Consumers locations will be sold or closed

by Karen E. Culp

SBJ Staff

Consumers Food and Drug stores will be closed or sold, as announced by officials at Fleming Foods, the company that has owned the stores since 1994.

Fleming became the sale owner of the Consumers chain in 1994. Prior to that, Fleming Foods was one of three owners of Consumers after founder Clarence Wheeler left the grocery business in 1991. Wheeler died in 1997.

Wheeler began building the Ozarks grocery chain when he opened Consumers Warehouse Market in 1948 on Glenstone Avenue. Consumers had 38 stores at its acme. Now, 51 years after the founding of the chain, at least one Springfield store will close and three others may follow.

Fleming Foods made the announcement that it had begun selling or closing the stores Feb. 18, said Shane Boyd, company spokesman. Fleming owns 18 Consumers stores, and one of those, in Webb City, closed Feb. 20, Boyd said.

A store at 3850 S. Campbell in Springfield will close in mid-March, as will stores in Bolivar, Osage Beach and Rogers, Ark., Boyd said. The stores are being closed one by one, and separate consideration is being given as to whether each store is sold or closed, Boyd said.

"We have some options. It's not to say we couldn't close a store and then sell it," Boyd said.

The company has no published schedule for completing the divestiture of the Consumers chain, and officials do not know whether they will find a buyer for all, several, or a few of the stores.

"It could be a situation where you might see a number of independent owners and operators buying the stores, and those could continue to be supplied by the Fleming Food company, or you could see interest from a larger player," Boyd said.

The majority of Fleming's business is on the wholesale side, as a supplier of foods to grocery stores. About 20 percent of Fleming's business is in retail stores like the Consumers chain.

Fleming has chosen to divest of Consumers because the "chain as a group was not meeting our performance objectives," Boyd said.

There are about 950 Consumers employees, 40 of whom are in the corporate offices in Springfield. The remaining employees are grocery store clerks, stockers, managers, etc. The Consumers grocery workers are members of the United Food and Commercial Workers union, which will work with the employees as the stores close or are sold.

David Glass, chief executive officer for Wal-Mart stores, said he has hated what's happened to Consumers. Glass knew and was once an employee of the late Wheeler.

"Clarence Wheeler was a pure entrepreneur. ... I learned a lot from him. He was a very astute businessman," Glass said.

Glass said the empty stores will provide a good opportunity for another entrepreneur or for someone who is already in the food business.

Despite the fact that some officials with Consumers have blamed Wal-Mart Supercenters for the stores' difficulties, Glass said, "The supercenters aren't the reason Consumers went out of business."

Boyd cited the southside Wal-Mart Supercenter as a detriment to the 3850 S. Campbell's store.

CRW Properties, which was started by Wheeler as a real estate company that would own the Consumers store property, continues to own most of the real estate occupied by Consumers stores, said Jerry Jared, president of CRW and son-in-law to Wheeler.

The company owns the store buildings at the 3850 and 1730 S. Campbell locations, and at the 2625 College St. location. CRW does not own the North Town Mall location, but it owns a building on West Kearney that is now a Dillon's store, and it owns a building on Glenstone that is now Smillie's IGA.

The Consumers buildings in Bolivar, Monett, Branson and Nevada are also owned by CRW, as is the office building on Chestnut Expressway that houses the Consumers general offices. In most cases, Jared said, the company will continue to own those buildings and rent them to other tenants.

"I expect most of those will give rise to more the independent operator type stores, although many of those buildings may be too large for an independent grocery store," Jared said.

Jared, who was president of Consumers and was one of its owners for a time, said he has no desire to return to the retail food business. Jared was one of three owners of Consumers when Wheeler sold his interest in 1991. Fleming and Merrill Lynch Capital Partners were the other two investors. Fleming purchased Jared's portion of the business in 1991, and Merrill Lynch's in 1994,thus becoming the sole owner.

Jared said he observed Fleming encounter a number of hurdles once it purchased the stores.

"It was my observation that there was not the attention and devotion to the Consumers entity that there perhaps needed to be. There was, at times, an inattention and lack of direction," Jared said.

Jenny Enochson, media relations representative for Albertson's, the grocery chain that owns Smitty's, said it is possible the company could look to the Consumers properties for expansion possibilities within the southwest Missouri market.

"We've been known to consider our options," Enochson said.

The company is in the process of building a distribution center in Tulsa, Okla., that will most likely serve the Smitty's stores.

Albertson's is in the process of merging with American Stores, which owns Osco Drug in Springfield, and will probably be the second-largest grocery company in the nation after that merger is complete.

Kroger, the largest grocery company, is the parent company of Dillon's stores. Spokesman Tim Bellanti said the Consumers closings represent an opportunity for Dillon's to maintain its focus on being the premier grocer in the market.

"We're not satisfied with our market share by any means, and we see this as a heck of an opportunity. Those loyal Consumers shoppers will be looking for a place to shop, and we want to give them a place to shop," Bellanti said.

It is difficult now for the mid-size grocery companies like Fleming to compete against retail giants, said Patrick Schumann, a grocery industry analyst with Edward Jones.

"I know that in the past year, Fleming's performance has lagged and that now they're looking to focus on the wholesale side and shutter some of the retail," Schumann said.

Consolidation in the grocery industry has led to the large getting larger, and niche markets opening up for much smaller, locally owned stores, Schumann said. In a case like Consumers', the emptied stores may be most attractive as real estate for new ventures, Schumann said. It is unlikely that another grocery chain would take a chance and buy the Consumers chain when its performance has lagged to the point it has, he added.

Wheeler's vision was to gain a stronghold in the market as the low-cost, high-volume grocer.

Wheeler was a pioneer in the low-prices every-day arena, in which Wal-Mart has fared so well. He introduced the concept in 1968, dispensing with sales and special discounts in order to provide everyone the lowest prices every day.

Wheeler also stopped buying products from wholesalers and bought directly from manufacturers. These innovations were among many the Springfield businessman brought to the grocery business, Jared said.

"It always saddens a person to see something you've worked so hard for fade away. I would have hoped that the Consumers name would have continued and prospered and done well, but it just wasn't to be," Jared said.

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