Lunds pays to keep Kowalski's at bay

In a sign of just how competitive the grocery business has become, a bustling neighborhood supermarket will close next month in south Minneapolis near Lake Harriet -- paid for by one competitor to shut out another.

The closing of Sunnyside Market was a "very difficult decision," said owner Jim Almsted, who cited competitive pressures and an anticipated rent increase as reasons for closing the store he has owned since 1992 across the street from Edina's Morningside neighborhood.

Yet he may find few sympathetic voices in the neighborhood, which has been abuzz with talk of how Almsted plans to close shop. He turned down an offer last week from Jim Kowalski, who says he wanted to open a Kowalski's Market at the location, and instead made a confidential agreement with Lund Food Holdings Inc., which operates a Lunds six blocks away.

Almsted doesn't own the property and has more than two years remaining on his lease, but neither he nor Lunds would comment on who would be paying it or what exactly Lunds is buying.

Nor does there appear to be any plan other than to let the grocery store go dark.

"We didn't purchase the business," said Lunds spokesman, Aaron Sorenson. "We have an agreement with them and part of the agreement is that we're going to interview their employees" for possible jobs at Lunds. The store will close around Sept. 15.

Kowalski, meanwhile, said he thought as recently as last Monday that the property was his. Then Almsted called and said "he had signed off a deal with Lunds, who are just going to close it," Kowalski said.

The smallish store -- at 14,200 square feet -- was a prime property that would have been easy to expand, he added.

"It's Edina. It's very viable. There's a ton of rooftops. We were pretty excited about it."

A multitude of forces are working against family-owned, unionized independent grocery stores like Sunnyside Market, regardless of who's in the neighborhood. Some are cultural: More families eat out today so they buy fewer groceries.

But most of the forces involve pure economics. The food retail business is now dominated by large nonunion players, such as Wal-Mart and Target, that can buy goods in greater numbers and sell them cheaper than smaller companies. Wal-Mart has grown to the No. 1 food retailer in the nation. Most of the new players in food retail -- Aldi, Trader Joe's and Whole Foods -- are not unionized and have lower costs.

The food retail industry offers union protection for about 42 percent of its employees, according to Jim Papian, of the United Food and Commercial Workers Union.

"We're kind of getting run over by big corporations," said Almsted.

The store was once the first Country Club Market, a chain that began in the 1950s and expanded to at least 18 stores before it shut down in the early 1990s. Almsted took over the location in 1992, leasing the building from its owner to run his Sunnyside Market, a Supervalu independent that paid union wages to its 40 employees.

The busy street corner, halfway between Hwy. 100 and Lake Harriet and surrounded by homes, has become crowded with food sellers lately, including a Trader Joe's on Excelsior Boulevard, a Whole Foods Market near Lake Calhoun and the relocated Linden Hills Co-op.

For neighbors in the area, it was a mainstay. Almsted said the store has some 6,000 customers a week.

Local resident Jim Stallman said his family has picked up groceries at that same corner for 50 years.

"We moved in in 1958," he said, adding that he lives about six blocks away. "This is sad because really nice people work here, too."

Tracy Linton said she plans to boycott Lunds after Sunnyside Market closes. "Everybody that I've talked to is so upset and disappointed," said Linton. "I'll go around the lake to the other side and shop at Kowalski's," she said.

Almsted, meanwhile, plans to keep operating his two other stores, in St. Louis Park and Crystal. "There's a place in the world for stores like this, but not with the current economics," he said.

Matt McKinney • 612-673-7329

Matt McKinney • mckinney@startribune.com