cc Friday, August 14, 2015 latimes.com/news

Grocer Haggen closing 27 stores, including 16 California

By SHAN LI TIMES STAFF WRITER Haggen Inc., the grocery chain that has struggled since rapidly expanding this year, is closing 27 stores, including 16 supermarkets in California. The Pacific Northwest compa- ny said most of the locations slat- ed for closure or sale are among the 146 , , Pavil- ions and Safeway stores it pur- chased this year. Haggen has spent the last few months converting A construction worker wipes away dust after installing a new sign in front of a Haggen those stores to the Haggen brand. , formerly an Albertsons, in Palmdale, in March. The chain, which has A company spokeswoman de- struggled since rapidly expanding this year, is closing 16 supermarkets in California. clined to disclose how many em- ployees will be affected. nounced plans to open 45 South- A smaller number of goods Haggen raised eyebrows last land stores starting in March. were incorrectly underpriced. In year after winning a bid to buy the In a land thick with rivals, shoppers' minds, the chain has yet stores, which the Federal Trade Haggen has failed to entice con- to recover from this stumble, ana- Commission had ordered sold as sumers, analysts said. lysts said. part of the merger of Albertsons Shoppers have complained that Last month, the Bellingham, and Safeway. its shops charge higher prices for Wash., company laid off employ- Online players such as Ama- the same quality products as the ees and cut worker hours in the zon.com and Google are getting supermarkets they replaced. face of what it called into food delivery. More special- When its first California stores “unprecedented” competition. It is ized chains such as Trader Joe's opened in March, about 1,000 also dealing with a lawsuit from and big-box stores such as Wal- items — or about 2.5% of a store's Albertsons that accuses the grocer Mart also are upping their food products — were erroneously of fraud in failing to pay millions offerings. German discount gro- overpriced at 10 supermarkets in as part of the sale. cery chain recently an- Los Angeles, Orange and San Die- Haggen warned Thursday that go counties. additional stores may be closed or Possible buyers include ethnic markets such as Northgate Gonza- lez, based in Anaheim, or more specialty retailers such as , analysts said. With Aldi heading to California soon, the fight for shoppers will get even more intense for Haggen. From a competitive standpoint, Greif said, “it doesn't get any bet- ter from here on out.”

Haggen, which touts its fresh produce and meats, is struggling in California. The chain said it will be closing 16 supermarkets in the state. sold as part of its “right-sizing “They have no brand identity in strategy.” Southern California. It's basically The California stores targeted ‘Haggen, who?' from the consumer for closure include four in Orange perspective,” said Lloyd Greif, County, four in Ventura County chief executive of Los Angeles and six in the San Diego area. investment banking firm Greif & A Bakersfield location and a Co. store in Los Osos, near Morro Bay, Analysts said Haggen may still also are shutting down. succeed after dumping its poorest- “By making the tough choice to performing stores and concentrat- close and sell some stores, we will ing on its profitable locales. be able to invest in stores that have But more likely, the company the potential to thrive under the will continue selling additional Haggen banner,” Bill Shaner, head stores so that Comvest Partners, of Haggen's Southwest operations, the investment firm that owns the said in a statement. majority stake in Haggen, can Haggen is known in its Pacific make some money, observers said. Northwest home base as a chain “Comvest, like many private with great customer service and equity firms, is always trying to high-quality products, a midway monetize its investments as quick- point between a grocer such as Al- ly as possible,” said Burt Flicking- bertsons and an upscale market er III, managing director of Strate- such as Whole Foods. gic Resource Group. But in California, Haggen has The Southland grocery industry failed to differentiate itself to po- is so saturated, he said, that tential shoppers and has struggled Haggen may have trouble finding in operating a vastly larger chain. buyers willing to pay a good price.