Tiny Haggen set to become major West Coast grocer
The little Bellingham grocery chain Haggen is about to morph into a major West Coast retail force with nine times as many stores, reaching from the Canadian border to Southern California.
The unlikely expansion is the result of a $9.4 billion merger between Albertsons and Safeway; the deal closed last week. To pacify federal antitrust regulators, the companies agreed to jettison 168 stores, 146 of which will be acquired by Haggen.
Before this lopsided deal, Haggen operated just 18 grocery stores in Washington and Oregon, plus a stand-alone pharmacy in Bellingham.
The transition of 26 new stores in Washington state starts this month. The entire process of converting scores of Albertsons, Pavilions, Safeway and Vons stores in Oregon, California, Arizona and Nevada, is expected to end in June.
It will be the first time since Fred Meyer’s takeover of QFC in 1998 that a big regional grocer will be based in Washington state.
“It’s a big deal,” said John Clougher, one of the company’s two CEOs, who heads the company’s Pacific Northwest operations.
His domain will expand to some 64 grocery stores, including nine in King County.
A separate CEO, Bill Shaner, was hired to run the company’s new Pacific Southwest territory. That division will be headquartered, for now, in Irvine, California.
Haggen is expanding its corporate staff in Bellingham from about 130 to 300 in order to handle the needs of its ballooning workforce – which has quintupled to 10,000.
Clougher, a former Whole Foods executive and CEO of the upscale San Francisco Bay Area chain Andronico’s Community Markets, said that despite the daunting leap ahead, “We’re ready to go.”
Haggen’s sudden ascent into the ranks of large regional grocers underscores the turmoil suffered by the grocery industry, a low-margin business assailed by competition from large discounters such as Costco and Walmart, specialty grocers such as Whole Foods and online retailers.
“There is high risk and possibly high reward,” said Burt Flickinger, managing director of retail consultancy Strategic Resource Group. He estimates the acquisition will put Haggen among the top five grocers in the Western U.S., with annual sales reaching up to $2.5 billion.
It seemed a surprising step for Haggen, an 82-year-old company that was a struggling family business when it was bought in 2011 by Comvest Partners, a private investment firm from Florida.
Since then the chain has closed 12 underperforming stores and shrunk its payroll from 3,100 to about 2,000. It also added “Northwest Fresh” to its banner.
The amount Haggen’s owners paid for the 146 added stores remains undisclosed.