Haggen Rolls out More San Diego Stores

Haggen's

About two months since grocery chain Haggen entered the California market with a Carlsbad store opening, it’s been doing well, according to one measure by an analyst.

Burt P. Flickinger III, managing director of the Strategic Resource Group in New York, said four key suppliers of a wide range of grocery items told him traffic and sales are up at Haggen stores in Southern California compared to the numbers for the stores that were previously Albertsons and Safeway (known locally as Vons.)

“So far, so good,” Flickinger said.

The Bellingham, Wash.-based chain advertises itself as a one-stop shop for brand-name staples and a wide array of fresh, natural and local food options at mainstream supermarket prices. It has opened 16 of its 25 stores in San Diego County. The last local store is scheduled to open June 13.

So far, its new stores have doubled the amount of organic produce, offered more gluten-free options and added more than 1,000 new products such as Double R Ranch meats, Di Lusso deli meats and cheeses and Santa Monica Seafood.

However, its expansion hasn’t been smooth. Within days of its debut in March in Southern California, a mix-up resulted in higher-than-intended prices at the 10 stores opened at that time in San Diego, Orange and Los Angeles counties.

“In the subsequent days and weeks, we made great strides in (fixing the issue) – thousands of prices were lowered as we worked through the system glitch,” said Haggen Pacific Southwest CEO Bill Shaner. “We’re at a point now where the pricing represents our desired market position – a competitive, fair offering.”

Regarding the price glitch, analyst Flickinger said shoppers appeared to understand that there were going to be some transitional issues when one store changes to another.

Shaner added: “While no one – customers or Haggen – were happy with the (price) issue, we still received plenty of positive feedback from customers who were thrilled with many of the initial changes we made in the stores,” which include more organic produce, higher quality meat and seafood, healthier salads and more bakery items.

The Haggen executive said the company regularly checks pricing at rival stores to make sure it’s within a few cents on similar items. Also on May 1, it launched “Fresh Deals,” where every Friday, Saturday and Sunday, shoppers at new Haggen stores get discounts on popular items. The deals are advertised every Friday on Instagram, Facebook and Twitter.

While Haggen is an 81-year-old company, it only had 18 stores before last year when it bought the 146 stores that Albertsons and Safeway had to divest before their merger so the combined company didn’t have unfair control of the retail market.

“When a company is required to divest stores, like what Safeway and Albertsons did, they prefer to sell to a weak retailer that will most likely fail,” said analyst David J. Livingston, founder of DJL Research. “My hunch is they are counting on Haggen’s failing. They want to make sure that whoever they sell to will be an ineffectual competitor.”

Readers of trade magazine Supermarket News who were recently polled by the publication had similar sentiments. They were asked: Will Haggen’s conversion of 146 Albertsons-Safeway stores ultimately prove successful?

As of May 5, this was the tally, according to Supermarket News:

• 29 percent – Yes in the Northwest but Haggen will struggle in Southern California.

• 27 percent – No, failure in Southern California will torpedo the entire acquisition.

“People are entitled to their opinions, but I’m confident Haggen will succeed,” Shaner said. “We have great locations, an experienced management team, a talented support team and tremendous leaders and associates in our stores who have already developed meaningful relationships within the communities we serve.”

Source: Hang Nguyen from U-T San Diego

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