SN ASKS: DOMINICK'S CHANGING FACE

ROBERT VOSBURGH

CHICAGO -- Randall Onstead Jr. returned to the supermarket business last year as president of Dominick's Finer Foods. Parent company Safeway, Pleasanton, Calif., which acquired Dominick's in 1998, gave Onstead a tall order: Restore the chain's profitability, entice disappointed customers to return and help smooth troubled labor relations. Today, there are signs of progress on all fronts. Onstead, former chairman and chief executive officer of Randalls Food Markets, Houston, also purchased by Safeway in 1998, has brought back good-faith negotiations with unions, and has engendered a new attitude within the 101-store chain. Customers are starting to notice the difference, too.

SN: The last time you spoke with SN five months ago, you were just coming on board at Dominick's. How has your business philosophy changed Dominick's?

Onstead: First, let me state my business philosophy -- it is very simple: Listen to people and respond. The most obvious change at Dominick's has been in employee morale. We are listening to our employees' concerns and addressing them. Dominick's has always been known for friendly customer service. By demonstrating our confidence and investment in the stores, we have reaffirmed our loyalty and confidence in our employees -- and they are responding with an incredibly positive can-do attitude that is reflected in our great customer service.

Dominick's started out as a family-owned business much like my father started Randalls in Texas. Steve Burd [Safeway president and CEO] understood that Dominick's needed a more personal touch. He brought me to Chicago to bring back that family-owned business feeling to Dominick's. I have been on a mission to restore that local identity that customers want at Dominick's.

SN: You've been quick to bring back some favorite items that were removed when Safeway acquired Dominick's in 1998. What are some of those products, and why were they chosen?

Onstead: Sunkist Orange soda is a good example. Safeway discontinued it and our customers let us know that they missed it -- so we brought it back. Another favorite that has been reintroduced -- much to the delight of our Dominick's customers -- is a selection of Eli's cheesecakes in our bakery. Jays Potato chips are another example of a local Chicago company with many different brands that our customers know and love. Gonnella focaccia bread is another Chicago favorite and new to Dominick's.

SN: Store managers have been given more latitude to decide what their individual stores should carry. How has this been received, and how is it being accomplished?

Onstead: A neighborhood grocery store needs a store manager who is a good neighbor. Our store managers are very involved in their communities and seeking out customer opinions makes them even better managers.

With the support and guidance of our store managers, we have managed to restore some of the local store personality in our stores. We are responding to the needs of the community and adding small changes that add up to big changes in our stores. Some changes include fresh new soups, a wider selection of produce, kosher items and an array of 52 different fresh salads in the deli cases. We have also responded to the low-carb consumer with low-carb wraps made fresh in our stores.

SN: How would you describe Chicago shoppers? What feedback are you getting from them on the changes you're implementing right now?

Onstead: Chicago shoppers are very loyal. They have strong feelings about their local Dominick's and their favorite brands. Our customers are vocal about how they feel. Right now, they are telling us that they like the changes and are happy to see their favorite store responding to their needs.

SN: There have been some store closings, but you also talk about expansion. What are the next steps Dominick's needs to take to arrive at that growth point?

Onstead: By closing 12 underperforming stores, we are 101 stores strong and in an excellent position for growth. Safeway has invested over $400 million in capital in Dominick's since 1998, which means that many of the stores have already seen major remodels and the new stores opened are doing well. Our immediate priority is settling union contracts and we are working diligently to make this happen with ongoing meetings.

Once our contracts are settled, we are in a market where there is plenty of room to grow through not only new stores in communities not currently served by Dominick's, but also through store expansions, remodels and new fuel centers.