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Slow sales stall Shaw’s

01:00 AM EDT on Saturday, June 30, 2007

By Paul Grimaldi

Journal Staff Writer

A welder works on a sign at Eagle Square Commons before it opened in 2003.

JOURNAL FILES / BILL MURPHY BILL MURPHY

Shaw’s Supermarkets said yesterday it will close its stores in Providence and Pawtucket on Sept. 1 because of poor sales — a decision that could leave two inner-city shopping centers without anchor tenants.

The Providence store is located in the Eagle Square shopping center in the Valley section, which is seen as a symbol of efforts to revitalize the city’s neighborhoods. The second store, at 50 Ann Mary St., Pawtucket, serves residents and workers in neighborhoods along North Main Street near the border with Providence.

“They are not meeting our goals,” said Judy Chong, a Shaw’s spokeswoman.

The proposed closings caught off-guard both city officials and the businessmen who developed Eagle Square.

“This is shocking,” said Josephine DiRuzzo, the city councilwoman who represents the Valley section. “That was the mainstay of that whole Eagle Square project.”

Gene Beaudoin, a partner in the Eagle Square project, was surprised to learn of the plan from a reporter yesterday morning.

“We were caught a little off-guard ,” he said.

Shaw’s expects to sublease the Eagle Square store to an undisclosed grocer, Beaudoin said later in the day, a prospect confirmed by a Shaw’s representative.

“We are working with other possible tenants including another grocery,” said Chong, the Shaw’s spokeswoman. She declined to name the prospective tenants.

The closings will affect 224 workers in all; some of them unionized employees who may be able to displace workers in other Shaw’s outlets.

“At the end of the day, that number of positions will be affected,” Chong said.

It’s uncertain what effect the Shaw’s move will have on residents along the Valley Street corridor, which stretches on the city’s West side from Olneyville Square, past the Mount Pleasant neighborhood to Pleasant Valley Parkway and the edge of the city’s Smith Hill and Elmhurst sections.

“I worked very hard to get a market in that area for years,” DiRuzzo said. “Just like Nordstrom coming to Providence Place mall, it was important.”

The Eagle Square project opened in 2003 after surviving a prolonged controversy over historical preservation.

Lengthy meetings with city officials and residents resulted in Beaudoin and his partner, Barry Feldman, committed to saving all or most of four mill buildings even as they sacrificed others to make room for a 65,000-square-foot Shaw’s store, about 20 other retailers, plus condominiums and offices.

Six new buildings in the project were built to blend with the mills, using brick on the outside and mill-like architectural details.

“Other redevelopment work, such as Monohasset Mill on Eagle Street and Rising Sun Mills on Valley Street, sprung up along Valley Street. Still in its infancy is the massive $333-million American Locomotive Works project.

That is shocking to me because I thought that whole area of the city was progressing,” said Donald Eversley president of the Providence Economic Development Partnership. “It kind of connects the whole Valley corridor.”

Even with all that development, it can be difficult for some stores to catch on with residents.

“The neighborhood around Eagle Square is multicultural and ethnically diverse,” Beaudoin said. “As a result, a supermarket operator has to be in touch with the neighborhood, which is not always easy for a chain.”

There is little vacant retail or office space at Eagle Square, Beaudoin said, and he expects there to be “no material impact on any of the operators there,” which include Dunkin’ Donuts, Staples, Subway and others.

Mayor David N. Cicilline agreed.

“I don’t know that it will blunt all that good work,” Cicilline said. “There’s no question that they’ll be a replacement in that space.

Shaw’s signed a 25-year lease when it opened in Eagle Square, Beaudoin said, which would be taken up by a new tenant.

Shaw’s is closing a third store, in Waterbury, Conn., as part of its operational review, the company said.

“This is part of the process,” Chong said. “We continue to invest in our stores.”

The closings will leave Shaw’s with 12 stores in Rhode Island and 204 throughout the Northeast.

Shaw’s is a division of Supervalu, of Eden Prairie, Minn., which owns about 2,500 supermarkets across the country.

In January 2006, Supervalu became the nation’s second-largest supermarket chain when it acquired 1,124 stores, including the Massachusetts-based Shaw’s Supermarkets, in a deal that resulted in the breakup of Albertson’s.

Albertson’s owned Shaw’s, of West Bridgewater, Mass., for only a short time, having paid $2.5 billion in early 2004 to J Sainsbury PLC for the New England supermarket chain.

pgrimald@projo.com

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