PW Market, one of Gilroy's five grocery stores, closed its doors for good. Lost sales to Wal-Mart and Costco for more than a year forced the store's owners to focus on other stores in their regional chain, a representative said Tuesday.

The store, at 260 E. Tenth St., officially closed for business Nov. 20, after a three-day sale to clear most of its merchandise.

A sign in the store's front windows Tuesday read "Closed Forever," as crews gutted the interior. Several check-out counters were lined up in the parking lot.

Theresa Baker, superintendent of the site who's been with PW for roughly 20 years, said the company knew 18 months ago that it would eventually pull up stakes in Gilroy.

The reason for the closure, according to Baker: "Wal-Mart."

Specifically, a planned Wal-Mart Supercenter, Costco, locally owned Arteaga's Super Save just across the street, and even Target all contributed to declining business for PW, Baker said.

PW was holding its own - barely - until about six months ago, when it really started losing money, she said.

"The only reason it stayed open is because it was on the lease," Baker said.

The store was ahead of its revenue projections early last fall, management said at the time, despite Costco's opening in March 2003.

In April, it became clear that the grocery store was preparing to close, when the store's main sign and another on Tenth Street were taken down. At the time, PW representatives said the signs were being relocated to another store and acknowledged that they were looking for another tenant for the building.

Baker said the building will be divided in half and a 99-cent store will take over part of it by Friday.

Smart & Final, which bills itself as a smaller, non-membership warehouse store, will open in the other half, said Bill Lindsteadt, executive director of the Gilroy Economic Development Corporation.

"I think they'll do well there," he said.

The PW Market Place Web site currently lists 11 locations, including those in San Jose, Cupertino, and Milpitas, but no longer lists the Gilroy location. The counters and much of the shelving inside the store was sold to other family-owned grocery stores in the area.

"We certainly wanted it to stay," Baker said. "We're sad to see it go."

Lori Stuenkel covers crime and public safety for the Gilroy Dispatch. Reach her at 847-7158 or lstuenkel@gilroydispatch.com.

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