Schnucks: Not the Friendliest Weeks in Town

Published the week of September 20-26, 2000

On the bright side, supermarket giant Schnucks has not manufactured a single defective tire, and at no time has it employed Bobby Knight in a position of responsibility.

But this has not been the company's best couple of weeks for public relations.

Schnucks announced Sept. 5 it was closing three stores, including two predominantly serving blacks on the city's North Side. Then, to a make a bad situation far worse, it candidly stated it was not willing to lease the store it was closing at Delmar and Kingshighway to a supermarket competitor because it didn't want to hurt business at its store a mile away, at 4171 Lindell Blvd.

This didn't play well, and with good reason. Schnucks is a $1.8 billion-plus enterprise, ranked in 1998 by Forbes magazine as the 89th-largest private company in America. Just five years ago, it ruffled more than a few feathers by buying out chief competitor National -- after skirmishing with the Justice Department -- and risked getting a tad too large for its old homegrown "friendliest stores in town" slogan.

The closings, initially described as "irreversible" by CEO Craig Schnuck, were not greeted with much friendliness. Pointed criticism came forth from Mayor Clarence Harmon, hardly known as an angry black activist, as well as African-American clergy and other leaders.

When the ever-accessible Schnuck tried to explain the company's stance in the Post-Dispatch, things got worse. Maybe you get honesty points for talking about how inner-city shoppers buy cheaper items, fewer at a time; or how customer take home shopping carts; or the extra employees you need to handle security and food-stamp payments, but on the PR-friendliness scale, we're talking near-Firestone here.

Even Harmon went ballistic, calling Schnuck's comments "sort of a blanket indictment of the city" with "a connotation that was unpleasant, whether it was intended or not." He added that "the implications of it are racial, (although) I'm not accusing them of being racist," according to the Post.

And that wasn't all. Attorney General Jay Nixon jumped into the fray with the threat of a lawsuit, saying the company had signed an antitrust agreement in 1995 barring it from refusing to sell or lease closed stores to competitors.

Whether in response to those threats or in response to the outcry from the city, or both, Schnucks gingerly agreed to keep the Delmar location open for six months while a coalition of black clergy drums up (ironically enough) Schnucks shoppers. Meanwhile, the company closed its downtown location at 1030 Cass Ave. and is voluntarily shuttling customers to another city location from its parking lot.

If you throw in the fact that Schnucks received $2 million in city community-development block-grant funds to help it open a now-thriving supercenter at Union and Natural Bridge, none of this feels so good. In fact, on the face of it, there seems to be no decent public-relations defense.

Well, at the risk of much political incorrectness, I think there is. To be sure, there seems no justification for even an appearance of resisting competition at the Delmar location, but that aside, some of the emotional attacks on the company -- such as those at a protest at the Natural Bridge store over the weekend -- are a bit over the top.

The main reason Schnucks is a target in the city is that -- unlike chief competitors Dierbergs (no stores) and Shop 'N Save (one store) -- it does indeed do business within the city limits. Admittedly, most of that presence before the National buyout was on the South Side, but it must be a little galling to get hammered for abandoning the city when you've got 10 stores and none of your competitors, who go unscathed, has one. Isn't it?

"It's not a little galling, it galls me greatly," CEO Craig Schnuck told me Tuesday. "We're the ones being criticized, whereas it's the other stores who have done nothing in the city."

As for the racial thing, Schnuck snapped, "I think anybody who knows me would know that's the furthest thing from the truth. I resent the implication by anyone who is making that claim."

Schnuck said the closings were the only way to keep the other Schnucks stores in the city viable. He said that in the past five years, the company has lost $4.6 million at its now-closed Cass location and $2.8 million at the Delmar location.

"I think that's an extraordinary contribution to North City over the past five years, but we just could not continue to absorb those kind of losses," Schnuck said. "With the city's declining population base, there will be fewer and fewer stores that will be able to operate profitably.

"The key thing we have to do is find ways to turn around the population decline. There's three major things that are needed: good jobs, a good education system and good housing.

"I'm trying to work on the good-jobs piece," Schnuck says, referring to his role as co-chairman of the St. Louis Inner City Competitive Alliance, a position that does seem a bit ironic at the moment.

Schnuck noted that the community-development grant at Natural Bridge was negotiated in 1993 -- well before the National buyout -- and also claimed that minutes of National board meetings to which Schnucks become privy after the buyout show that National planned to close the Delmar store in any event.

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