Central Grocers said Tuesday that it was in talks to sell 22 stores operated by its largest retail customer, Strack & Van Til, and that it was closing Strack’s remaining nine stores beginning this week.
Central and Strack did not identify a buyer for the stores it intended to sell, but said it intended to sell them as going concerns. The company operates under the Strack & Van Til, Town & Country Market and Ultra banners in Illinois and Indiana, specifically the Chicagoland market. The nine stores that are closing all operate under the Ultra banner. Strack separately closed five stores last month.
Central, a $1.9 billion retailer-owned co-operative, would be losing its largest shareholder and most of its $700 million in retail sales unless the stores were redistributed among existing or new co-op members. Sources said Central earlier this year engaged Peter J. Solomon Co. to seek strategic alternatives and that the process had produced “several indications of interest,” but it was unclear Wednesday when or if a deal for Strack’s stores or Central’s distribution business would be forthcoming.
Strack & Van Til grew aggressively during a period of upheaval among Chicagoland grocers, as the corporate parents of longtime market leaders Jewel and Dominick’s struggled to invest in their brands earlier this decade. Jewel, however, has rebounded under ownership of Albertsons Cos., which took back control of the chain from Supervalu in 2013. In the meantime, Dominick’s stores were sold piecemeal by then-owner Safeway, and its one-time position as an upscale grocer was supplanted by Mariano’s, which today is operated by Kroger.
Chicago is also one of the strongest U.S. markets for Aldi, which sources say limited the appeal of the low-price Ultra model.
Observers contacted by SN speculated that Albertsons Cos. would be a store buyer and could add to its Jewel chain, which has a small presence in Indiana already. “Some of the Strack & Van Til stores in Indiana are doing quite well and would make a good buy for a well capitalized retailer,” said David J. Livingston, a Pewaukee, Wis.-based consultant.
Chris Wilcox, an Albertsons spokeswoman, declined comment.
“They are struggling with the same deflationary trends as anyone, but the Chicago market went from being extremely friendly when there was a struggling Dominick’s and a struggling Jewel to now when you have a very good Mariano’s run by Kroger and a much better Jewel run by Albertsons,” Neil Stern, managing partner at Chicago-based consultant McMillan Doolittle, told SN Wednesday. “The competitive nature of the market changed, and pretty dramatically in the last five years.”
Jeff Strack, chairman and CEO of Strack & Van Til, in a statement said: “As we move forward with this sale process, we are as committed as ever to providing our customers the highest-quality products and services and working hard to make sure our customers are completely satisfied. As a third generation member of the company’s founding family, and a proud member of the Northwest Indiana community, I want to assure our customers and neighbors that we take pride in the responsibility we have to the communities we serve and live in. We thank our loyal customers for their ongoing support, and also thank our employees for their continued hard work and dedication.”
Central Grocers was founded as a cooperative in 1917 and serves more than 400 independent stores in Chicago, according to its website. Central merged with Certified Grocers Midwest in 2008 and the combined companies serve out of a Joliet, Ill., facility.
Were Central to follow through on a sale, sources speculated that Supervalu, SpartanNash and Associated Wholesale Grocers would all be interested.