Chain Reaction -- A Giant Snaps Up A Neighborhood Icon. But Art's Is More Than Just A Sign . . .

It is shortly before 9 o'clock on a recent Friday morning, and Adele Inslee and her neighbors have gathered at the Art's Food Center restaurant for their weekly breakfast meeting.

Opinions fly as the conversation turns to the news that Art's, the quirky amalgam of groceries, beauty aids, pharmaceuticals and auto supplies on Crown Hill, is being bought by Quality Food Centers, the upscale supermarket chain.

"I like their quality, but I don't like their prices. I hate to see such a big conglomerate get it, but . . . progress, you know," sighs Inslee, who began shopping at Art's in the late-1950s when her son Jay, the congressional candidate, was 6.

"My personal opinion is it stinks. It just seems like there is just going to be one of everything: one store, one bank, one gas station," snaps Inslee's friend, Betty Hill.

As QFC prepares to add another independent neighborhood grocery store to its growing chain, the Bellevue-based company, now a subsidiary of Portland-based Fred Meyer, will be remaking a store known for low prices and a "hard-working, no-nonsense" clientele, as current store owner Scott Case described his customers.

The job will be not unlike QFC's conversion of the old Food Giant in Wallingford. While Food Giant had its beloved blinking neon sign and came to embody the city's grunge side in such movies as "Singles" and "Sleepless in Seattle," Art's has developed its own personality and loyal legions of customers drawn to the store under the revolving white globe on Holman Road Northwest.

Many are concerned about what changes QFC will make and ask the inevitable question that comes when large chains acquire smaller competitors: What happens to prices?

"This is good competition for the others," said Bob Nordquist, 81, a retired electrician. "If Safeway says $1.44, they'll go $1.40 or less."

He points to Art's Ad Match program. Rather than doing its own advertising or coupon distribution, it promises to meet or beat the advertised prices of Safeway, Larry's Markets and QFC.

"This has been a good one for making the others hold their prices down," said Nordquist.

Bigger name, higher prices?

The deal, which is expected to be finalized at the end of the month, is the latest in a string of acquisitions by QFC that have increased the 83-store chain's share of the Puget Sound grocery market. Much of that expansion has come from its purchase of independently owned stores and small chains.

QFC has boosted its market share in the Puget Sound region from 6 percent to 20 percent in the last 12 years and now ranks as the second-largest supermarket chain in the area behind Safeway.

Industry watchers say there's little hard evidence to suggest consolidation in the grocery industry necessarily leads to higher prices. In fact, prices can drop because of the lower advertising and distribution costs a large chain can achieve. In QFC's case, it now has the buying power of Fred Meyer behind it.

Still, Seattle is a city where residents reportedly pay more for their groceries than the national average. And QFC is a chain known for its premium products and the higher prices that go with carrying that kind of merchandise. How it goes about changing the stores it acquires varies, and officials say it's too early to tell what changes the chain might have in store for Art's.

"I don't have answers to a lot of these questions because we are in the process of determining what we are going to do with the store," said QFC President Dan Kourkoumelis. The company, he says, now is surveying people in the community to see what they want.

With earlier expansions, Art's is now 60,880 square feet, 5,000 square feet shy of QFC's flagship store in University Village, one of its fanciest with espresso, warm cinnamon rolls, sushi, bagels, a large deli and a fireplace lining the periphery.

"We're looking at doing something that would be, say, a cross between a U Village and what Art's is with its variety and everything," said Kourkoumelis.

QFC, for instance, might add Scandinavian specialty foods, which Art's does not carry, if that's what Ballard-Crown Hill-Greenwood area residents want, he said.

Art's opened in 1956

When Art Case opened his Crown Hill store in 1956, the supermarket was half of a 40,000-square-foot shopping mall that included a drugstore, restaurant and clothing store. Fred Meyer acquired the drug-store site from Marketime, then Art's took over the whole building in 1976.

"We took a lot of their (Fred Meyer) departments that we felt they were doing well in, that the neighborhood was used to coming in for, like automotive, plumbing, electrical, sporting goods, the camera counter, things like that," said Scott Case, son of the late owner.

In the late 1970s, at the suggestion of Art's first box girl, Theresa Claussen, Art's began outfitting fishing boats headed for Alaska, a sub-business that has grown to more than 500 accounts, said Case. Kourkoumelis said QFC intends to keep the boat-supply department. Add to the food and dry-goods departments such amenities as a post office, Ticketmaster and large video section and you have a supermarket that looks unlike just about any store in Seattle.

Walk around the store and on Aisle 17A and B you'll find tools, auto accessories and motor oil; and on Aisle 16, furnace filters and plumbing and electrical supplies. On Aisle 11A are little pink and green children's sandals for $4.19, a toy guitar for $2.49 and a yarn doll for $9.99. Up toward the front, near the meat and seafood section, are racks of T-shirts, tank tops, shorts and sleeping shirts from $10.99 to $15.99.

The irony that Art's is like a Fred Meyer with its mix of food and merchandise hasn't been lost on Kourkoumelis.

"I will tell you absolutely that there will be a larger selection of hardware (at the Art's/QFC) than you will find in a (typical) QFC. That is one of the reasons that location has been successful. We can learn from the people that work at Art's. Our new marriage with Fred Meyer can help us with procuring the products that have been so successful at Art's," said Kourkoumelis.

The white ball will stay, topped by a QFC sign. QFC is studying what to do with the restaurant; it doesn't operate one in any of its other stores, but the Art's restaurant is a popular community fixture.

While Case wouldn't disclose sales figures, he said his store draws 35,000 shoppers a week from a core area that stretches from the Lake Washington Ship Canal to North 155th Street and from Puget Sound to Interstate 5.

Case said his family decided to sell because he and his brother Bob were the only family members still working in the store, and none of the four siblings' children were planning to go into the grocery business.

"It'll be interesting to see what they do with it. They have beautiful stores. They're planning on spending a fair chunk of coin here, I guess," said Case. Kourkoumelis said QFC will spend between $3 million and $4 million on the store remodel.

Mixed reactions to past buyouts

If QFC's past work is any indication, Art's will be spiffed up considerably, but Case and others say prices won't necessarily increase, given the huge buying power that the Fred Meyer-QFC-Ralphs Grocery merger created earlier this year.

Wesley Reed, former owner of Reed's Super Valu in Port Hadlock, Jefferson County, said that when QFC bought and made over his store last year, "Some (prices) went up, some went down. . . .It appears sales are up," said Reed, who still shops at his former store.

QFC expanded the bakery and deli sections at the former Super Valu, improved the selection of the drug department and upgraded the floral section, said Reed.

At the former Food Giant in Wallingford, QFC added a second floor for natural and organic foods and incorporated the old Food Giant neon letters into a new sign that spells out "Wallingford."

Mary Hanson, a longtime Food Giant shopper, said she hasn't felt sticker shock - she shops more now at the View Ridge Puget Consumers Cooperative near her home - but she is aware that other customers say they have.

She also said she is distressed that some of the longtime Food Giant clerks were not kept. Five of them have filed an age-discrimination lawsuit, still pending, against QFC. Kourkoumelis denied the allegations, saying QFC interviewed employees from four Food Giants for jobs at only two Food Giants it kept open.

Art's employees say they have been offered jobs, with no loss of seniority, when QFC takes over the store's operation.

"We are like family," said Roberta Bouchard, a waitress in the Art's restaurant.

"People really care," added Linda Hageselle, an Art's meat wrapper. "The people who are concerned seem to be more concerned about us than that it's going to switch. As soon as they look at you and say, `Are you OK with it and are you happy?' then they seem much better about it."

Lee Moriwaki's phone message number is 206-464-2320. His e-mail address is: lmoriwaki@seattletimes.com

------------------- QFC grows and grows -------------------

Quality Food Centers has grown over the years by opening its own new stores and acquiring others. Here are some of its acquisitions:

1974 - Five former A&P stores in Seattle.

1995 - 12 Olson's Food Stores in the Seattle area.

1996 - Two Food Giant stores in Seattle.

1997 - 57 Hughes Family Markets in Southern California (later spun off to Ralphs supermarkets as part of the Fred Meyer-QFC-Ralphs merger earlier this year).

1997 - 25 Stock Market and Thriftway stores in the Puget Sound region from Keith Uddenberg.

1997 - Reed's Super Valu in Port Hadlock, Jefferson County.

1998 - Art's Family Center in the Crown Hill section of Seattle. Sale is to be completed at the end of July.