Monday, August 10, 2015

Haggen Goes Bust (Intentionally?) in So Cal

The Bellingham, WA based supermarket chain Haggen  moved into Southern California earlier this year.

Their banner motto: "Good-bye Hassles. Hello Haggen" does not seem to be playing out very well in the major Southern California market. Because of overpriced goods, low sales, and lack of customer-consumer acton, the Northwestern company may be moving out by next year.

It is astonishing to see so many new Haggen stores with empty parking lots throughout the South Bay. Customers hate the prices and have complained about the poor service in the stores.

With high prices, higher than the previous stores which they had taken over, and middle to middling products on shelf, customers who had frequented the local stores for years, who knew the  names of all the staff, are no longer coming back.

Haggen stores throughout the Southland are laying off workers, shifting new hires to unemployment, and old-timers to part-time status (or layoffs with letters to seek employment in other stores).

Allegations have been going back and forth among supermarket staff and employees that Haggen intentionally ruined itself as part of a backroom deal with the new company created through the Albertsons-Safeway merger.

Initially, for the merger to take place, the Securities Exchange Commission required a set number of Vons, Pavilions, and Albertsons stores to be sold off and acquired by another company, in order to prevent a private monopoly.

From an economic standpoint, private monopolies are nothing to fear, since capital investment invites efficiency and reforms, with new competitors fighting for a diverse yet fickle market. Still, the SEC required the selling off of a number of stores, a large set of which were purchased by Haggen.

After about six months in Southern California, the Washington based company is not doing well. Yet why would any company invest so much time and energy into expanding its brand into other states with bad pricing and limited selections? Would any firm make such a hasty and foolish investment?

Perhaps this outcome was intended. Because ABC LLC  (the new name of the Albertsons-Safeway merged corporation) could not hold onto a large set of stores per the SEC, why not collude with Haggen to allow the stores to fail, and then permit the original company to purchase the stores originally sold off?

Discussions about this background "deal" are ongoing, but one thing is clear: Safeway stores, including Vons and Pavillions in Southern California, have enjoyed a massive uptick in business without resorting to aggressive ad campaigns or marketing investments.

No comments:

Post a Comment