumer.” Kantar sees a scenario in which “20 supermarket chains control as much as 90 percent of the market” at some point in the future.

No. 3 Sprouts — 2012’s hottest retailer — is one of the specialty grocers that Kantar sees as driving supermarket growth. Earlier this year, the company hit a milestone by opening its 150th store just a decade after its founding. Though its origins can be traced to 1943 when Henry Boney opened a fruit stand in Southern California, the company marks its modern era from the time Boney family members opened the first Sprouts store in Chandler, Ariz.

Also in the top 10 is The Fresh Market, another specialty supermarket. Emphasizing customer service and presenting an unconventional store layout, it has grown to more than 100 locations in 25 states over the past 30 years. Rather than growing progressively, it clusters stores by region: In the past few months, the company opened its fourth store in Pennsylvania, its eighth in Illinois and its sixth in California, with four more slated to open later this year. In all the company plans to add 19 to 22 new stores in 2013.

Craig Carlock, Fresh Market’s CEO, suggests that there are three reasons consumers shop The Fresh Market stores, which average just over 21,000 sq. ft.: Food quality that emphasizes healthy, fresh, local and regional; extraordinary customer service; and the stores’ neighborhood grocery atmosphere. In the first quarter of this year, sales remained in “hot retailer” territory with a 12.9 percent increase and same-store sales growth of 3 percent.

Wearing it well
M ichael Kors, which went public in December 2011, posted a 57.1 percent jump in revenues and same-store sales gains of 36.7 percent in the first three months of 2013. The company has increased revenues at a compound annual rate of about 50 percent over the last five years and has tripled its store count over the past three years.

No. 4 Lululemon Athletica has been through a dramatic year that included a quality control issue that led to the exit of its chief product officer and, subsequently, the abrupt and unanticipated departure of chief executive Christine Day. In March, Lululemon was forced to remove nearly one-fifth of its inventory after its black stretch pants were deemed too sheer when the exclusive Luon fabric was stretched. The recall would cost between $57 million and $67 million, the company said.

“While we regret that we had quality issues … we are proud of the organization’s ability to get Luon delivered back into our stores within 90 days of having pulled it from our line, all the while keeping our guests happy and engaged with the brand,” Day said in announcing her resignation. In June, Lululemon said it would begin opening stores devoted exclusively to menswear by 2016.

No. 6 Under Armour, which sells almost as much merchandise through Dick’s Sporting Goods as it does through its own stores and website, may see tougher competition as it expands into global territory controlled by Nike and Adidas. Well-represented among American high school, college and professional teams, last year only about 6 percent of Under Armour’s revenues were from abroad; Nike and Adidas each generated about 60 percent of their revenues in non-U.S. markets.

Company executives acknowledged that “international was underinvested because they were trying to find the right team,” noted Kate McShane, a securities analyst with Citi Research. Under Armour outfits one team in the English Premier soccer league and plans to outfit many athletes at the 2014 Winter Olympic Games in Sochi, Russia, and the 2016 Summer games in Rio de Janeiro.

Hot 100 newcomer H&M has experienced a slowdown in sales so far this year and says it will step up store openings in response, particularly in China and the United States. American store openings include a high profile location on New York’s Fifth Avenue about a block from Saks Fifth Avenue, and another three-story, 42,500-sq.-ft. site at Broadway and 42nd Street. The company also plans to launch an e-commerce site catering to U.S. customers.

H&M, which was stung three years ago when news media reported the retailer disposed of unsold inventory by putting holes in the garments and leaving them on the street for trash collectors, in February launched a program to encourage customers to recycle old garments in exchange for discounts on new merchandise.

“We don’t want clothes to become waste, we want them to become a resource,” says Henrik Lampa, H&M’s sustainability manager. “We want to make new commercial fibers out of this, to make new clothes and textiles.”

The online factor
No. 5 Apple’s hot growth continued last year, but this spring’s e-book pricing trial was a distracting sidelight for company executives seeking to keep consumers’ attention focused on products and services. iTunes Radio, a streaming music service offering more than 200 free stations, was launched in June; later this year, Apple is expected to introduce its Mac Pro, a sleek new desktop computer. One of Apple’s more significant retail moves was last fall’s ouster of Scott Forstall, a long-time associate of Jobs who oversaw Apple stores.

No. 7 Amazon.com’s most recent splash in the retail arena was entering the Los Angeles market with a grocery delivery service honed for years in its Seattle home territory. Called Amazon Fresh, the operation was jump-started when Amazon acquired Kiva Systems last year for $775 million; Kiva employed concepts and technology used by early Internet grocer Webvan.

Citing Amazon as “one of the few large-cap [businesses] to have secular exposure to e-commerce,” Oppenheimer & Co. analyst Jason Helftstein says the company “continues to gain share of U.S. e-commerce with its deep product selection, low-cost express delivery through its Prime program and breakthrough successes of its Kindle e-reader platform.”

Amazon also has an advantage because of its “head start and deep operating capability,” says Kantar’s Gildenberg. “It’s hard to see other e-commerce start-ups replicating what Amazon has done.” There is still plenty of opportunity for Amazon, he says, noting its relative weakness in such areas as consumables and apparel.

The expansion of Amazon Fresh to a second major market may turn out to be as significant a game-changer as Wal-Mart’s entry into the grocery business, Gildenberg says. “There are a lot of parallels” in that both Amazon and Wal-Mart went about showing the retailing establishment “a fundamentally different way of selling,” he says. “They operated with business models that were different from the way consumers bought things before.”

Curation and convenience
Kantar predicts drug stores, dollar stores and membership warehouse clubs will remain in growth mode.

“One reason club stores and dollar stores will be successful is that they both do a good job curating product,” Gildenberg says. Drug stores will also see an anticipated $15 billion increase in prescription medication spending as a result of coming changes in health care coverage, he says.
Even if dollar store openings see a temporary slowdown after the past five years’ explosive growth, Gildenberg sees expansion in the sector continuing as they exploit their capability “in curation and proximities as competitive advantages.”

The most successful retailers will be those that “best present their business’s value proposition to consumers,” he says.

Whatever the economy is doing, consumers were out and about in their cars more often in 2012 than 2011, as evidenced by the presence of eight convenience store chains on the Hot 100 Retailers chart, up from seven last year. Kantar’s researchers say c-store chains are growing through “acquisition of smaller chains and independents, rapid organic store growth and big investments in store remodels, food service and private label merchandise.” The numbers back that up: At the end of 2012, there were nearly 150,000 convenience stores in the United States, according to Nielsen Research — accounting for a little more than a third of all retail stores in the country.

As much as a quarter of the population says it shops convenience stores as often as supermarkets, according to a study released in June by Imprint Plus. The survey, which polled 1,000 consumers, also found that 60 percent of respondents bought something at a convenience store at least once a week.

C-store sales are segregated into two major categories: Fuel sales, which last year amounted to $501 billion, according to the recently-released State of the Industry Report by the National Association of Convenience Stores; and in-store sales of $199.3 billion. The three hottest categories for in-store sales were “alternative snacks” like meat snacks and health/energy/protein bars, which grew 12.2 percent year over year; liquor, up 11.6 percent; and cold dispensed beverages, up 11.3 percent.

The highest-ranked c-store chain on the Hot 100 Retailers chart is No. 24 Stripes, owned and operated by Susser Holdings. Stripes, which has locations throughout Texas, New Mexico and Oklahoma, has opened eight new stores so far this year. The company recently brought in Sid Keswani from Target stores to serve as senior vice president of store operations.

No. 73 7-Eleven, owned by Japan’s Seven & I Holdings, is the largest c-store chain among the Hot 100 Retailers in terms of sales and has plans to double its North American footprint over the next several years, both through takeovers of small operators and increased penetration of urban areas.

The chain “could increase … store numbers to 20,000 or even 30,000,” says Toshifumi Suzuki, chairman of Seven & I, declining to specify a timetable for the expansion. The company acquired more than 650 stores last year and controls nearly a quarter of the North American market. 7-Eleven has also invested heavily in remodeling and renovating both its own older units and acquired stores. It has been an industry leader in improving the quality and freshness of its offerings along with increasing the amount of private label products.

Ranksort iconCompanyHeadquartersUSA Retail Sales (000)Sales Growth (’12 v ’11)Worldwide Retail Sales (000)USA % of World Sales2012 StoresGrowth (’12 v ’11)
1Bi-LoJacksonville, Fla.$8,956,000353.0%$8,957,000100.0%688232.4%
2Michael Kors HoldingsNew York$850,00063.2%$1,063,00080.0%1732.4%
3Sprouts Farmers MarketPhoenix$2,142,00062.6%$2,142,000100.0%14641.7%
4Lululemon AthleticaSumner, Wash.$823,00057.7%$1,287,00063.9%13525.0%
5Apple Stores / iTunesCupertino, Calif.$23,998,00034.6%$26,760,00089.7%2554.1%
6Under ArmourBaltimore$498,00033.4%$532,00093.6%10624.7%
7Amazon.comSeattle$34,416,00030.4%$61,276,00056.2%N.A.N.A.
8H&MNew York$1,712,00020.7%$18,142,0009.4%26915.5%
9Helzberg’s Diamond ShopsN. Kansas City, Mo.$692,00020.5%$692,000100.0%232-0.4%
10The Fresh MarketGreensboro, N.C.$1,329,00020.0%$1,329,000100.0%12914.2%
11J.CrewNew York$2,179,00019.4%$2,194,00099.3%39710.0%
12Lumber LiquidatorsToano, Va.$813,00019.3%$813,000100.0%2799.0%
13Rue21Warrendale, Pa.$902,00018.6%$902,000100.0%87716.2%
14Grocery OutletBerkeley, Calif.$1,300,00018.2%$1,300,000100.0%17311.6%
15Ulta Salon Cosmetics & FragranceBolingbrook, Ill.$2,099,00018.2%$2,099,000100.0%55022.5%
16Chico’sFort Myers, Fla.$2,581,00017.5%$2,581,000100.0%1,3578.0%
17AT&T WirelessDallas$7,577,00016.8%$7,577,000100.0%2,3000.0%
18Tilly’sIrvine, Calif.$467,00016.6%$467,000100.0%16820.0%
19Tops HoldingWilliamsville, N.Y.$2,066,00016.4%$2,066,000100.0%1375.4%
20WayfairBoston$600,00016.0%$600,000100.0%N.A.N.A.
21Whole Foods MarketAustin$11,324,00015.6%$11,699,00096.8%3223.5%
22Bed Bath & BeyondUnion, N.J.$10,853,00015.6%$10,983,00098.8%1,43425.5%
23Ralph LaurenNew York$2,167,00014.6%$2,367,00091.5%249-0.8%
24StripesCorpus Christi, Texas$1,009,00014.5%$1,009,000100.0%5593.3%
25ZumiezEverett, Wash.$622,00013.9%$677,00091.8%4728.8%
26Bodega LatinaParamount, Calif.$1,061,00013.6%$5,009,00021.2%4525.0%
27Ross StoresPleasanton, Calif.$9,712,00012.9%$9,721,00099.9%1,1986.6%
28Urban OutfittersPhiladelphia$2,640,00012.9%$2,795,00094.4%4158.9%
29Foot LockerNew York$4,468,00012.9%$6,129,00072.9%2,406-2.8%
30GNC HoldingsPittsburgh$2,191,00012.4%$2,669,00082.1%4,1118.8%
31NordstromSeattle$11,762,00012.1%$11,762,000100.0%2406.7%
32Dick’s Sporting GoodsCoraopolis, Pa.$5,836,00012.0%$5,836,000100.0%6017.1%
33Hibbett SportsBirmingham, Ala.$819,00011.7%$819,000100.0%8734.9%
34TJXFramingham, Mass.$19,422,00011.6%$25,719,00075.5%2,3355.6%
35DSWColumbus, Ohio$2,258,00011.5%$2,258,000100.0%36411.7%
36CoachNew York$3,394,00011.3%$3,394,000100.0%5144.5%
37Dollar TreeChesapeake, Va.$7,266,00011.3%$7,395,00098.3%4,5316.6%
38Festival FoodsOnalaska, Wis.$587,00011.0%$587,000100.0%176.3%
39American Eagle OutfittersPittsburgh$3,158,00010.8%$3,586,00088.1%971-2.3%
40Pier 1 ImportsFort Worth, Texas$1,564,00010.8%$1,691,00092.5%9821.1%
41PetSmartPhoenix$5,740,00010.7%$5,980,00096.0%1,1983.4%
42CostcoIssaquah, Wash.$71,042,00010.6%$97,062,00073.2%4352.4%
43Vitamin ShoppeNorth Bergen, N.J.$942,00010.6%$949,00099.3%5759.3%
44IKEA North AmericaConshohocken, Pa.$3,902,00010.4%$36,406,00010.7%392.6%
45Sherwin-WilliamsCleveland$5,000,00010.4%$5,410,00092.4%3,3781.6%
46Tractor Supply Co.Brentwood, Tenn.$4,664,00010.2%$4,664,000100.0%1,1768.4%
47Stage StoresHouston$1,613,0009.8%$1,613,000100.0%8626.0%
48Cabela’sSidney, Neb.$2,640,0009.3%$2,780,00095.0%3715.6%
49Newegg.comCity of Industry, Calif.$2,686,0009.3%$3,074,00087.4%N.A.N.A.
50Family DollarMatthews, N.C.$9,331,0009.2%$9,331,000100.0%7,4426.0%
51Yankee Candle CompanySouth Deerfield, Mass.$445,0009.0%$447,00099.4%5622.7%
52C & J ClarkNewton, Mass.$990,0009.0%$990,000100.0%28611.3%
53Aldi SüdBatavia, Ill.$10,041,0008.9%$42,321,00023.7%1,2605.4%
54Conn’sThe Woodlands, Texas$650,0008.9%$650,000100.0%684.6%
55Harp’s Food StoresSpringdale, Ark.$826,0008.8%$826,000100.0%748.8%
56RaceTracAtlanta$1,070,0008.7%$1,070,000100.0%6425.2%
57QuikTripTulsa, Okla.$849,0008.7%$849,000100.0%6399.8%
58WegmansRochester, N.Y.$6,736,0008.7%$6,736,000100.0%812.5%
59SephoraSan Francisco$1,359,0008.6%$2,029,00067.0%2855.9%
60Neiman MarcusDallas$4,345,0008.6%$4,345,000100.0%78-1.3%
61H-E-BSan Antonio$18,201,0008.2%$19,410,00093.8%3183.2%
62Dollar GeneralGoodlettsville, Tenn.$16,022,0008.2%$16,022,000100.0%10,5065.7%
63ZalesIrving, Texas$1,517,0008.1%$1,855,00081.8%1,535-2.8%
64Sally Beauty HoldingsDenton, Texas$2,601,0008.1%$2,601,000100.0%3,6583.6%
65Cumberland FarmsFramingham, Mass.$798,0008.0%$798,000100.0%9725.4%
66WinCo FoodsBoise, Idaho$4,932,0008.0%$4,932,000100.0%867.5%
67Abercrombie & FitchNew Albany, Ohio$3,445,0008.0%$3,721,00092.6%912-3.6%
6899 Cents Only StoresCity of Commerce, Calif.$1,605,0007.9%$1,605,000100.0%3197.0%
69Academy Sports + OutdoorsKaty, Texas$2,191,0007.7%$2,191,000100.0%1569.9%
70Ascena Retail GroupSuffern, N.Y.$3,125,0007.6%$3,235,00096.6%2,5853.0%
71Verizon WirelessBasking Ridge, N.J.$8,010,0007.6%$8,010,000100.0%1,910-18.0%
72Books-A-MillionBirmingham, Ala.$504,0007.6%$504,000100.0%2570.0%
737-ElevenDallas$10,699,0007.5%$93,011,00011.5%7,6726.3%
74Casey’s General StoresAnkeny, Iowa$2,004,0007.5%$2,004,000100.0%1,7543.2%
75Ann Inc.New York$2,376,0007.4%$2,376,000100.0%9843.3%
76Trader Joe’s *Monrovia, Calif.$7,844,0007.4%$31,666,00024.8%3955.1%
77Signet JewelersAkron, Ohio$3,330,0007.3%$4,065,00081.9%1,3331.1%
78Burlington Coat FactoryBurlington, N.J.$4,104,0007.1%$4,131,00099.3%4924.5%
79BelkCharlotte, N.C.$3,957,0007.0%$3,957,000100.0%301-0.7%
80Leslie’s PoolmartPhoenix$610,0006.9%$610,000100.0%7677.7%
81O’Reilly AutomotiveSpringfield, Mo.$6,182,0006.8%$6,182,000100.0%3,9766.3%
82VPS Convenience Store GroupWilmington, N.C.$324,0006.7%$324,000100.0%1906.7%
83CVS CaremarkWoonsocket, R.I.$63,688,0006.7%$63,863,00099.7%7,4721.7%
84KrogerCincinnati$92,165,0006.6%$92,165,000100.0%3,538-1.0%
85AutoZoneMemphis, Tenn.$6,949,0006.5%$8,423,00082.5%4,6573.3%
86Williams-SonomaSan Francisco$3,920,0006.5%$4,043,00097.0%5660.9%
87The Home DepotAtlanta$66,022,0006.4%$74,754,00088.3%1,9650.1%
88Hot TopicCity of Industry, Calif.$734,0006.3%$742,00098.9%8034.8%
89Pilot Flying JKnoxville, Tenn.$694,0006.3%$771,00090.0%5493.0%
90Wakefern / ShopRiteKeasbey, N.J.$13,656,0006.3%$13,656,000100.0%3003.1%
91GenescoNashville, Tenn.$2,013,0006.2%$2,506,00080.3%2,190-0.5%
92Stein MartJacksonville, Fla.$1,232,0006.2%$1,232,000100.0%2630.4%
93PetcoSan Diego, Calif.$3,011,0006.1%$3,011,000100.0%1,1934.9%
94GymboreeSan Francisco$1,180,0006.1%$1,235,00095.5%1,2119.9%
95Ethan Allen InteriorsDanbury, Conn.$834,0006.1%$834,000100.0%2112.4%
96BJ’s Wholesale ClubWestborough, Mass.$12,465,0006.0%$12,465,000100.0%2002.6%
97Harris Teeter SupermarketsMatthews, N.C.$4,535,0005.8%$4,535,000100.0%2082.0%
98C&K MarketBrookings, Ore.$514,0005.8%$514,000100.0%654.8%
99The BuckleKearney, Neb.$1,124,0005.7%$1,124,000100.0%4402.1%
100Kinney DrugsGouverneur, N.Y.$825,0005.7%$825,000100.0%955.6%
Source: Kantar Retail
Notes on Methodology
USA = 50 States and District of Columbia; sales in Puerto Rico, the U.S. Virgin Islands, and Guam have been estimated and removed if reported as part of the U.S. business segment for that company.
All retail sales estimates are excluding wholesale and non-retail services (not sold at store).
Fuel sales are included, except where revenues of fuel exceed 50% of average store revenues, in this case sales are reported exclusive of fuel sales.
All figures are estimates based on Kantar Retail research and company reports.
* Trader Joe’s Worldwide figures are for ALDI NORD.

Center Main

Vacancies for U.S. strip malls improve slightly

The average vacancy rate for a U.S. strip mall improved slightly in the fourth quarter from the third quarter, as consumer sentiment and retail sales ticked up, according to a preliminary report released on Tuesday from real estate research firm Reis Inc.

“Consumers appear to be acting more aggressively in response to improvements in the labor markets,” the report said.

The national vacancy rate for strip malls was 10.4 percent in the fourth quarter of 2013, down from 10.5 percent in the second and third quarters.

The report noted a growing rift between “have” and “have-not” markets as income inequality worsened. “In these ‘have-not’ areas,” the report said, “demand remains enervated, rents continue to fall even as the macroeconomy and labor market improve, and new development activity is virtually if not completely nonexistent.”

Reis said it expects this “two speed” recovery to continue in 2014.

Source: Reuters Michelle Conlin Jan 7th, 2014

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Independent Grocers Negotiating to Buy 10 Dominick’s

Independent grocery chains affiliated with the Centrella cooperative are in negotiations to buy as many as 10 Dominick’s stores, sources familiar with the talks said.

Grocers affiliated with Centrella, the brand name used by Joliet-based Central Grocers Inc., are looking to purchase stores as a group in both the city and suburbs, sources said. It’s unclear which Dominick’s locations Centrella would buy on behalf of its member firms.

The group has hired food industry investment banker David Schoeder to negotiate the package deal with Dominick’s parent, Pleasanton, Calif.-based Safeway Inc., which announced it would leave the Chicago market.

Mr. Schoeder, a principal with Food Partners LLC in Washington, declined to comment. A Centrella executive could not immediately be reached this evening.

Centrella grocers looking to open stores in soon-to-close Dominick’s around the region include Tony’s Finer Foods, Treasure Island and Strack & Van Til, among others, according to the sources. The co-op has more than 150 members.

Tony Ingraffia, president of South Barrington-based Tony’s Finer Foods Inc., did not return calls. Christ Kamberos, vice president of development at Treasure Island Foods Inc., declined to comment. An executive with Highland, Ind.-based Strack & Van Til did not return a call.

Jewel-Osco, meanwhile, is suspending plans to snap up additional Dominick’s on the market here. The firm, owned by private-equity firm Cerberus Capital Management LP, is no longer looking to buy additional Dominick’s stores that are currently open, said an Itasca-based spokeswoman for Jewel.

When Safeway announced in October that it would leave the Chicago market, the firm operated 72 stores across the region. No more than 55 remain.

Earlier this month, Milwaukee-based Roundy’s Inc. announced a $36 million deal for 11 Dominick’s. Jewel-Osco has purchased four. And Dominick’s leases are expiring at properties in Matteson and Morton Grove and the landlords there are pursuing other options.

A Safeway spokeswoman did not return a call.

Jewel announced its Dominick’s acquisitions in October, stores at 1340 S. Canal St. and 2550 N. Clybourn Ave. in Chicago, and in Homer Glen and Glenview. It’s currently operating those outlets as Dominick’s, with plans to convert them into Jewel stores by mid-January, according to Jewel spokeswoman Allison Sperling.

The grocer won’t buy any more operating Dominick’s stores, Ms. Sperling said. Instead, Jewel will wait to see what’s left after Safeway shutters its chain Dec. 28th.

“In the near future, we will consider any opportunities that arise” to take over closed Dominick’s, said Ms. Sperling, who declined to elaborate further.

Chicago Tribune first reported on Jewel-Osco’s decision not to pursue Dominick’s that are currently open.

In other Dominick’s developments, Safeway did not renew its lease for its store at 4233 W. Lincoln Hwy. in south suburban Matteson. A spokesman for Indianapolis-based Simon Property Group, which owns the retail property that Dominick’s is leaving, said in a recent email that Simon is trying to find a new tenant for the space.

In Morton Grove, Dominick’s lease is expiring in April, a source said, and the landlord plans to pursue a retail-focused redevelopment project there.

Source: Crains Chicago Business Micah Maidenberg December 18, 2013

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Pop-Up Stores Raise a Question for Landlords

As the holiday season approaches, temporary stores selling Halloween, Thanksgiving and Christmas merchandise are sprouting up in malls across the country. But whether pop-up stores are a positive or negative trend for retail landlords is an open question.

The issue took on new significance when home-furnishing retailer Crate and Barrel said it would operate pop-up stores for the first time in its roughly 50-year history. The temporary stores, which will be much smaller than a typical Crate and Barrel store, are set to open this and next month in Las Vegas, Des Moines, Nashville and Albany, N.Y.

Crate and Barrel plans to open a pop-up store this holiday season in the Town Square Las Vegas mall. CoStar Group

Small retailers, artists and craftsmen have long operated pop-up stores, kiosks and carts to sell seasonal products in malls. But as a rising number of large retailers embrace pop-ups, some landlords and analysts worry the trend is another sign of a declining need for permanent retail space.

The pop-up concept “has tremendous cost advantages for the retailer without the financial risk,” said Burt Flickinger III, a managing director with the Strategic Resource Group, a consulting firm that specializes in consumer goods and retail. He said pop-ups, along with the growth in Internet shopping, are sparking a “retail revolution that’s making land-based retail less relevant every year.”

A spokeswoman for Crate and Barrel declined to discuss its strategy except to say these temporary stores were a good way to test markets.

For retail landlords, pop-ups can help fill a void. Crate and Barrel recently leased 6,700 square feet in the Town Square Las Vegas mall. Jamiesen Mapes, Town Square’s marketing director, said he would prefer to sign tenants to long-term leases because they provide predictable cash flow. But with just over 80% of the mall’s 900,000 square feet of retail space occupied, the mall is willing to consider leasing space on a short-term basis, he said. Besides, Crate and Barrel’s short-term lease eventually could turn into a permanent one. “You want to fill [the space] permanently but if it’s sitting vacant it isn’t doing you or your center any good,” said Mr. Mapes.

But there is a downside to pop-ups. Retail tenants, especially large ones, often get bargain rates when they rent for the short-term, which could prompt long-term tenants to ask for discounts, too. Mr. Flickinger estimates shopping centers in hard-hit retail markets such as Las Vegas might offer discounts of as much as 40% on rents to bring in a brand name retailer on a short-term basis. Crate and Barrel and a spokesman for the mall declined to comment on the terms of the lease.

Crate and Barrel isn’t alone. Toys “R” Us Inc. also plans to open about 200 temporary stores this holiday season, an initiative that it started in 2009.

Short-term retailers have been around for decades and the concept has grown popular for a range of reasons. Malls bring in seasonal retailers to boost holiday sales and add to the festive atmosphere while retailers use pop-ups to gain a presence in expensive markets such as Manhattan.

Some analysts say they expect the growth of pop-ups to slow as retail occupancies rise. Overall retail vacancies in 63 major U.S. markets stood at 6.8% in the third quarter, down from a recessionary peak of 7.7% in the first quarter of 2010, according to CoStar Group Inc., a real-estate research firm. “The pop-up idea probably peaked in 2010 because that’s when you had the most real estate available for it,” said Cedrik Lachance, an analyst with Green Street Advisors Inc. “As more of the space is leased, it becomes more difficult for retailers to find pop-up locations.”

But Christina Norsig, chief executive of PopUpInsider LLC, a brokerage firm that specializes in short-term leases, says there is a place for pop-ups even in an improved economy. “It serves a lot of purposes,” said Ms. Norsig. “Not every idea can stand alone in permanent space and pop-ups generate revenue between leases and turn the lights on.”

Source: Wall Street Journal By MAURA WEBBER SADOVI Oct. 22, 2013