The merger of Shopko Stores and Pamida, which both serve smaller cities and towns, should add as many as 46 jobs to Montana and Wyoming.
Affiliates of a private investment company called Sun Capital Partners Inc. decided to merge the two chains and rename the Pamida stores as Shopko Hometown.
By the end of this year, Sun Capital will spend $80 million to remodel most of the 193 Pamida locations, including a dozen in Montana and 15 in Wyoming, and to expand merchandise selections.
Shopko spokesperson Tara Powers said today's retail landscape underserves people living in smaller communities.
"The big-box retailers are really focused on the larger markets, assuming people will be willing to drive," Powers said. "We're offering them what they can find at a larger store in a smaller setting."
Four of Montana's Pamida stores are pharmacies only, including the one in Roundup. The closest full-service store to Billings is in Hardin.
By comparison, Shopko operates five Montana stores in Billings, Great Falls, Helena, Kalispell and Missoula, and none yet in Wyoming. No changes are expected at the existing Shopko stores, including at the Billings store, which opened in 1991, Powers said.
Fewer than 10 Pamida stores, primarily in cities that also have a Shopko, will close, she said.
Each conversion, one department at a time, will take six weeks. The store and pharmacy will remain open during remodeling.
After the remake, each former Pamida store, which employs an average of 30 people, will need one or two more employees, Powers said. Existing Pamida employees will keep their pay and benefits without having to reapply for their jobs, and managers are welcome to stay if they want to work for Shopko, she said.
The merger creating 350 stores in 22 states sharing the Shopko banner is expected to be completed in February. Shopko also plans on buying or building more stores in the last half of this year and in early 2013.
Shopko has $2 billion in annual sales, about double Pamida's revenues. Financial terms of the merger were not disclosed.
Over the past two years, Shopko bought seven Pamida stores and did a trial run of this hometown model. The stores showed significant improvement in sales and profitability, according to Shopko.
"We intend to be the leader in this category by combining the best of Shopko and Pamida in our aggressive new store growth plans," said Shopko chairman and chief executive Paul Jones.
This is sort of a replay of a previous merger.
In 1999, Shopko bought Pamida and basically operated the stores as one company. In 2005, Sun Capital bought both chains that formed in the early 1960s but kept their corporate operations separate.
By year's end, Pamida's headquarters in Omaha, Neb., will close and its corporate operations will move to Shopko's home in Green Bay, Wis. About half of Pamida's 220 corporate employees will be offered jobs in Wisconsin if they want to transfer, Powers said.
No local store managers for Shopko or Pamida were allowed to talk to the media about the merger.