01/07/04 - Farmer Jack Closures - Free Press
Some Farmer Jack stores could be repackaged next year as Food Basics, which is not a full-service grocery store. It has fewer items than a typical Farmer Jack and fewer frills, but lower prices. Farmer Jack officials would not say Tuesday how many might be converted to the new format. The stores would not provide grocery bags, bagging, a deli or a bakery. The products carried would be best-selling items typically found in a grocery store but with a limited number of brands and sizes. The company said stores on Rosa Parks Boulevard, Outer Drive and Telegraph Road at 7 Mile will close by mid-February, leaving Detroit with two stores. Farmer Jack President Mike Carter said the grocer remained committed to "serving the citizens of Detroit and minimizing job losses." He said the company would work with the United Food and Commercial Workers Local 876 in Madison Heights, which represents most of its workers, and Detroit Mayor Kwame Kilpatrick's office "to explore the possibility of converting these locations to a different grocery store format." Kilpatrick spokesman Dave Manney said keeping the grocers who are located downtown and attracting more has been one of the mayor's top priorities. "The mayor has been taking the lead in working with Farmer Jack and the UFCW to ensure high-quality, healthy, affordable, safe supermarkets remain in these locations," Manney said. "We are confident citizens will get some good news next week." Farmer Jack's owner, the Great Atlantic & Pacific Tea Co. Inc. of Montvale, N.J., operates 12 Food Basics stores in New York and New Jersey and 28 in Ontario. There also are 65 franchises in Ontario. "It would be good in terms of community relations to convert the stores, instead of leaving them vacant," said Gary Ruffing, a retail consultant with BBK Ltd. of Southfield. "It would save jobs and it puts something in place that is an alternative to the competition. "It's a viable alternative if it does make money. If it doesn't make money, it would be just another drain on their capital." Farmer Jack has been sharply reducing costs since October. A&P reported in October that it had a net loss of $83.7 million for the three months that ended Sept. 6. The company has shown a loss in seven of the last 10 quarters, but does not break out results for its units, such as Farmer Jack. The store conversions were mentioned as a possibility to avoid massive store closings in the new contract the Detroit grocer has with the UFCW. Under the contract, nearly 10,000 Farmer Jack employees took an immediate 5-percent wage cut to help avoid massive store closings as the chain struggles to compete against Kroger Co., Meijer Inc. and others. The wage cut would be restored in 2005; a 5-percent increase was promised in 2006. The contract says any workers fired because of store closings would be offered jobs at "limited-assortment stores," operated by Food Basics Inc. The company did not say how many workers would lose their jobs. It said some employees would have the option of transferring to another Farmer Jack store or taking a voluntary severance agreement. Contact GRETA GUEST at 313-223-4192 or gguest@freepress.com. Article reference: http://www.freep.com/money/business/fjack7_20040107.htm
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