Rainbow Foods is closing its supermarkets in Columbia Heights and Brooklyn Park as the ongoing grocery war in the Twin Cities again changes the landscape.
The Columbia Heights store closed its doors Wednesday. The Brooklyn Park store is slated to close next month, sources said Wednesday.
Rainbow Foods has been under heavy pressure in recent years as a multitude of food operators have opened a legion of new stores, ranging from discounters Walmart and Target to niche players, such as Whole Foods and Trader Joe's to bargain-minded outlets like Aldi and club giant Costco.
In the Twin Cities marketplace, Rainbow's "trend has been down," said supermarket analyst John Dean. "For years, they were the No. 2 group (after Cub Foods). This year I think they're No. 4 and trending down. Walmart and Target have jumped over them."
Dean added, "Rainbow's got some good locations. It's just not a strong player right now. There's nothing bad about being No. 4, but it's the trend that's worrisome."
David Livingston, a supermarket analyst in Milwaukee, said Wednesday that Rainbow's parent company, Roundy's, is yet again trying to sell the shrinking Rainbow chain to other buyers -- and prune back its weaker performers when the store leases expire.
"Something's going to happen, because I'm just seeing too much private equity activity going on right now," Livingston said.
"I'm getting a lot of phone calls, inquiring and asking questions."
Livingston's best guess? Eventually, the Rainbow name is likely to disappear, although most of its lineup of supermarkets is likely to stay under different ownership.
"They may not stay Rainbow, but somebody will take them, for the most part," Livingston said. "I think most of the locations will remain a supermarket. But if they can't sell as a group, they will just slowly close the stores over time or just sell them (individually)."
Dean, the Twin Cities supermarket analyst, notes that just over a year ago, Rainbow Foods had 31 stores in the Twin Cities. By next month, it will be down to 26 supermarkets.
"The stores that aren't performing well, as their leases come up, are closing," Dean said. "The latest one, in Brooklyn Park, the lease didn't come up, but somebody was able to take them off their lease. The one that closed in Columbia Heights, the lease did come up and they didn't renew it.
"Prior to that, they closed Forest Lake and Robbinsdale and Plymouth."
