Bye-bye, Dominick's

Back in Chicago, where I soon will be (good Lord willing and the plane don’t crash), Safeway has decided to sell (or shut down or whatever; anyway, get rid of) their Dominick’s chain. It's not clear whether the name will survive on whatever stores remain.

Dominick’s was once, along with Jewel-Osco, the dominant chain in metro Chicago, but has been in slow-motion shutdown ever since Safeway bought them fifteen years ago. More than a third of the stores have been shut, with the chain shrinking from 116 stores to 72. As part of the announcement, Safeway said they had sold four more of the stores to Jewel-Osco.

The linked report says that Safeway paid about $1.8bil for the chain in 1998, and was offered an embarrassing $325mil in 2005. One presumes that they will get even less now. This is bad news for stockholders, of course, though it’s safe to say that anyone buying or selling Safeway stock in the past several years has taken the Dominick’s debacle into account. If not … caveat emptor.

I thought this part of the article was interesting, since it describes a common problem:

One hiccup with selling Dominick's in the past was the United Food and Commercial Workers (UFCW) union, which represents the chain's workers. It has been long rumored in the past that former Safeway CEO Steve Burd has had buyers interested in the chain — presumably under more favorable terms — but none could ever work out a deal with the UFCW.

Safeway unloading the chain can be counted as another example of the perils of being involved with unions. Safeway probably should have recognized when buying the chain that they might be dealing with a troublesome union. But beyond that (I have little sympathy for Safeway in any of this), one feels for the workers. Because their union leadership shoot down earlier buyout offers, the chain has suffered through several tough years, stores have closed, and now they’re looking at what will probably be a much worse deal than they could have had before.