Shrinking Rainbow Foods will close two more stores in Twin Cities north metro

Rainbow Foods is quietly closing two more stores in the north metro citing increased competition and changing consumer habits, bringing to five the number that have been shuttered in the Twin Cities over the past year.

Rainbow's store on Central Avenue in Columbia Heights is shutting its doors for good this week, and its Brooklyn Park location will close in mid-February, according to store employees.

Rainbow also has closed stores in Plymouth, Forest Lake and Robbinsdale. The supermarket chain, which is owned by Milwaukee-based Roundy's, will be down to 27 stores in the Twin Cities.

"The economic downturn over the last few years, coupled with an increased competitive footprint from the likes of Wal-Mart and others, has made it hard to control costs and remain competitive in the geographies where we have closed stores," said James Hyland, Roundy's vice president of investor relations and corporate communications, in a statement.

Rainbow's problems stem largely from the growth of Wal-Mart and Target in the grocery business, which has intensified competition for traditional grocery chains including Cub Foods and Rainbow. Cub still has the most grocery sales volume in the greater Twin Cities, but Rainbow has fallen from second to fourth, behind Target and Wal-Mart, said John Dean, a supermarket analyst based in the Twin Cities.

Roundy's acquired Rainbow Foods in 2003 with the intention of selling it, Dean said. Unable to find a buyer for its Rainbow brand, Roundy's has been closing stores when leases on storefronts expire, he added.

"Roundy's bought them to sell them, and they haven't been able to. They are past their timeline," Dean said. "The focus just hasn't been on Minnesota … Their focus is on Chicago."

Grocery competition in the Twin Cities is fierce, and the market has become more stratified with value shoppers choosing Wal-Mart, Target and Costco and higher-end consumers flocking to Lunds, Kowalski's and Trader Joe's. Rainbow is simply getting "squeezed out," said David Livingston, a supermarket analyst in Milwaukee.

"Sales are declining. Market share is declining. They are making a good business decision," Livingston said.

In recent years, Roundy's has been building a presence in Chicago with a more upscale grocery chain called Mariano's.

Even with the Rainbow closings, consumers have many nearby choices for groceries in all five communities. Frequently there is a competitor — Cub Foods, Wal-Mart or Target — across the parking lot, Dean said.

"It doesn't penalize the consumers other than the people who particularly want to shop there," Dean said.

Employees at the Central Avenue store in Columbia Heights say they have known of the closing for about a month. Most of the store's 67 employees will transfer to other stores.

Rainbow Foods on Rockford Road in Plymouth closed in May. The Robbinsdale store closed in April, and the Forest Lake store closed in January 2013.

Anne Griffin-Lewin has shopped the Columbia Heights Rainbow for nearly 20 years.

"I am very disappointed," said Griffin-Lewin, who lives in northeast Minneapolis. "The staff is extremely friendly and many are long term. I like the way it's organized. It's easy to find things."

She said the store was on a bus line and easy to access on foot or bicycle, which made it convenient for many in the neighborhood. She's not sure where she will shop now, but she won't be frequenting the nearest Rainbow at the Quarry in northeast Minneapolis.

Perhaps she'll try Cub, she said.

Mike Hughlett contributed to this report.

Shannon Prather • 612-673-4804