‘Chairman Bob’ gets last laugh in Chicago

There’s something to be said for having the last laugh and having the best laugh in business.

In this case, I’m referring to the Chicago grocery market. Bob Mariano began his career in that market by working as a high school student as a clerk at the deli counter of a Dominick’s Finer Foods store.

Mariano diligently worked his way up the company’s ladder, ultimately becoming its chief executive officer.

Along the way, Mariano’s mentor, Dominick DiMatteo, paid for him to receive his MBA from the University of Chicago.

“His passion for taking care of the customer, always trying to tickle the customer in terms of what they were looking for, his dissatisfaction with the present, was unsurpassed…It wasn’t about words, but what he did, and the relentless focus for being very, very good,” Mariano told The Chicago Tribune about DiMatteo.

However, Dominick’s was sold to Pleasantville, Calif.-based Safeway Inc. in 1998. Safeway made it clear at the time that Mariano was no longer welcome as the CEO. Mariano soon parted ways.

Safeway’s takeover “was not an enjoyable or enlightening experience,” Mariano recalled.

A five-year non-compete agreement led to a pause in Mariano’s retail career.

However, in 2002, Mariano moved 90 miles north to become chairman and chief executive officer of Milwaukee-based Roundy’s Inc.

In recent years, Mariano made a strategic decision to re-enter the Chicago market on his own terms, opening 13 upscale Mariano’s Fresh Markets.

Fast forward 11 years…Safeway is bleeding cash. The company lost $35.2 million in the first 36 weeks of 2013 and announced it will leave the highly competitive Chicago market by closing all 72 of its Dominick’s stores by 2014.

Cue Mariano. Roundy’s recently agreed to purchase 11 Dominick’s stores from Safeway for $36 million and will convert the stores to the Mariano’s banner.

“This acquisition is transformational in terms of Mariano’s expansion plans in the Chicago metropolitan area, allowing us to open 11 additional stores in 2014 in prime locations with great market demographics,” Mariano said. “These key locations will seamlessly integrate into and complement our existing base of 13 Mariano’s locations as well as our five additional 2014 Mariano’s locations now under construction.”

The former Dominick’s employees will be given consideration for the new jobs at Mariano’s.

The transaction, which is expected to be closed by the end of the year, will double Mariano’s presence in his beloved Chicago market. Mariano said the company ultimately could expand to operate 50 stores in the market.

Meanwhile, look for Roundy’s to continue test-marketing several Mariano’s concepts in its Pick ‘n Save stores in the Milwaukee market, which also is highly competitive.

Pick ‘n Save, once the dominant grocer in Milwaukee, is getting squeezed on both ends of the grocery spectrum. On one end, the company is trying to compete on price with big-box retailers such as Walmart, Target and Woodman’s. On the other end, the company is trying to compete on service with upscale grocers such as Balistreri-owned Sendik’s Food Markets, Whole Foods and Outpost Natural Foods.

“Our goal is to set ourselves apart from other competitors in the market, and we accomplished this in part through strategies, such our investment in our fresh departments, developing unique approaches to pricing and merchandising and investing in customer service,” Mariano told analysts in his most recent quarterly call.

The challenge for “Chairman Bob” will be to find Pick ‘n Save’s sweet spot on the barbell in the middle of those two grocery templates – price and service.

Steve Jagler is executive editor of BizTimes.

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