EXCLUSIVE: Why 2 Urban Retail Disrupters Are Merging
Just a few years ago, both Dom’s Kitchen & Market and Foxtrot Market set out to change the way people shop for groceries and everyday essentials. In their competitive hometown market of Chicago, they kept an eye on each other’s businesses while carving out their respective brands.
Shortly after the companies issued a joint announcement this week that they were merging under a new organization called Outfox Hospitality, Progressive Grocer talked with Dom’s Co-Founder and Co-Chairman Jay Owen about how the banners will retain their unique offerings while pooling their efforts to fuel even more growth. Owen will serve as chairman of the new company when the deal closes by the end of this year.
Progressive Grocer: This was a bit of a surprise move to some, given that Dom’s and Foxtrot have been so keen on unique disruption in their market. How did the deal come about?
Jay Owen: This merger between our two organizations has been in the works for some time. I’d back up by saying that Foxtrot is a business and a brand that we have long admired and have obviously followed for a number of years. Their team – (founder) Mike LaVitola and now (CEO) Liz Williams – has built offerings for customers that we think are truly unique and exceptional. At Dom’s, we’ve been clear about who we are and the type of business we’ve created. We believe we have disrupted the food shopping experience – our stores are not the usual grocery stores – and we think our template is the future of meal shopping. One of the things we observed over the years is that we share customers in common, who go between the two stores. We saw a tremendous amount of synergy between the two businesses. The initial thought of that synergy turned to a conversation between our boards, which came together with a deal to put the two businesses together. We are enormously excited about the potential of combining these businesses with 34 stores in four markets. It gives us the ability to serve customers in a complete way, whether they want to do a whole shop at a Dom’s store or grab something convenient for dinner to take home at a Foxtrot store.
PG: How will you handle the banner names, since some of your stores are located in close proximity in Chicago?
JO: Outfox Hospitality is our holding company, and we don’t anticipate that as a customer-facing name. As for the brands themselves, both have their own character, and we think we have a very loyal following around each of our brands. We are very aware of that and will spend the next couple of months giving that a lot of thought and studying how we best to communicate this to the consumer. For the moment, the two brands will stay as they are and the stores will operate as they are. In the short term, you will start to see some cross-merchandising, like some of the Foxtrot private label products brought to our stores and some of the prepared foods and meal solutions we do in our stores brought to Foxtrot stores.
PG: What about some of the new stores already in the works?
JO: We have additional stores in our Dom’s pipeline that will stay in the pipeline, and the same with Foxtrot. They have a strong pipeline of new stores in the four markets where they do business and the plan is to continue to build out those stores. Longer term, we will have to take a look at the different formats.
PG: Your combined leadership team is one with deep retail experience, with Mike LaVitola and Liz Williams at Foxtrot and you, Bob Mariano and Don Fitzgerald at Dom’s. How will you leverage this brain trust to fuel future innovation and growth?
JO: For an organization that is as young as ours, we are fortunate to have such a wealth of experience across both businesses. This is an area where we see such incredible synergy, with the two brands complementing one another. From our history, Dom’s grew as an operationally focused business that was built by grocers. Foxtrot’s history is a little more different, it’s more of a digitally native business and what they have built on the tech side with their consumer-facing platform is really incredible and something we are excited about offering to our entire fleet of stores.
PG: Dom's and Foxtrot stores have become local gathering spots, with their in-store cafes and events. What will that synergy look like?
JO: We see that as one of the real defining pillars of both organizations and the combined organization will have a value driver around community. That will not change going forward – if anything, we will lean more into that.
PG: Finally, Jay, since you are the grandson of well-known Chicago grocer Dominick DiMatteo of Dominick’s Finer Foods, what has that taught you about the nature of this industry, and how things can change?
JO: I was fortunate to work alongside my grandfather for an early part of my career and also fortunate to work alongside Bob Mariano, who was such as protégé of Dominick as well. One really important thing I learned from both of them is that you have to be able to adapt to the needs of the customer. Those needs change oftentimes, and if you look at the grocery business, you see that it’s one that can’t stay static. I think we are in one of those periods right now.
