Bill Virgin: Haggen saga not over yet

Let’s take a tally of Haggen, the Bellingham-based grocery chain, before and after its acquisition by a private-equity firm, its dramatic overnight expansion, its journey to and through bankruptcy court, its just as dramatic and nearly overnight contraction and now its takeover by Albertsons, as measured in number of stores.

Haggen, before: 18 stores.

Haggen, after: 15 stores.

In other words, after all the store renamings and re-renamings and legal proceedings and legal fees and tumult for employees and whiplash for customers, the net result is a loss of three stores.

For all that, the Haggen story still isn’t done, because Albertsons, which has been steadily acquiring many of the former Albertsons and Safeway stores it was told to divest, is not only buying a batch of 29 Haggen stores but plans to keep the Haggen name on 15 of them.

Fourteen of those stores were Haggen before all of this started. The 15th is an ex-Safeway location that was converted to Haggen in its short tenure as part of the larger company, and will stay that way. The remaining 14 stores in the 29 being sold as part of the bankruptcy proceeding will go back to being Albertsons.

That Albertsons plans to maintain a separate brand is actually standard procedure in the grocery business. Chains do so all the time because of the legacy value in certain geographic markets and to differentiate different styles of markets they operate. Cincinnati-based Kroger, for example, operates under more than a dozen brands including, in the Northwest, Fred Meyer and QFC and most recently, in Gig Harbor, Main & Vine. Even Haggen, a small regional player until introduced to the wonders of private equity funding, operated for a time a second brand known as Top Foods.

More interesting is that Albertsons sees some value in the Haggen name and concept, even with the potentially tarnishing developments of the last year.

What would that value be? Let’s let Albertsons describe it: “Haggen’s original core group of Pacific Northwest stores set the gold standard in the markets they serve for quality fresh products and exceptional service,” said Bob Miller, Albertsons chief executive, in a news release. “We are proud to now be associated with this tradition, and want to assure Haggen’s dedicated shoppers that the stores will continue to offer customers the freshest local products available and exceptional service, with the same great employees at the stores.”

The release goes on: “Haggen has a strong reputation and deep roots in the communities it serves, which will continue to be fostered beyond the transaction close. They have established and well-known practices for supporting regional farms, ranches and fisheries, and for supporting a sustainable local food economy.”

Haggen, in other words, isn’t Albertsons and Safeway, which the private-equity owners discovered when they tried to convert stores under those brands in markets that had never heard of Haggen. Customers gave their review of the project by staying away.

Albertsons and Safeway are decidedly middle-of-the-market players, not stripped-down operations in which price is all but not in the higher-elevation slice of the market that Haggen and, say, QFC play in, which is also not the sector in which a Whole Foods competes in.

In the aftermath of the debacle, there’s little doubt the private-equity owners weren’t equipped or knowledgeable enough to run Haggen on such an ambitious scale. Maybe there’s not much call for Haggen these days even in its home territory, but by shrinking the operation to roughly its original operating territory, Albertsons gives it at least a chance to right and repair itself. Who knows, it might even see some opportunity to slowly and judiciously expand both the number of stores and the name’s geographic reach.

Or it could decide, in a few years, that the Haggen story has run its course and convert the remaining 15 to Albertsons, Safeway or something else.

Such is the tumultuous nature of the grocery business. Small regional players get bought up, shrink or disappear. Haggen is not the first in this region to go through troubles — anyone remember Larry’s? In fact it’s not even the first Bellingham-based chain to do so, what with Brown & Cole having journeyed to bankruptcy court a decade ago. It happens to big players too, with no better example than A&P which at one time, as its original name (Great Atlantic & Pacific Tea Co.) implied, stretch from one coast to the other.

Yet others expand or try to get into what is already a crowded, thin-margin business, perhaps on the theory that everyone eats so there ought to be room for one more food purveyor. A few are trying one more revival of home-delivered groceries, a business that consumes investment capital the way a houseful of teenagers inhales refrigerator loads of food.

Haggen is merely the latest episode in this serial. With Albertsons keeping the brand alive, for now anyway, the name, the stores, the employees and customers may be featured in a few more chapters still to be written.

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 March 19, 2016 at 8:31 PM with the headline "Bill Virgin: Haggen saga not over yet."