Jewel to buy remaining Strack & Van Til stores

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pseudo3d
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Jewel to buy remaining Strack & Van Til stores

Post by pseudo3d »

Called it!

http://www.nwitimes.com/business/local/ ... 9b5ce.html

EDIT: Apparently it's not a done deal yet (they received other bids, but Jewel seems to be the favored one, and I expect that the unions would push Jewel if a higher bid is non-union) but I did expect this announcement.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by klkla »

Looks like they have negotiated 'stalking horse status' and are offering about $5 million per store. Usually in that case another bidder would have to outbid ALB by a certain percentage. IIRC correctly with the Haggen BK they had to outbid the stalking horse bidder by 20%.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by pseudo3d »

klkla wrote:Looks like they have negotiated 'stalking horse status' and are offering about $5 million per store. Usually in that case another bidder would have to outbid ALB by a certain percentage. IIRC correctly with the Haggen BK they had to outbid the stalking horse bidder by 20%.
I thought they won the Haggen by proxy because they were only "qualified bidder" to do so. Since Albertsons didn't appear to buy the name as well (unlike Haggen, which has more or less remained a semi-independent group within Albertsons unless something changed recently), I'll guess that this will be something like the A&P purchases, liquidate or otherwise sell down the Centrella merchandise (to discount food stores/salvage food stores), close down, reset, new systems, repaint logos and make other small fixes, and they're up in a few days as Jewel-Osco. Guess I need to get around to updating that "openings/closings" list soon... :roll:
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Re: Jewel to buy remaining Strack & Van Til stores

Post by klkla »

pseudo3d wrote:I thought they won the Haggen by proxy because they were only "qualified bidder" to do so. Since Albertsons didn't appear to buy the name as well (unlike Haggen, which has more or less remained a semi-independent group within Albertsons unless something changed recently), I'll guess that this will be something like the A&P purchases, liquidate or otherwise sell down the Centrella merchandise (to discount food stores/salvage food stores), close down, reset, new systems, repaint logos and make other small fixes, and they're up in a few days as Jewel-Osco. Guess I need to get around to updating that "openings/closings" list soon... :roll:
I'm sorry, I should have made myself clearer. The original bids from Smart & Final and Gelson's were the stalking horse bids in the Haggen BK.

I get the impression that ABS might be buying the remaining Strack & Van Til stores as a going concern. $30 million of the $100 million is said to be for the cost of inventory.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by pseudo3d »

klkla wrote:
pseudo3d wrote:I thought they won the Haggen by proxy because they were only "qualified bidder" to do so. Since Albertsons didn't appear to buy the name as well (unlike Haggen, which has more or less remained a semi-independent group within Albertsons unless something changed recently), I'll guess that this will be something like the A&P purchases, liquidate or otherwise sell down the Centrella merchandise (to discount food stores/salvage food stores), close down, reset, new systems, repaint logos and make other small fixes, and they're up in a few days as Jewel-Osco. Guess I need to get around to updating that "openings/closings" list soon... :roll:
I'm sorry, I should have made myself clearer. The original bids from Smart & Final and Gelson's were the stalking horse bids in the Haggen BK.

I get the impression that ABS might be buying the remaining Strack & Van Til stores as a going concern. $30 million of the $100 million is said to be for the cost of inventory.
Right, because if it wasn't, it would go to a liquidator and those stores would have to go through going out of business sales (that was one of the things about Gander Mountain--the stores and leases were bought but the inventory was not) and it would take longer for the stores to get back up and running again. And of course, it buys time for those stores to operate as S&VT...even the unsold stores are still expected to operate at least another month, and I imagine that the closures will be done on a rolling basis. I highly doubt that the S&VT name will be kept, they didn't buy the names to those brands.

Haggen also bought the inventory of the stores it acquired, and it was one of how much the assets were vs. how much they paid was one of the disagreements between Haggen and Albertsons, but they still closed and re-merchandised the stores.

I also do wonder why the three stores got dropped. Were they too close to Jewel stores and dropped, were they to be picked up later as "dark stores" to move the existing Jewel stores, were they old stores that would've been not worth it to invest in, or are they looking at picking up better Marsh locations as well?
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Re: Jewel to buy remaining Strack & Van Til stores

Post by rwsandiego »

pseudo3d wrote:[... I highly doubt that the S&VT name will be kept, they didn't buy the names to those brands.

Haggen also bought the inventory of the stores it acquired, and it was one of how much the assets were vs. how much they paid was one of the disagreements between Haggen and Albertsons, but they still closed and re-merchandised the stores.

I also do wonder why the three stores got dropped. Were they too close to Jewel stores and dropped, were they to be picked up later as "dark stores" to move the existing Jewel stores, were they old stores that would've been not worth it to invest in, or are they looking at picking up better Marsh locations as well?...
It seems that ABS intent is to "grow the Jewel-Osco brand" in its purchase of the S&VT locations:

NWITimes Article

Based on that strategy, I would not rule out Jewel-Osco taking some of the better Marsh locations. At the same time, I wouldn't bet money that they would buy them.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by storewanderer »

What is the average size of these SVT Stores compared to the typical Jewel Osco?

Is this really a good fit for that brand?

I was only ever in one SVT Store, in some SE (?) Chicago suburb, and I recall it being medium size (not large like a standard Jewel Osco), and trying hard on perimeter but clearly not doing anything close to the volume of the Jewel that was nearby (it was about as busy as a nearby Dominicks - so not very busy).
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Re: Jewel to buy remaining Strack & Van Til stores

Post by pseudo3d »

rwsandiego wrote:
pseudo3d wrote:[... I highly doubt that the S&VT name will be kept, they didn't buy the names to those brands.

Haggen also bought the inventory of the stores it acquired, and it was one of how much the assets were vs. how much they paid was one of the disagreements between Haggen and Albertsons, but they still closed and re-merchandised the stores.

I also do wonder why the three stores got dropped. Were they too close to Jewel stores and dropped, were they to be picked up later as "dark stores" to move the existing Jewel stores, were they old stores that would've been not worth it to invest in, or are they looking at picking up better Marsh locations as well?...
It seems that ABS intent is to "grow the Jewel-Osco brand" in its purchase of the S&VT locations:

NWITimes Article

Based on that strategy, I would not rule out Jewel-Osco taking some of the better Marsh locations. At the same time, I wouldn't bet money that they would buy them.
Interesting. It does confirm one of the things that the news media didn't know, was if the Strack & Van Til brand would be kept (and the answer is no if they want to expand Jewel-Osco). I wonder why they didn't buy out any of the Ultra Foods, one of them was renovated this year. The thing is, would expanding Jewel-Osco really work? They did have stores in some of those areas, most of which (there is one in northeast Indiana) closed shortly after the 2006 split.

Like I said before, looking at Jewel-Osco's performance long-term suggests that despite it being a strong brand (strong enough for American Stores to use the brand in the South), it seems that Jewel has not performed well outside Chicagoland. Under American Stores (not Albertsons), the former Eisner territory deteriorated, Michigan vanished, while SuperValu pulled Jewel-Osco out of Wisconsin.

Other things to note include this little tidbit: "Jewel-Osco has agreed to interview and extend offers of employment to substantially all of the employees of the stores that are part of the transaction." Substantially all? Who's getting sacked?
storewanderer wrote:What is the average size of these SVT Stores compared to the typical Jewel Osco?

Is this really a good fit for that brand?

I was only ever in one SVT Store, in some SE (?) Chicago suburb, and I recall it being medium size (not large like a standard Jewel Osco), and trying hard on perimeter but clearly not doing anything close to the volume of the Jewel that was nearby (it was about as busy as a nearby Dominicks - so not very busy).
A handful of the stores are fairly large, at least one of them (I think a few more) are former Omni Superstore locations (in the range of 85k-89k square feet), the smallest I've found of S&VT is 1836 Calumet Avenue in Whiting, and that looks to be around 33k square feet. It's not really the size Jewel should be worried about--trying to attract and properly merchandise to former S&VT customers before they jump ship is going to make or break the acquisition.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by rwsandiego »

pseudo3d wrote:...Interesting. It does confirm one of the things that the news media didn't know, was if the Strack & Van Til brand would be kept (and the answer is no if they want to expand Jewel-Osco). I wonder why they didn't buy out any of the Ultra Foods, one of them was renovated this year. The thing is, would expanding Jewel-Osco really work? They did have stores in some of those areas, most of which (there is one in northeast Indiana) closed shortly after the 2006 split.

Like I said before, looking at Jewel-Osco's performance long-term suggests that despite it being a strong brand (strong enough for American Stores to use the brand in the South), it seems that Jewel has not performed well outside Chicagoland. Under American Stores (not Albertsons), the former Eisner territory deteriorated, Michigan vanished, while SuperValu pulled Jewel-Osco out of Wisconsin....
Jewel-Osco actually has four stores in NW Indiana, but they are all on the fringes of metropolitan Chicago, Of course, many of the S&VT stores are, too. ASC closed the Eisner warehouse in Central Illinois and supplied those stores from Melrose Park, which made them uneconomical. J-O must be doing well in Bloomington and Kankakee, else the stores would be closed. Likewise in the Quad Cities.

An article written at the time of Jewel's retreat from Milwaukee attributed their problems to them being "too fancy." What I think really happened is ASC bought a handful of discount food stores (Cub Foods) and converted them to Jewel, anything but a discount food store. No wonder they failed. I loved Jewel and it was the only place I shopped save for an occasional Treasure Island or Whole Foods run, but it wasn't because they sold cheap groceries. Their prices were typically higher than Dominick's and Butera (a/k/a Buterrible) but the quality was far superior.

The Milwaukee failure might explain why they are not taking any of the Ultra Foods locations. They probably learned their lesson - don't convert a discount supermarket into a higher-priced food and drug store. I think they also learned that you can't compete in a large area, like Milwaukee or Northwestern Indiana, with four stores. Had Jewel bought Sentry Foods or Pick 'n' Save in Milwaukee they probably would have succeeded, as they would have bought a large number of stores.

In terms of the brand's success or failure outside of Chicagoland, they are successful in the non-Chicagoland markets in which they operated pre-ASC and SVU. That's probably because they have the historical reputation of offering superior service and quality, even though it might have flagged in the last several years. Seeing what Albertsons LLC has done with Jewel after re-acquiring it I can see the brand being successful outside of Chicagoland. The Jewel-Oscos I visited last summer were very close to what they used to be: extremely clean and well-stocked and offering superior quality. That will win in other markets adjacent to Chicago. However, if they slap a Jewel-Osco sign on a crappy set of stores and keep them crappy they will fail.
storewanderer wrote:What is the average size of these SVT Stores compared to the typical Jewel Osco?

Is this really a good fit for that brand?

I was only ever in one SVT Store, in some SE (?) Chicago suburb, and I recall it being medium size (not large like a standard Jewel Osco), and trying hard on perimeter but clearly not doing anything close to the volume of the Jewel that was nearby (it was about as busy as a nearby Dominicks - so not very busy).
I've never been in an S&VT, but based on Google Maps images it looks like many of them are pretty good sized, probably on the smaller end of the Jewel spectrum. The one they are not buying looked big but pretty shabby on the outside. There were no interior pics. I'll do some more digging Tuesday. It is getting late and I am getting sleepy.
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Re: Jewel to buy remaining Strack & Van Til stores

Post by pseudo3d »

rwsandiego wrote:
pseudo3d wrote:...Interesting. It does confirm one of the things that the news media didn't know, was if the Strack & Van Til brand would be kept (and the answer is no if they want to expand Jewel-Osco). I wonder why they didn't buy out any of the Ultra Foods, one of them was renovated this year. The thing is, would expanding Jewel-Osco really work? They did have stores in some of those areas, most of which (there is one in northeast Indiana) closed shortly after the 2006 split.

Like I said before, looking at Jewel-Osco's performance long-term suggests that despite it being a strong brand (strong enough for American Stores to use the brand in the South), it seems that Jewel has not performed well outside Chicagoland. Under American Stores (not Albertsons), the former Eisner territory deteriorated, Michigan vanished, while SuperValu pulled Jewel-Osco out of Wisconsin....
Jewel-Osco actually has four stores in NW Indiana, but they are all on the fringes of metropolitan Chicago, Of course, many of the S&VT stores are, too. ASC closed the Eisner warehouse in Central Illinois and supplied those stores from Melrose Park, which made them uneconomical. J-O must be doing well in Bloomington and Kankakee, else the stores would be closed. Likewise in the Quad Cities.

An article written at the time of Jewel's retreat from Milwaukee attributed their problems to them being "too fancy." What I think really happened is ASC bought a handful of discount food stores (Cub Foods) and converted them to Jewel, anything but a discount food store. No wonder they failed. I loved Jewel and it was the only place I shopped save for an occasional Treasure Island or Whole Foods run, but it wasn't because they sold cheap groceries. Their prices were typically higher than Dominick's and Butera (a/k/a Buterrible) but the quality was far superior.

The Milwaukee failure might explain why they are not taking any of the Ultra Foods locations. They probably learned their lesson - don't convert a discount supermarket into a higher-priced food and drug store. I think they also learned that you can't compete in a large area, like Milwaukee or Northwestern Indiana, with four stores. Had Jewel bought Sentry Foods or Pick 'n' Save in Milwaukee they probably would have succeeded, as they would have bought a large number of stores.

In terms of the brand's success or failure outside of Chicagoland, they are successful in the non-Chicagoland markets in which they operated pre-ASC and SVU. That's probably because they have the historical reputation of offering superior service and quality, even though it might have flagged in the last several years. Seeing what Albertsons LLC has done with Jewel after re-acquiring it I can see the brand being successful outside of Chicagoland. The Jewel-Oscos I visited last summer were very close to what they used to be: extremely clean and well-stocked and offering superior quality. That will win in other markets adjacent to Chicago. However, if they slap a Jewel-Osco sign on a crappy set of stores and keep them crappy they will fail.
The addition of the Strack & Van Til stores make that one Jewel-Osco store in NE Indiana seem like not an outlier anymore since they'll be spread through northern Indiana now. I think that one of the reasons why Jewel is interested (and, consequently, one of the reasons for Central's hastened death) is that in the last few years, a number of the S&VT stores were remodeled into attractive, full-featured stores. The stores that didn't get the full rehabs will probably end up getting LLC or whatever the "low-end" package is soon enough, but the real meat all lies in the execution, because Strack & Van Til, from what I've heard, was generally cheaper than Jewel-Osco, and the problem would be compounded if they ran most with "Chicago pricing" even in the more rural, distant areas.

The Milwaukee market had more than four stores, the four stores that were Cub Foods (plus a franchised Pick n Save, which I swear I remember reading was a pretty downmarket operation) were only the start. By the time SuperValu pulled out in January 2007, they had 15 stores, but nearly two thirds of them were closed outright (five went to Pick n Save, two went to an independent called Lena's, and eight were closed). However, the expansion largely happened under Albertsons Inc., and we all know that in every division, there were a handful of terrible locations that were never going to work.
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