Bill Virgin: The roller coaster rides of Haggen, Russell

Readers sometimes claim they don’t read business stories because they don’t know much about business.

Neither of these statements happens to be true. Readers are far more knowledgeable about business and economics than they give themselves credit for. If they’re consumers, employees or homeowners, they’ve learned far more about those subjects just from experience than they’d ever absorb from plowing through case studies in business school. They have to, if they expect to survive long, at least financially.

As for avoiding business and economic news, the level of interest in this paper’s articles, columns and editorials about the Haggen grocery debacle, as seen by page views and comments, would suggest otherwise.

This shouldn’t be a shock, really. While the items at a grocery store may individually not cost much, in the aggregate the food bill represents a major chunk of the weekly household budget. Given the constant need for and perishable nature of food, the consumer likely pays more frequent and longer visits to the grocery store than any other type of retail establishment.

They’ll never win awards for their cleverness of prose or inventiveness in design, but the weekly grocery fliers are likely the best read of any type of advertising the consumer encounters. Those ads are pored over intently as consumers compare prices, assemble shopping lists and plan meals.

Groceries also represent one of retailing’s few remaining examples of brand loyalty. Consumers typically choose and stick with one store, making their selection based on location, parking and ease of access, price, breadth and depth of selection, store cleanliness and appearance, quality of meat and produce, in some personal combination and weighting of those factors (for some, price is all; others are willing to pay slightly more in exchange for other considerations that matter to them). The people who staff the counters and the check-out stands are familiar faces.

What that means is that consumers are keenly attuned to what’s going on in “their” and other grocery stores. They may not know the behind-the-scenes details of grocery-store financing or logistics, but they’re hyper-aware of what’s being sold to them, how it’s being sold and by whom.

That consumers have those insights and strong opinions about grocery stores is a facet of the business that the investors behind the attempt to rapidly and dramatically expand Haggen from a small local to a major West Coast player seemed to have missed.

Had they paid attention to consumer behavior and history, they might have picked up some warning signals. A&P virtually invented the category of the modern national grocery chain; at one time its network of stores stretched to this state. Now the company is in bankruptcy proceedings for the second time in half a decade, looking to sell some of the few stores that remain to keep afloat (and doesn’t that sound familiar).

But even as some names fade from the scene, others endure and new ones try to elbow their way in, each with some formula it hopes will win consumer loyalty.

One of the new entrants could be Aldi, a German discount-grocery chain that has plans to expand in the U.S. Just to confuse matters, a separate, independently operated branch of the Aldi corporate and family tree owns Trader Joe’s.

Or it could be a different type of service from an existing retailer. Target, which has had its own stumbles in the grocery business, is partnering with Instacart on grocery deliveries (the launch doesn’t include this area yet). Walmart, meanwhile, is testing a concept in which shoppers can place grocery orders online, then pick them up in a sort of drive-through lane. Amazon, already established in grocery delivery, is adding new markets for its service.

Consumer loyalty is hard won in the grocery business, but it is not permanent and can be squandered if the sellers don’t meet at least some of the expectations and priorities of buyers. The success of those that endure, and those that want in, will depend on how well they avoid the long-term mistakes made by A&P and short-term bungles made by Haggen. Grocery shopping in some form is never going away. Grocery brands do.

▪ Speaking of comings and goings on the business scene, remember Frank Russell Co.? They used to be something of a big deal here; even had their name on their own downtown building and everything.

But then Russell got sold (Northwestern Mutual Life), moved to Seattle, then sold again (London Stock Exchange). The latest chapter in the Russell saga, according to Bloomberg News, is that LSE’s plan to sell a piece of the business to Citic Securities Co. may run aground because of the slump in China’s stock market.

For the locals this is largely of passing interest, Russell no longer being a cornerstone of the city’s business community. But it is one more reminder, like the grocery store discussion, that when it comes to the business world, loyalties are fine, but don’t get too attached to anything.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

This story was originally published September 26, 2015 at 5:43 AM with the headline "Bill Virgin: The roller coaster rides of Haggen, Russell."