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DETROIT-The looming sale of the Farmer Jack grocery store chain, and the likely closing of more than a dozen of its stores, is likely to be the biggest reshuffling of the $6.6-billion southeast Michigan grocery scene in years. The New Jersey-based Great Atlantic & Pacific Tea Co. said Tuesdaythat it plans to divest itself of the Detriot-based 88-store Farmer Jack chain. Farmer Jack's president, Mike Cart, said that after the transition, Farmer Jack should emerge as a 70-store chain.
The decision to sell or spin-off its Farmer Jack division by A&P points to the fierce competition in the metro area grocery market, says Ed Deeb, president of the 3,300-member Michigan Food & Beverage Association in Warren. Exactly which stores Farmer Jack intends to keep in the chain and which it plans to sell are still unclear. Even the union which represents Farmer Jack's workers is unclear on the company's exact plans.
"While the announcements put an end to months of speculation regarding the future of Farmer Jack in Michigan, neither the information provided by A&P or Farmer Jack was very specific," Victoria Collins, Local 876's president, says. "At this point, we have been informed that approximately 70 Farmer Jack stores identified well performing by the company will remain in operation during the divestiture, while a small group of under-performing Farmer Jack stores, along with 10 Food Basics stores, will be closed or sold during the next few months."
The union says it was not provided with a list identifying which stores will remain in operation or an updated list of the stores identified for sale or closure. On Wednesday, New York-based New Plan Excel Realty Trust, Inc. said it has formed a partnership with DJM Asset Management LLC to market 32 Farmer Jack or Food Basics stores in southeast Michigan and/or the Toledo area for sublease, assignment or other disposition. Meanwhile, the William Blair & Co. LLC is leading the process of selling 70 core Farmer Jack stores in the local market as an ongoing business.
Deeb says smaller, independent storeowners and operators might see an opportunity with Farmer Jack locations closing. "You are going to have stores coming up for sale or lease that might represent an opportunity for a smaller independent to move into a larger facility," he says. "He might get the chance to add much more space at a very good price."
Deeb says independent operators can't always compete with the big super chains on price, but can still create a successful niche. "Take a look at Nino Salvaggio's [in St. Clair Shores and Clinton Township] or a Pete & Frank's [in Eastpointe]. They are selling service and value. They started just as fruit markets, but now people go to those stores because they appreciate a certain level of service you can't get at a chain store," Deeb says.
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