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Jewel-Osco looks to court displaced Dominick's customers

(MCT) — Jewel-Osco unveiled its first remodeled grocery store under new ownership Wednesday and a glimpse of its plans for the Chicago market as longtime rival Dominick's prepares to close up shop for good.

Speaking to employees and customers inside a newly refreshed store at State and Ohio streets, Jewel executives touted such improvements as new flooring, expanded fresh produce offerings, a new salad bar, a sushi bar and a tank of live lobsters.

After the ceremony, Jewel President William Emmons reflected on the opportunity presented by Dominick's announced exit from the Chicago market, which will open up dozens of store locations and displace thousands of loyal shoppers.

"They're going to be searching for a new place to shop," Emmons said. "A lot of those stores will change banners with somebody, and they're not necessarily going to feel as comfortable as they might feel in a Jewel. We'll try to take advantage of all that."

In March, Jewel was sold to Cerberus Capital Management as part of a $3.3 billion deal that also included the Acme and Shaw chains and the rest of the Albertsons grocery chain. The privately held parent company, New Albertsons Inc., is based in Idaho, but operations for Jewel remain headquartered in suburban Itasca.

The 30,000-square-foot store, a distinctly urban location catering to commuters, tourists and River North neighborhood residents, is the first of 20 planned remodels for Jewel's 176-store chain. Ready-to-go meals, a bakery, craft beers and expansive vertical produce shelves underneath bold "fresh" signage seem squarely aimed at increased upscale competition, which, along with discounters, have squeezed the traditional grocery market.

But the legacy Chicago grocer, which leads the market with about 30 percent of shopping dollars, is also looking to expand by acquiring some of Dominick's 72 stores, including four that it has purchased.

"We're obviously interested," Emmons said. "It's still a roll of the dice on who's going to get what. We'd like to have some of their locations."

Jewel purchased the four stores Oct. 10, retaining about 450 workers and the Dominick's banner, for now. Sometime after the holidays the stores will close for a few days, then reopen as full-fledged Jewels, according to executives.

Dominick's parent, California-based Safeway, announced this month that it would shutter the longtime Chicago grocery chain, which lost $35.2 million through the first 36 weeks of 2013. Many of the locations are expected to be taken over by rival grocery chains as Safeway exits the market by early next year.

Emmons would not confirm a target number, but sources say Jewel may be looking at as many as 30 locations, including the four it has acquired. Other players such as Kroger are potential bidders, but the lion's share may go to independent stores, perhaps by banding together through a partner, according to sources.

Sources say Safeway has set a Nov. 1 deadline for accepting bids. The company would not confirm the deadline, but a spokeswoman said Wednesday it is "still seeking buyers."

Emmons said that beyond other competitors, the Federal Trade Commission will have a role in limiting the number of locations it acquires. Any grocery store transaction of $70.9 million or more must be reported to the FTC, which employs an arcane formula to measure market concentration. But smaller acquisitions may also fall under its scrutiny if deemed to be potentially anti-competitive.

Jewel, Dominick's and other traditional grocers have been squeezed in recent years by increased competition from upscale and discount supermarkets. Emmons remains confident that the traditional grocery store can thrive in Chicago, under the right management.

He said that unlike Dominick's, Jewel is operating in the black this year. He plans to expand the bottom line by growing the top line through increased sales.

"It's a pretty simple formula — do more business and make more money," Emmons said.

Emmons, a longtime veteran of the Albertsons chain who started by stocking shelves, was lured out of retirement to take the reins at the newly acquired Jewel chain in March. His impact was felt quickly with Jewel's decision to drop its Preferred Customer Card in June.

"We think it's a very fair way to do business, because it gives every customer the right to buy it at the right price," Emmons said. "It's been very successful."

Other changes are coming, including the imminent end of self-checkout at Jewel, to be replaced by staffed express lanes, according to Emmons.

"We want to be face to face with the customer," he said. "We feel that's the best service level to give them."

While changes will vary from location to location, Emmons said customers will see cleaner, brighter stores, a new dress code, friendlier, better-trained employees and an enhanced variety of merchandise, with an emphasis on fresh products. He is even bringing back grocery carryout service at most locations.

"I don't care how much money you make a year, everybody loves great service," Emmons said.

Luigi De Matteo, a 14-year Jewel veteran who became store director at 550 N. State St. in May, said he has hired about 50 new full-time and part-time employees. On Wednesday, many of them roamed the aisles with trays, offering patrons samples of the expanded offerings and a taste of what's to come for the 114-year-old chain. Signs at the newly cut entrance at State and Ohio tout freshly squeezed juice and, perhaps, a more promising future.

Emmons expects competitors to gain ground as well from the vacated Dominick's stores, and he says the days when Jewel could dominate the Chicago grocery market are long gone. But with upscale tweaks and lower prices, he believes the new Jewel can defend its turf against the competition.

"It's a competitive world, and we're a different Jewel than what was," Emmons said. "We don't lay down anymore. We stand up and protect."

(c)2013 the Chicago Tribune
Distributed by MCT Information Services

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