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What upset the grocery cart: Why the supermarket scene is in a state of flux

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The players are shifting in the highly competitive fight for grocery dollars in the Twin Cities.

A story in the Milwaukee Business Journal and carried by sister publication, the Minneapolis-St Paul Business Journal analyzed Roundy's exit from the market, saying it "comes as little surprise to industry experts." Rainbow, it went on to note, "has been in retreat," closing five of 32 Twin Cities supermarkets in the past 14 months. David Livingston, a Milwaukee-area grocery consultant and former Roundy’s executive, told the Business Journal that Roundy’s has been trying to unload Rainbow for years.

"The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul Market, has made it difficult for Roundy's to keep the Rainbow banner competitive," Roundy's Chief Executive Officer Robert Mariano said in a statement.

A story in the Star Tribune last month noted that the supermarket scene has become highly segmented, with Lunds thriving in a higher-income niche while "Cub and Rainbow have been caught in the middle, losing business to low-price chains like Wal-Mart and Target."

Sure, people have to eat three times a day, but there's no shortage of places to pick up the ingredients. Kowalski’s and Whole Foods, which is expanding in the Twin Cities, go after the the higher-end niche. Costco and Aldi's have established a presence in the metro area. And the competition is expected to heat up as Des Moines-based Hy-Vee enters the market.

A prescient story in the Pioneer Press in 2009 characterized the battle that was shaping up among grocers as "fight-or-die." Roundy's and Rainbow Foods might be a casualty in the battle predicted in that account.

The Business Journal adds that workers at the 18 Rainbow Foods stores in Minnesota are relieved about the news of the sale. Don Seaquist, president of the union local that represents them, said Roundy's had neglected its Twin Cities Rainbow Foods stores starting in 2010, when it launched its Mariano's Fresh Market stores.

"From our perspective, this is a good thing. The stores were skeleton crews. We probably lost 30 percent of our membership in these stores" over the last five years, Seaquist said. "They sold to employers who are committed to this marketplace. They provide good jobs and good healthcare."

Seaquist expressed concern about the workers at the nine Rainbow stores that were not included in the sale. Roundy's said if it doesn't find a buyer for those stores, it will close them.

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