New To California, Haggen Supermarkets Struggle

Here on the Central Coast, we have had some good markets come and go including my favorite Scolari’s, which folded up after a 60 year reign and left the Golden State in 2012 due in part to being over-taxed and over-regulated by Sacramento. Then came some news this past year that seemed positive when Washington based Haggen bought up nearly a hundred Albertsons and Vons in California. It was thought that Haggen would bring better customer service and a more fresh set of products to market, somewhat along the lines of Whole Foods. It sounded promising, but only three months into their endeavor, it appears the concept isn’t working.

Cuts

Based in Bellingham, Washington, Haggen announced this week that there would be layoffs throughout the Southwest. No exact numbers we’re given and the store says they are “temporary layoffs”. The layoffs aren’t a big surprise as employees have already had their work hours cut back in the past month or so.

What brought all this upheaval was when supermarket giants Albertsons and Safeway (including Vons) merged last year, the government made them divest 146 of their stores in California, Nevada and Arizona. In a surprise move, the small chain from the Pacific Northwest snapped up the stores and ballooned to almost ten times it size.

The store owners felt that a supermarket with the feel of a Whole Foods type model could work. The idea was to provide and combine the necessities of a supermarket, along with local food options, plus customer service.  However, in such a competitive environment like California, there appears to be growing pains for the once little chain.

Is pricing pushing people away

The Haggen's grocery store on Creston Road in Paso Robles.

The store in Paso Robles has plenty of empty parking spaces.

Pricing is an issue as consumers here are used to low prices and that’s not Haggen’s strength. Also, with so many choices, especially in Southern California, it has been difficult for the new store and its brand to get noticed.

From a personal point of view, along with the local food idea, I thought the store would give us a bit of Scolari’s combined with Whole Foods and typical fare of a supermarket. They’re nice and although the meat and bakery departments are improved, so far, in my opinion and from an anecdotal perspective, pricing is too high and the offerings aren’t that different from before – the store they replaced here in Paso Robles was a Vons. Note, the other North County Haggen is in Atascadero and used to be an Albertsons.

This would not be the first – or likely the last – new concept to fail in California. Fresh and Easy was going to be the latest greatest conception when they rolled into the Western U. S. determined to bring a smaller and quicker way to shop, especially in places like Southern California where people are always in a hurry. That theory didn’t pan out and the store went bankrupt in 2013 after a six-year battle.

Fresh and organic foods, plus bakery and meat sections are some of the positives for Haggen concept.

In any case, as Haggen struggles to find their niche, will the over-extended chain be able to hold off the rigors of making it California? More succinctly, will the ongoing process of selling folks on the idea of fresh and local food, make up for the fact the prices are higher?

Competition

Here in Paso Robles, we still have an Albertsons, as well as Walmart, Food for Less, Smart and Final Extra (in the old Scolari’s), Target and just down the road in Templeton, a Trader Joe’s. We will also have a Grocery Outlet opening next month. With Amazon now delivering food to your door, competition is tough, to say the least. By the way, regarding the Central Coast, there are a total of six Haggens here in San Luis Obispo County and six more in Santa Barbara County – there are currently no Haggen stores in Monterey County.

Fresh foods grown locally is a popular idea and one I hope leads to helping Haggen stay afloat. The food business is cutthroat with tight margins and as Scolari’s will attest, a heavily taxed and regulated industry that is dominated by unions in California.

How customer service will be affected is still up in the air, but when you cut back hours and layoff employees, certainly customer service will lag. Is this another Fresh and Easy flame out because of such a difficult situation and particular customers? We can probably use a fresh food oriented store as a counter to the big boxes and supermarket, so let’s hope there’s a place for them on the Central Coast. However, Haggen’s struggles this early on are ominous.

Cheers,

Daryle W. Hier

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http://pasowinebarrels.com/

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