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EAST ST. LOUIS, Ill. -- Schnuck Markets, Inc. reached an agreement with a landlord of a store the family held chain operates here that will end months of speculation and enable the store to remain open.
Jim Koman, president of Koman Properties, recently purchased the State Street Shopping Center from Illinois Land Trust. As the new landowner, Koman agreed to extend a "no rent" lease agreement to Schnucks in exchange for a commitment to operate for at least five years.
According to Koman, the deal required approvals for the allocation of approximately $1.8 million in funds from the city's Tax Increment Financing (TIF) budget in support of the project. The funds are to be repaid by real estate taxes generated within the redevelopment area, which includes not only the shopping center but also surrounding Koman enterprises.
Koman says the project is already underway with renovation scheduled for the store interior and roof. According to Gordon Lyons, Schnucks' v.p. of supermarket development, the chain plans include expanding its pharmacy operation to allow for a drive through. "We will start making improvements to the property this fall," said Lyons.
Schnucks chairman and c.e.o. Craig Schnuck said what started out as tough decision to close a store, "has turned into a win-win proposition benefiting Schnucks associates, our customers and the entire East St. Louis community. Thanks to recent operational changes, we were able to promote or transfer some associates to positions in other stores and generate new jobs and new revenue within the East St. Louis community."
Schnucks' officials said the store has operated at a loss since it was purchased in 1995 as part the National Supermarkets acquisition. Company leaders felt the operation lost the potential for recovery when in 1999 and 2000, city officials subsidized stores of competitors in the area. A combination of this competitive disadvantage, high labor costs and poor sales led to the decision to close the store last October.
Schnucks leaders are optimistic that newly negotiated agreements with the city, the new landlord and members of Local 534 will help the store overcome operating deficits.
Schnuck Markets, Inc. operates 103 stores (including five Logli stores) and 99 pharmacies in Missouri, Illinois, Indiana, Wisconsin, Tennessee, Mississippi and Iowa.