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More about the decision by Safeway to sell off its Dominick's stores in Chicago.

One MNB reader wrote:

I grew up in Chicago, and after a years-long absence, returned there just about the time that Safeway bought Dominick’s.

As a younger person, Dominick’s was where we went when we wanted something a little bit more “special”. It wasn’t custom-meat-market-special, it wasn’t specialty-international-market-special, but it seemed above all of the other mainstream grocers. They seemed to carry a great variety of unique and specialty items. Their managers seemed to know just a little bit more than the Jewel managers about food; they seemed to care a little bit more.

Enter Safeway. I remember the Dominick’s in Elk Grove Village near my office. Shortly after Safeway took control a huge 300 case display Safeway Select soft drinks went into the lobby. It was always visible. One time, talking with the manager I commented on it. “That display most be very productive to leave up for three months”. His simple response was, “no, we haven’t sold a case… that is the identical display.” I watched as every reason I ever had to shop at Dominick’s disappeared. At the same time, over time I saw Safeway take many of the ideas that Dominick’s instituted in Chicago in the nineties show up in Safeway in the 2000's as if they were new ideas. I honestly think they thought of them themselves. I am still surprised how much Safeway’s Healthy Living resembled the very old Dominick’s Fresh Stores.

It wasn’t all Safeway’s fault. When Safeway bought Dominick’s they did so at a high value period. Dominick’s closed the high volume Omni group to seem simpler, but still had that old volume on the books. Dominick’s was positioned to sell with great purpose. Safeway got suckered.

But Safeway took what could have been the dominant format in Chicago (because Jewel was just as dysfunctional) and destroyed it because they thought that all value and knowledge came from the minds of northern California. It was years before they understood what the people of Chicago wanted and valued. By then it was too late. I am amazed it took them so long to get out of the market. Ultimately, a great grocer brand has died due to institutional arrogance.

In the wake of the world where Jewel and Dominick’s own the majority of the market, we have seen the re-emergence of some great independent grocers. I am surprised how strong they are. It is because no one good has risen to be the strong player.

And from another reader:

As a former Safeway employee, I've never understood the fragmentation that grocers are willing to tolerant within their own chains. Kroger, Supervalu and Safeway all seem to be determined to maintain a variety of banners without trusting the inherent value of their own Corporate brands. While the death throes of Dominick's have been legendary the past 10 years, I would argue that the demise of that brand is less about Safeway trying to run it from Corporate and not "getting" the Dominick's customer, but rather it is more about Corporate trying to operate a non-Safeway brand leading to internal confusion as to who exactly they were trying to please.

I've pondered for a while, whether most or all of these grocers would be better served putting a solid face on their stores by creating a tiered and branded approach based on demographics ; i.e. Safeway Plus for upscale stores (not a marketing guy, for example only), Safeway for midmarket, and Safeway Value for price sensitive markets. Stand behind the brand, understand that some regional variation of product selection/preferences will exist, and stop trying to support multiple brand entities. At Dominick's, they ended up trying to run stores that no longer really had the feel of a Dominick's but nor did they feel like a Safeway, leading I would suspect to customer confused by the approach as well. Vons, in California, is headed down the same path, not really feeling like Vons of old, but not really a Safeway either, leaving no heart and soul truly representing either brand.

Not to mention the extra cost of generating advertising for each brand, buying staff procuring for each brand and failure to build corporate brand awareness, much less loyalty, I would think in the long run that with Walmart eating them alive on the price side and Whole Foods succeeding wildly on the innovation and quality side, that the chickens have to come home to roost at some point. Bite the bullet, solidify the brands into something your customers will understand for the long haul and execute the hell out of the plan.

I would challenge the notion that Kroger has the same problems as Safeway in this regard. My sense of Kroger is that they are very good at operating multiple banners - hence the general belief that in buying Harris Teeter, Kroger is uniquely qualified to make an acquisition that will work.

Following yesterday's obituary for independent grocer Orville Roth, MNB reader Monte Stowell wrote:

I do not know if you knew Orville Roth, but he was truly one of the finest men that the Oregon independent grocery trade has ever had. He held the banner higher for the independent grocer than anyone I have known in this industry here in Oregon. A true giant and he will be sorely missed by all of us here in Oregon.  A sad day indeed for his family and all of us who have had the pleasure of working with him and know him as a friend. He will be sorely missed with that trademark green bowtie and big smile.

I did know Orville, and liked him enormously. As I said yesterday, he always struck me as a happy warrior ...
KC's View: