Southwest Supermarkets, a Phoenix-based grocer that caters to ethnic shoppers, has purchased seven ABCO stores in Arizona, five in the Valley and two in Tucson.

Southwest expected to close on the purchase of the stores in the next 45 days, says Southwest chief executive Tony Gioia.

With this acquisition, the privately held grocery chain now has 39 stores in Arizona and one in California.

Terms of the sale were not disclosed, but Fleming Cos., which owned the ABCO stores, will continue to supply the stores. The supply agreement was said to be critical in the negotiations to sell the locations.

Southwest is buying stores located in Mesa at Alma School Road and 8th Street in Phoenix at 59th Avenue and Thomas Road, 28th Street and Indian School Road and 67th Avenue and Camelback Road.

Southwest is also buying the ABCO at the northwest corner of 7th Street and McDowell, but that sale is rife with controversy. Nearby neighbors are ardently opposed to Southwest opening a store, saying that Southwest doesn't maintain their stores as well as other chains and are loud and disruptive on weekends, when the stores often bring in mobile carnival rides and other attractions.

Gioia says he plans to work with neighbors to allay their concerns.

The Fleming Cos., a Dallas-based grocery distributor, put the ABCO chain up for sale a year ago along with other conventional supermarket chains it has around the country, as part of its strategic plan to remove itself from the grocery retailing business. The company had 56 ABCO stores in the state.

Safeway was first to purchase ABCO locations, buying 11 stores in the Valley and Tucson. Independent IGA grocers has agreed to purchase 19 stores and will convert four location in the Valley and six in Tucson into IGA location in the next few months. Negotiations on the other nine stores that IGA has it eye on continue and should be concluded in the next few weeks, says Jim Tooms, president of the Phoenix-based IGA West Group. Western Farms Marketplace, a single store in south Phoenix, has expressed interest in buying some stores.

Fleming closed 12 of the stores, which leaves seven on the auction block.

"We are weeks away from getting the process pretty much cleaned up," Fleming chief executive Mark Hansen told stock analysts earlier this month. "We are going to close a few stores that frankly don't have good economic utility."

Real estate experts are worried that the sudden glut of retail space will further drive down rates or leave some centers without anchor tenants. Experts also expect that several of the locations would be converted for other uses, perhaps as office space or back office use.

Instant Insights /

Southwest Supermarkets Buys Up Seven ABCO Stores

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