HomeMy WebLinkAboutJonathan and Betsy KahnoskiJonathan & Betsy Kahnoski
3313 W. Cherry Lane, PMB#340
Meridian, ID 83642-1119
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JMK: 541.646.0484
BMK: 503.407.8969
14 January 2019
To the Mayor and Members of the City Council of Meridian, Idaho:
Introduction
My wife and I vehemently oppose approval of the Linder Village project as proposed and
before you as of this date. Everything we have read and heard since this project first
became public has convinced us that whatever benefits the project may promise are
greatly outweighed by the project's disadvantages and harmful impact. We moved to
Meridian and chose to purchase our home in the Paramount subdivision for the very
quality of life both the city and Paramount offered. Now, this proposed development puts
all of that at risk.
For over a year now, we have attended meetings of both the city's planning and zoning
commission and the city council whenever this project has been on the agenda. I,
Jonathan, have given public testimony in opposition to this project several times because
we believe this project is in gross violation of the city's comprehensive plan and contrary
to the city's spirit of family -friendly neighborhoods. Should the council vote approval of
this project, we believe it will have terrible consequences for our neighborhood and for
the City of Meridian. Allow us to elaborate.
Note: we wrote to you before the city council meeting in December. Some of the
arguments we make below will repeat and build upon the points we made in that
December email.
An Unacceptable Proposal
The citizens and residents of the neighborhoods around the site of the proposed Linder
Village have been fighting this project for going on two years. During all of the
neighborhood meetings, public hearings, etc. the residents have raised issue after issue,
only to be met with dodges (the comprehensive plan is only "guidance"), excuses ("this is
our business model"), or silence (no one has explained how this meets the pedestrian- and
neighborhood -friendly requirements of the MU -C zoning). Nearby residents have
pleaded and cajoled to no avail; the applicant and their primary tenant have been adamant
— it is their way or the highway. Their arrogance has been infuriating.
At the risk of being repetitive, let's do a quick recap:
The proposed Linder Village project violates the spirit of the comprehensive
plan's intention that this property be zoned MU -C, and the specific requirements
of that zoning. Specifically:
a. It creates a major attraction (a large discount grocery store) that will draw
customers from the greater region rather than just the nearby community.
b. The proposed site plan is a massive parking lot with buildings scattered
around the periphery. (The short center retail section is addressed below.)
It is neither pedestrian nor community friendly. One cannot walk from a
restaurant on the frontage to Chinden Blvd. or Linder Rd. to the proposed
retail in the center without crossing a parking lot. The same is true for the
proposed future office/retail development at the east end of the property.
Note: my wife and I once were shopping for blinds; we visited Lowe's on
Eagle Rd., and then walked across the parking lot to a budget blinds store.
We swore never again. The next time we did this, we drove. This site
plan discourages pedestrian access.
c. The retail, restaurant, office, and residential buildings are segregated into
separate areas with almost no pedestrian links.
d. The entire site plan is auto -centric. As proposed, customers will drive to
Linder Village to shop at their intended destination (WinCo, chain
restaurant, etc.) and depart. There will be no pedestrian crossover from
one restaurant to the shops or from one retail store to another because
everything is separated from everything else by parking lot and the retail
stores are, mostly, big box buildings with no window displays to attract
customers:
e. Several of the proposed buildings exceed the maximum square footage
allowed under MU -C.
f. The land designated residential is less than the minimum required to meet
the "mixed-use" requirement of the MU -C zoning.
g. The applicant's primary tenant, WinCo, has demanded they be allowed to
operate 24 hours a day, seven days per week, with semi tractor -trailer and
other deliveries starting as early as 4:00 AM daily, all in conflict with the
MU -C zoning restrictions. WinCo officials have argued this is their
business model and they are unwilling to compromise. Even Costco,
although not a local company, demonstrated a more reasonable attitude
than WinCo officials have.
In summary, the applicant has proposed just another ugly strip mall like several others
along Eagle Rd. and Fairview Ave. Isn't it time Meridian have something better?
2
2. Traffic —regardless of whatever ACRD says or approves, item l.d. above,
demonstrates this site plan will only make traffic on Chinden Blvd. and Linder
Rd. worse. The applicant has offered no solutions that have any hope of
alleviating the congestion they will create. For example:
a. The requested traffic signal at the intersection of Chinden Blvd. and
Bergman Way (north of Chinden)/Bergman Ave. (south of Chinden) only
will exacerbate traffic congestion in this stretch of Chinden Blvd.,
especially during commute hours. The evening hours, when commuters
may want to stop to get something for dinner, will be the worst as traffic
piles up at the Bergman traffic signal all the way back through the signals
at Fox Run Way and Meridian Rd. to the traffic signal at Locust Grove
Rd.
b. The proposed connector from Fox Run Way will draw traffic across the
front of the Veranda assisted living facility, spoiling the tranquility of the
tenants, and perhaps into Paramount. We already have too much traffic
cutting through Paramount to avoid the traffic signals and congestion on
Chinden Blvd.
c.' This same connector from Fox Run Way into the proposed Linder Village
project risks drawing semi tractor -trailers traveling east on Chinden Blvd.
or north on Meridian Rd. to Director St, and then to Fox Run Way and
into Linder Village. There are some who say this won't happen. My wife
and I will be happy to accept this prediction at face value if the person
making the prediction posts a bond that states every household within 500
feet of Director St. will receive $100,000 for every semi tractor -trailer that
travels down Director St. in route to Linder Village.
d. Delivery trucks (all sizes) seeking the shortest route to WinCo traveling on
Chinden Blvd. will turn south onto Linder Rd. and then sit in a left -turn
lane to turn in to Linder Village. This will occur directly in front of a city
fire station, possibly blocking fire equipment from exiting the station
quickly.
Retail
As we noted in our email in December, we stated that the retail industry, including
grocery retail is changing dramatically in the United States. We mentioned articles in the
Wall Street Journal that supported our assertions but didn't include them. Today, we
have attached WSJ articles in Appendix 2.
To recap and add to what we wrote in December:
A distressing number of major, well-known companies (some once household
names) have gone bankrupt, including Toys -R -Us, Payless Shoes, RadioShack,
and Sports Authority. Others are teetering, including Sears and JC Penney.
Others are in trouble, such as Dollar Tree. Many of these have (or had) a
presence in Meridian.
3
2. Credit Suisse, the Swiss international investment and financial services bank,
estimates that by 2022 one in four (25%) of all shopping malls will close. If
true, that is horrendous. Imagine one in four malls on Eagle Rd. and Fairview
mostly empty.
3. New companies like Choice Market and Zebra Green Grocery in Portland, OR,
Foxtrot in Chicago, the Goods Mart in Los Angeles, and Amazon Go in Seattle
are redefining the convenience store to offer its customers staples like pasta,
milk, and yogurt as well as specialty items like quinoa, an array of fresh fruits
and vegetables, snacks ranging from Doritos (no surprise) to multigrain
chips and seaweed (whoa!), and even beer and kombucha on tap.
4. Kroger Grocery Co. (owns Fred Meyer) is opening "Kroger Express" sections
in Walgreens drug stores near Cincinnati, OH to sell Kroger brand groceries.
Kroger also is investigating the feasibility of deploying driverless vehicles to
make home deliveries.
5. Amazon is looking to expand its Whole Foods chain to be able to promise its
Prime subscribers groceries delivered within two hours. Rather than a
WinCo that violates the MU -C zoning, why not pursue a Whole Foods that
would be only about 45,000 square feet?
6. According to Phillip Krim, CEO of Casper Sleep - an online mattress retailer -
customers want to visit "good retail," defined as a place the customer has a
great shopping experience. The applicant's proposal for Linder Village is an
excellent example of what Mr. Krim would consider "bad retail."
Note: I remember that, during one of the public hearings before the city council, a
council member asked the WinCo folks if they were exploring online ordering. Their
answer was no. By contrast, Kroger/Fred Meyer already has online ordering with
store pickup, and is exploring home delivery; Alb ertsons already delivers albeit by
truck and driver; and Amazon is looking to two-hour home delivery from their
Whole Foods stores. No doubt, council members have noticed the Amazon delivery
trucks in Meridian. One has to wonder how long WinCo can remain competitive. It
is easy to think WinCo is well established and always will be with us. How many of
us said that about Toys -R -Us and Sears? Is allowing WinCo to go into Linder Village
a good risk at this time? Or, in five years, will the nearby communities be stuck with
an over -sized vacant storefront? ' Look how long the former Rosauers store has
remained vacant.
The proposed design for Linder Village is the same design that have been built up and
down Eagle Rd. and Fairview/Cherry Ave. for years if not decades — a massive parking
lot with buildings scattered everywhere, no core retail, no place, nothing to draw
customers for one thing (e.g., dining) and stay for another (e.g., some window shopping
that leads to additional purchases). There definitely is nothing "pedestrian -friendly"
about this plan. It is just ugly suburban sprawl.
Here is the prediction we made in December: the applicant never builds the center retail
"mall," especially the so-called live -work units. From their comments over the past
months, it is clear the applicant doesn't build until they have prospective tenants
S1
interested. Every shop owner knows the importance of foot traffic, and this design will
have none. If the applicant does build it, we predict the storefronts will be vacant as
much as they are occupied as retail businesses come and go because there isn't enough
customer traffic to sustain them. Furthermore, who will want to live in an upstairs unit in
the middle of a parking lot? Where do they park their car or store their stuff? Where do
their kids play?
Thus, it is reasonable to predict this project will fail as a viable commercial enterprise.
Council members may think that isn't their concern. However, a failed development
means empty storefronts, buildings and landscaping deteriorating from lack of
maintenance, creating blight on the community. Such places attract litter and crime. Is
that what we want next door to Paramount, Foxtail, Lochsa Falls, and the other nearby
neighborhoods?
An Alternative Design
Appendix I offers an alternative site plan that, we believe, is superior to the applicant's
plan because it is far more in agreement with the MU -C zoning requirements and the
spirit of the comprehensive plan. We encourage you to review this material closely and
see if you don't agree. Then, ask the applicant why not this instead of their lame design.
Implications for Meridian's Future
I enjoyed a 20 -year -plus career in the U.S. Army's Reserve Component (Army Reserve
and Army National Guard) and a parallel civilian career in business data processing. My
wife was a four-year RN with a Masters in Public Health and worked in the medicine for
40 years. My experience was that, when my unit's commander had a plan and issued
orders, they were not "suggestions" or "guidance." They were what he/she expected us
to accomplish and how we were to accomplish it. Similarly, when I developed a plan for
implementing a software system for my business client, I never considered the plan "a
suggestion" or "guidance" that I could fulfill or not. I understood my proposed plan was
a commitment upon which my client made business decisions. My wife's experience,
and she has spoken of it often, was that a doctor's treatment plan for the patient was to be
followed to the letter; that if she had concerns, she had to consult with the doctor before
altering the treatment plan. For us, and we suspect for most people, a plan is what you
are going to do — end of discussion.
Thus, it is very difficult for us to comprehend how members of the city council do not
feel bound by the very comprehensive plan they have had staff, with considerable input
from the community, prepare, then reviewed and approved. Regardless of whether or not
there is a specific city ordinance requiring the council members to be bound by the
comprehensive plan, one would think they owe it to the citizens of Meridian, and to their
own integrity, to hold themselves bound.
5
We also want to remind the council members of how many people testified in the
hearings concerning the Costco application that they had read the comprehensive plan,
were re -assured no big -box stores would be allowed nearby, and chose to purchase a
home in nearby neighborhoods. These were ordinary people doing their due diligence
before making a major life decision. Failure to abide by the comprehensive plan,
regardless of what loopholes may exist in the city code or planning and zoning processes,
looks like a betrayal to normal folks.
City officials, especially the Mayor, have gone to great lengths to solicit the public's
participation in the current revision of the city's comprehensive plan. However, if
the council is going to treat that comprehensive plan as merely "a suggestion" or just
"guidance," one has to ask why we bother. Why should citizens contribute time and
energy if all their contributions can be over-ridden at the whim of the council?
Indeed, why should the city go to the trouble and expense of formulating a
comprehensive plan at all if the council doesn't feel bound by it? It just makes the
council look unreliable and reduces citizens' confidence in their city government.
Two somewhat related points:
1. Council members may believe they have no obligation or right to tell a
property owner what they should build or the aesthetics of the project.
While zoning restrictions certainly can be excessive (a la California, Oregon,
and various cities), that does not relieve the council from its responsibility to:
a. Enforce a comprehensive plan it has prepared with invited citizen input
and promulgated. If this council does not want to enforce the city's
comprehensive plan, either we need a new city council or we need to
abandon the whole idea of having a comprehensive plan.
b. Protect the city, its neighborhoods and its residents from the ravages of
municipal development that is excessive and/or lacking any aesthetic
qualities. Cities that are just urban/suburban sprawl have officials who
allow development — any development — to override all other
considerations. Communities that are rated highly for their character and
livability have officials who can distinguish between good and bad
development, and can say no to bad development.
2. We have heard the council has received some 300 or more petitions in
support of the applicant's proposal. We understand these are mostly
repetitive petitions generated from a website established by the applicant.
Three considerations:
a. Council members should not give undo weight to petitions so easily
generated, especially given they reflect a rather mindless "We want
WinCo" without any consideration of whether or not applicant's
proposal makes sense for the surrounding communities or is a
potential disaster.
b. The comprehensive plan and its zoning restrictions under MU -C
should outweigh the petitions. If these citizens want the plan
amended to allow a WinCo, let them go through the appropriate
public process whereby all concerned can participate. They should
not be generating petitions asking the council to ignore the
comprehensive plan so as to give them what they want. If you
disagree, then consider...
c. My wife and I live in Paramount, subject to the zoning restrictions
applicable to our residential neighborhood. What if we showed up
with 300 signed petitions supporting our intention to open a little
French Bistro in our house, open only on weekends. Would the
council give our proposal serious consideration? Would we even get
past the planning and zoning staff, or the planning and zoning
commission, to the council? Somehow, we doubt it.
Conclusion
Consider: you see my ad in the Meridian Press and walk into my Ford dealership
and ask to see the 2019 Mustang GT I advertised. I show you a 2019 Taurus four -
door sedan. In the spirit of compromise, I offer to upgrade the engine, transmission,
the stock wheels with something flashy, maybe some dramatic headlights and turn
signals. Are you going to take the Taurus? No? Can't you compromise?
In this little fable, the Mustang is the comprehensive plan calling for the MU -C
zoning; the Taurus is the proposed site plan for Linder Village under consideration.
No matter how much the applicant has tweaked or amended their Taurus, they
cannot transform it into a Mustang.
This entire project has been fatally flawed since it was first proposed. Either this
applicant, or another with more creativity and strong design aesthetics, needs to
start over and design something completely new. The site plan proposed in
Appendix 1 shows what can be done.
(The applicant may object that they have invested two years to get where they are
and cannot afford to start over. Well, it was the applicant, and their major tenant,
who repeatedly ignored the ideas and suggestions of those living nearby. The
applicant all along has been gambling they can cajole or bully the council into
granting everything they want. The neighborhoods around this property deserve to
be protected by the council.)
7
Should the council members choose to reject the Linder Village project as proposed,
you will accomplish several things:
a. You will preserve the integrity, quiet, and quality of life of the nearby
neighborhoods.
b. You will preserve the integrity of the city's comprehensive planning process,
demonstrating that the citizens of Meridian can trust their city officials to stand
by what they have created.
c. You will protect the quality of life in Meridian.
For all of these reasons, we encourage you to vote NO on the Linder Village proposal
and thereby vote YES for Meridian.
Sincerely,
Jonathan Kahnoski
Betsy Kahnoski
0
Appendix 1
During one of the prior hearings, one of the council members asked what would the
neighborhood like to see. This appendix offers one idea, with the site plan near the
end.
Some caveats:
1. My formal training in this area is limited to a year of high school Architectural
Drawing class. I don't have access to design software to prepare this design. I had
to fall back on simple cut and paste.
2. Not being a design professional, and not familiar with the technical requirements
in city codes, I cannot claim this is a design that will pass muster. For example, the
space I have set aside for parking may be insufficient, or may be excessive. Thus, it
may be possible to have more buildings, perhaps somewhat larger buildings, and
still satisfy city restrictions.
Despite my amateur designer status, I believe this design is superior to anything the
applicant has proposed. Allow me to make my case.
Features:
First, let's state right up front there is no allowance for WinCo or any other big -box
store. The reasons for this are two:
1. An 85,000 square foot store exceeds the maximum square footage allowed by
the MU -C zoning. Yes, an applicant can get a waiver of that maximum if he
offers mitigating features. However:
a. The Linder Village applicant has offered little or nothing that really
mitigates the problems a WinCo or similar -sized store would create.
b. A comprehensive plan that has backdoor escapes from its zoning
restrictions makes a mockery of the concept of a comprehensive plan.
The lay citizenry understand they have to do their due diligence in
reading the plan before malting a home purchase decision. They do
not expect need the expertise of a land use attorney and authority on
city code.
2. This design was developed with the goal of safely staying within the spirit
and hard restrictions of the MU -C zoning. Thus, there are no large buildings
anywhere. A more refined development of this plan may demonstrate that
some larger buildings might be possible and even desirable and still be
within those restrictions. For example, a Trader Joe's or Whole Foods that
can be accommodated in 60,000 square feet or less may work.
Second, let's ask if a name for this development more interesting "Linder Village" is
possible. For example, there are a number of facilities on the periphery of the
Paramount subdivision named such -and -such "at Paramount". Why not the Village
at Paramount? If that is not possible, why not something that plays on the
Paramount Studios theme; after all, half the streets in Paramount are named after
movie stars (Heston Court and Drive, Bacall, Barrymore, Gable, Laughton, Bergman,
Broderick) or directors (DeMille) or are film related (Producer and Director).
Paramount Elementary School carries out this theme in a number of ways, including
their mascot "Super Stars" and the stars embedded in the sidewalk. A movie -making
connection brings two other names to mind: Studio Village or The Back Lot.
Third, the architecture and any entrance monuments should blend with the existing
Paramount development. The "urban contemporary" proposed by the Linder
Village applicant is just a nice name for pole barn covered with stucco; cheap to
build and maintain, uninspired, and dated. By contrast, entrances to Paramount
have quaint Old -Tudor style monuments, a couple (Fox Run Way and Cayuse Creek
Drive) very large and the others more modest. The photos below show the two
entry monuments under construction at the entrances to the Cascade Over -55
development just off W. Director Street. This same monument style has been
proposed for the storage unit complex planned on Meridian Rd. just north of
McMillan Rd. Why shouldn't this same style be incorporated into any development
on the Linder Village property?
West Entrance to Cascade South (Main) Entrance to Cascade
The primary feature of the design below is the consolidated layout. Instead of
buildings scattered all over a massive parking lot, the buildings are on either the
Main Promenade (east -west) or the Minor Promenade (north -south). The entire
plan is not just pedestrian -friendly but pedestrian -centric. Once a visitor parks their
car and walks to a promenade, they don't have to cross a parking lot again.
Pedestrian features along the promenades would include benches, maybe small
tables, water fountains, flowerbeds, trees and other landscaping, and colorful, clever
signage.
Note: assuming certain city codes (e.g., requirements for parking spaces) allowed it,
the Main Promenade could be widened enough to create two small artificial
"streams" or "brooks": one running from the Clock -Tower Plaza to the Fountain
Plaza and one running from the Children's Plaza to the Fountain Plaza. Naming
these two brooks after the Snake and Boise Rivers could help distinguish the two
halves of the Main Promenade. The K -Street pedestrian mall in Sacramento, CA at
one time had such a brook. It did not flow constantly, but cycled through fast, slow,
dry, mimicking the seasonal flow of the American and Sacramento Rivers. It was a
nice touch.
The second major feature consists of three plazas, each with its own distinctive
landmark where friends can meet to go shopping or to lunch or dinner:
1. The Fountain Plaza (#2) is the largest and has a large fountain (#1).
2. The Clock -Tower Plaza (#3) is smaller and features a tall, slender clock
tower in the center.
3. The Children's Plaza has a distinctive bronze or stone statue of children at
play, perhaps with a small playground and/or a splash fountain in the
warmer months and a Santa's North Pole during the Christmas holidays.
All three plazas are ideal for restaurants that want to offer outdoor seating, similar
to what you see in Italy and Paris. The Fountain Plaza and the adjacent Library
Plaza combined provide enough space to have a venue for special events and live
entertainment. Because the surrounding buildings shelter the plazas, providing
some shade in the hot summer months and protecting visitors aren't from the traffic
noise and fumes coming from Chinden Blvd. and Linder Rd.
I retained the proposed library at the south end of the Minor Promenade. This puts
it close to the residential areas, especially for pedestrians. Children can walk safely
to the library without encountering the distractions of a retail mall.
This design assumes the buildings are two or three stories tall to allow for office
space upstairs or perhaps two-story retail interiors. Ideally, some buildings would
be two-story, and others three, creating an interesting variation in the rooflines.
One office building is placed at the east end of the Major Promenade. If the area set
aside for parking is sufficient, a second office building would be possible.
The two-story townhomes (marked with A) create a buffer between the existing
residential areas from the noise and light of the development,
The design assumes no traffic signals controlling access from Linder or Chinden.
The traffic issues are too complicated, with too many agencies involved, to try to
resolve in this admittedly rough conceptual design.
Advantages:
This design's consolidated configuration has several advantages, including:
1. As noted above, once a visitor parks their car and walks to the promenade, they
never have to cross a parking lot again. They can walk up and down the
promenade to shop, dine, or enjoy the company of friends over a specialty coffee
or a nice glass of wine on one of the plazas.
2. Having all businesses - retail, office, and restaurant - together concentrates all
the foot traffic along the promenades, allowing businesses to "share" customers.
Thus, one visitor comes for a dental appointment and stays for lunch. Another
visitor joins a friend for lunch, they opt to do a little window-shopping together,
and the visitor finds just the right birthday gift for their mother. This kind of
"sharing" of customers constitutes the critical foot traffic so important to the
success of retail establishments.
3. The Main and Minor Promenades invite all sorts of creativity for landscaping,
flowerbeds and seasonal decorations. For example:
a. Starting in the spring, the beds tulips, daffodils, and other early blooming
flowers would splash color everywhere, brightening the scene after
gloomy winter.
b. The high point of summer is the 4th of July, and thus the promenades
would be decked out in their very best Red, White, and Blue patriotic
finest. By then, the spring blooming flowers will be exhausted and
replaced with summer flowers.
c. Fall means football, Halloween, of course, and Thanksgiving. The
possibilities for colors and activities are endless: BSU Bronco game
parties (Tailgate in the Plaza), Halloween costume parades and contests,
etc.
d. With winter and the Thanksgiving -Christmas -New Year's holidays, bring
their own decorating ideas. The Children's Plaza could be Santa's HQs,
the Clock -Tower Plaza could have a Dickens' theme during Christmas and
perhaps a "ball drop" on New Year's Eve while local school choirs could
be invited to sing Christmas Carols and Holiday music in the Fountain
Plaza.
Note: all of the above is possible only because all the buildings are compactly
clustered around the promenades and plazas. None of this would be possible using
the applicant's site plan. The expansive parking lot with buildings scattered all
around the periphery precludes any central retail core or pedestrian mall or any
gathering places necessary for the activities to occur.
Summary:
While the site plan attached is a bit crude, clearly the design and its advantages as
discussed above are far more in agreement with the spirit of an MU -C zoning than
anything proposed by the applicant of Linder Village. That a mere layperson can lay
this out, and the Linder Village applicant has not, shows there is something seriously
wrong with the applicant's thinking or ability to be at all creative.
It has been my intention to show that, with a little imagination, something really
wonderful can be built on the property in question. I think this design does that.
The site plan is on the next page.
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Appendix 2
The following articles from the Wall Street Journal are attached: F =
1. Activist Seeks Change at Dollar Tree - January 7, 2019.
2. Could the Internet Power a Small -Town Renaissance? - November 23, 2018.
3. Welcome to the New Convenience Store - April 28-29, 2018.
4. Kroger to Sell Groceries In Walgreens Stores - December 5, 2018.
5. Kroger Gears Up Driverless Deliveries (lost second page) - June 29, 2018.
6. Amazon to Bulk Up Whole Foods Chain - December 31, 2018.
7. A Retail Disrupter's Outlook: "There's Just a Death of Bad Retail" - December 1-2,
2018.
OO 2019 Dow Jones 6 Company. All Rights Reserved, * * THE WALL STREET JOURNAL, Monday, January 7, 2010 1
See more at WSJMarkets.com
BY CARA LomBAno
Activist investor Starboard
Value LP has taken a stake in
Dollar Tree Inc. and is push-
ing the retailer to sell its
Family Dollar business and
tweak its pricing model, ac-
cording to people familiar
with the matter.
The New York hedge fund
has a 1.7% stake in Dollar Tree
worth roughly $370 million
and is also seeking majority
control of the company's 12 -
person board, the people said.
Starboard quietly nomi-
nated seven directors to Dollar
Tree's board ahead of the
nomination deadline last
week, they said.
Several shareholders and
analysts have grown frus-
trated with the $22 billion
dollar -store chain, whose
shares dropped about 15%
over the past year and lagged
behind those of peers such as
Dollar General Corp., which
rose by about the same
amount.
At the center of the criti-
cism has been Dollar Tree's
slow progress integrating and
turning around Family Dollar,
which it bought for $9 billion
in 2015.
Some investors saw the two
chains as mismatched from
the outset.
C_ 1-1 1 a_1 p & 1_ 1 T 1 D t^
Family Dolla- r sells grocer-
ies and gadgets to low-income
shoppers in rural and urban
areas at a variety of prices,
and Dollar Tree, which only
sell- items for $1, caters to
mostly middle-income subur-
ban shoppers who enjoy hunt-
ing for bargains. Together
they have about 15,000 loca-
tions.
Starboard wants Dollar
Tree to explore a sale, of the
struggling chain, even if it
means selling it for signifi-
cantly less than it paid for it,
the people said. Family Dollar
could garner interest from pri-
vate -equity firms able to
spend money renovating the
stores, they said.
Starboard also wants Dollar
Tree to consider joining its
competitors in selling some
items at price points above $1,
such as $1.50 or $2, the people
said.
Aside from a limited trial
many years ago, Dollar Tree's
$1 cap hasn't budged in its
30 -year history, while Dollar
General and several others
have been able to improve
quality and address inflation
by selling some higher -priced
products.
Dollar Tree Chief Executive
Gary Philbin said on its third-
quarter earnings call that the
company plans to accelerate
renovations at Family Dollar
stores in 2019.
He said that while Family
Dollar sales haven't met ex-
pectations, sales in renovated
locations have been better
than expected.
Family Dollar's sale in 2015
was prompted by activist in-
vestors including Carl Icahn
and Trian Fund Management
LP. Dollar General also made a
bid for the company at the
time, but Dollar Tree won out.
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Hca ,,nom potu Jones d Company. All Rights Reserved.
THE WALL STREET J®URNAL• 11 Wednesday, December 5, 2018
KrogerGroceries
In Walgreens torus
By HEnTHm HADDON
Pack Inc. have raised pressure
on supermarkets and pharma-
Kroger Co. plans to sell
cies to change their busi-
groceries in branded sections
nesses.
of Walgreens Boots Alliance
CVS Health Corp. last
Inc. stores, as both retailers
month completed a nearly $70
look for ways to keep custom-
billion merger with insurer
ers loyal to their products.
Aetna Inc. Walgreens and
'6` The first Kroger Express
health -insurance provider Hu -
sections will open by early
mana Inc. are in talks to take
next year in 13 Walgreens
equity stakes in each other,
stores near the grocer's Cin-
The Wall Street Journal re-
cinnati headquarters. The
ported last month.
companies said they would
Supermarkets, are also un -
add more of the 4,000 -square-
der pressure as consumers buy
foot displays of produce,
more of then food outside big
Home Chef meal kits and other
food stores. Chains of smaller
products if customers take to.
stores like Aldi have lured
th .They wih accoimfor
away customers with low
roughly one-third of an aver-
prices on a•narrower selection
age Walgreens store's selling
of goods.
space.
Grocery stores that sell a
- Like most traditional retail-
more limited range of items
ers, Kroger and Walgreens are
saw their sales grow by about
also racing to reach new cus-
7% last year, according to In-
tomers and reshape their busi-
mar Analytics, while sales at
nesses to account for the rise
traditional supermarkets were
of e-commerce. Amazon.com
tip about 1%.
hic: s 2017 purchase of Whole
"We are definitely seeing
Foods and its $1 billion bid in
that customers are changing
June for online pharmac�P-i11—_.__._:__,
__Pkasje_Wrn_toPa_aeB2
Continued from thepriorpage
and looking for different op-
tions," Gary Millerchip, a
Kroger executive leading cor-
porate partnerships, said in an
interview.
Kroger and Walgreens exec-
utives wouldn't say how the
companies would share sales
revenue or provide financial
details of the deal. Kroger and
Walgreens will supply and op-
erate the Kroger -branded sec-
tions together, officials said.
Kroger won't sell store-
brand items that compete with
Walgreens's private-label
products but will take over its
supply for branded goods, the
companies said. Deerfield, Ill. -
based Walgreens has struck
several deals recently, such as
taking a minority stake in the
Birchbox Inc, cosmetics com-
pany and offering parcel ser-
vices at stores through FedEx
Corp.
"This is consistent with our
broader partnership strategy,"
said Adam Holyk, Walgreens
senior vice president and chief
marketing officer.
Grocer Albertsons Cos. and
pharmacy chain Rite Aid Corp.
earlier this year attempted to
merge to better position both
companies to fend off compet-
itors. The deal failed after Rite
Aid investors protested the
share price offered, among
other issues.
Kroger's agreement with Wal-
greens mirrors aspects of the
scrapped Albertson deal. The
arrangement would have put
Albertsons's store -brand prod-
ucts and its Plated meal -lits in
Rite Aid stores. Private-label
products are more profitable for
grocers than sales of goods
made by other companies.
Kroger has made six deals
this year to broaden its reach
and revenue streams, ranging
from building warehouses
where robots will pack grocer-
ies to selling its goods online
in China through Alibaba
Group Holding Ltd.
In October; Kroger added
some Walgreens stores to the
list of locations where its cus-
tomers can pick up groceries
ordered online.
Kroger said it also world
sell Home Chef meal lits at 65
Walgreens pharmacies in Chi-
cago.
Meal -kit companies are
looking for more sales in
stores as subscription sales of
the preapportioned packages
have stalled. Kroger acquired
Home Chef in May.
Kroger is scheduled to re-
port third-quarter earnings on
Thursday.
Dollar General Loos
tallty is really not the way to
and have a product selection
1.® Food for Growth
be productive and to make the
that Is, "tailored to vertical liv-
most of your real estate port-
ing'customers" in more densely
folio," he said.
populated areas In some key
For instance, Mr. Vasos said
cities across the U.S., Mr. Vasos
Dollar General Corp, is bet-
the company can "drive a tre-
said.
ting that more food choices, in-
mendous amount of traffic" by ;
Dollar General reported on
eluding fresh produce, will
opening stores that`offer refrig-''
Tuesday a higher profit for its
boost its revenue and traffic as
erated products and produce in
third quarter that was in line
It looks to expand in rural and
food deserts, areas where ac-
with analysts' expectations.
metro areas lacking grocery-
cess to affordable and healthier
The company said net sales
store options.
food options is limited.
rose 8.7% to $6.42 billion and
In its fiscal 2019, which
The company expects to
same-store sales grew 2.8%,
starts Feb. 2, the discount re-
add, produce to about 200 of
both beating analysts' esti-
tailer plans to open 975 new
these remodeled stores. Cur-
mates.
stores, remodel 1,000 stores
rently, Dollar General has about
Overall, Dollar General's re -
and relocate 100 stores, the
425 stores that carry produce,
sults were better than competi-
company said Tuesday. That is
About half of the remodels
for Dollar Tree Inc. Last week,
75 more store openings than
will be in what the company
the owner of both the Dollar
expected for fiscal 2018.
describes as its 'traditional
Tree and Family Dollar chains
Dollar General Chief Execu-
plus" format—a typical Dollar
said sales rose 42% to $5.54
tive Todd Vasos said during a
General in terms of size, but
billion in its latest quarter.
conference call with analysts
with more cooler space.
Same-store sales rose 2.3% at
Tuesday that the company is
Mr. Vasos added there is
Dollar Tree, but sales at stores
eyeing various setups as part
still an opportunity to add
open at least a year under the
of its expansion because cus-
12,000 to 13,000 stores in the
Family Dollar banner fell 0.4%.
tomers' needs vary.
continental U.S.
Dollar General shares fell
"We intentionally develop
Out of the anticipated new
6.8% to $104.10 In trading
these additional formats to be
stores, the company plans to
Tuesday. The shares are up
able to move into certain de-
open about 10 locations that
nearly 15% in the past 12
mographics across the U.S.
are about half the size of a tra-
months,
where a one -size -fits -all men-
ditional Dollar' General store
—Aisha A1 -Muslim
Aid investors protested the
share price offered, among
other issues.
Kroger's agreement with Wal-
greens mirrors aspects of the
scrapped Albertson deal. The
arrangement would have put
Albertsons's store -brand prod-
ucts and its Plated meal -lits in
Rite Aid stores. Private-label
products are more profitable for
grocers than sales of goods
made by other companies.
Kroger has made six deals
this year to broaden its reach
and revenue streams, ranging
from building warehouses
where robots will pack grocer-
ies to selling its goods online
in China through Alibaba
Group Holding Ltd.
In October; Kroger added
some Walgreens stores to the
list of locations where its cus-
tomers can pick up groceries
ordered online.
Kroger said it also world
sell Home Chef meal lits at 65
Walgreens pharmacies in Chi-
cago.
Meal -kit companies are
looking for more sales in
stores as subscription sales of
the preapportioned packages
have stalled. Kroger acquired
Home Chef in May.
Kroger is scheduled to re-
port third-quarter earnings on
Thursday.
THE WALL STREET JOURNAL. 2 I Friday, June 29, 018
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