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Haggen, dogged by problems, closes

Some customers unaware of closures but aware of no donuts

Haggen's Carlsbad/La Costa location
Haggen's Carlsbad/La Costa location

Nine months after announcing the biggest move into the Southern California grocery business, Washington-based Haggen Foods is giving up, leaving 127 California, Nevada, and Arizona stores vacant and laying off thousands of workers. 

The closures were announced at around 2:00 p.m. on September 24. I talked with Haggen shoppers around dinnertime that evening, at the Carlsbad location (7660 El Camino Real). Most were unaware of the news.

Perhaps a sign of Haggen’s problems — most customers walked out with just a few items at a time. 

Tom said he knew something was up two weeks ago when he took his five- and six-year-old boys for their usual Saturday-morning donuts. “There was no donuts,” he said. An employee told him the store didn’t get their shipment. “They weren’t paying their suppliers,” said Tom. 

Cory and Gwen said they didn’t care what name was on the building. “We’re come because of the former Albertsons employees that still work here,” said the La Costa residents, hoping some other store will take Haggen’s place.

Dean said Haggen never had the selection and quality that Albertsons had. “But I’m disappointed,” he said when he heard the news. “It’s a very convenient location to all of us in La Costa.”

A manager gathering carts in the parking lot said he couldn’t discuss the situation but invited me inside to speak with customers. “It’s pretty screwed up,” he said. As management, he won’t be able to return to his former employer, Albertsons.

With suppliers and creditors reportedly ready to cut them off, Haggen filed for Chapter 11 bankruptcy protection two weeks ago. The Haggen executive who shepherded the nine-billion-dollar acquisitions was fired a few months ago.    

Haggen, an 80-year-old chain in the Pacific Northwest, operated only 18 grocery stores in 2014 before buying Albertsons stores and entering the Southwestern U.S. region. The firm has since filed lawsuits claiming that Albertsons, which owns the Vons and Safeway chains, purposefully withheld important pricing and food-trend information. 

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Haggen's Carlsbad/La Costa location
Haggen's Carlsbad/La Costa location

Nine months after announcing the biggest move into the Southern California grocery business, Washington-based Haggen Foods is giving up, leaving 127 California, Nevada, and Arizona stores vacant and laying off thousands of workers. 

The closures were announced at around 2:00 p.m. on September 24. I talked with Haggen shoppers around dinnertime that evening, at the Carlsbad location (7660 El Camino Real). Most were unaware of the news.

Perhaps a sign of Haggen’s problems — most customers walked out with just a few items at a time. 

Tom said he knew something was up two weeks ago when he took his five- and six-year-old boys for their usual Saturday-morning donuts. “There was no donuts,” he said. An employee told him the store didn’t get their shipment. “They weren’t paying their suppliers,” said Tom. 

Cory and Gwen said they didn’t care what name was on the building. “We’re come because of the former Albertsons employees that still work here,” said the La Costa residents, hoping some other store will take Haggen’s place.

Dean said Haggen never had the selection and quality that Albertsons had. “But I’m disappointed,” he said when he heard the news. “It’s a very convenient location to all of us in La Costa.”

A manager gathering carts in the parking lot said he couldn’t discuss the situation but invited me inside to speak with customers. “It’s pretty screwed up,” he said. As management, he won’t be able to return to his former employer, Albertsons.

With suppliers and creditors reportedly ready to cut them off, Haggen filed for Chapter 11 bankruptcy protection two weeks ago. The Haggen executive who shepherded the nine-billion-dollar acquisitions was fired a few months ago.    

Haggen, an 80-year-old chain in the Pacific Northwest, operated only 18 grocery stores in 2014 before buying Albertsons stores and entering the Southwestern U.S. region. The firm has since filed lawsuits claiming that Albertsons, which owns the Vons and Safeway chains, purposefully withheld important pricing and food-trend information. 

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Comments
7

This comes as no surprise to me. I visited Haggen's once, and that was all I needed to see they sell the same produce and products as other grocers but charge nearly twice the price for the privilege of shopping there. How stupid do they think people are? I say, "Don't let the door hit you..."

Sept. 25, 2015

Here's the list of closings in San Diego metro: Carlsbad – Carlsbad Village Dr. Carlsbad – El Camino Real Chula Vista – East H St. Coronado – B Ave. Del Mar – Via De La Valle El Cajon – Broadway El Cajon – Camino Canada La Mesa – Avocado Ave. Poway – Pomerado Rd. Rancho Bernado – Rancho Bernardo Rd. San Diego – Balboa Ave. San Diego – Highland Village Pl. San Diego – Penasquitos Dr. San Diego – Tierra Santa Blvd. San Diego – Univ. Ave. in North Park San Diego – W. Washington St. San Diego – Westview Pkwy. San Diego – Turquoise St. Santee – Magnolia Ave.

Sept. 25, 2015

A regular reader shared some updates to this story. THX David.

Hi Ken, I've been following the Haggen fiasco for a while now. A little correction. That $9 billion figures refers to the merger of Albertsons with Safeway/Vons. http://consumerist.com/2015/01/27/ftc-requires-safeway-albertsons-to-sell-168-stores-before-completing-9-2b-merger/

Haggen's cost of buying the Albertsons/Vons/Safeway stores was MUCH less. I've seen a figure of $1billion +, but another story stated $300 million. So that one is a bit fuzzy. I don't think the Haggen PR people have ever stated the cost.

I also read they were spending about $500,000 per store for the conversions. I knew our local (North Park) Haggen was headed for closure but their outside PR flack refused to confirm or deny it when I asked her recently. She also wouldn't comment when I told her one of the San Diego stores (north of I-8) had received an eviction notice for nonpayment of rent.

David B.

Sept. 25, 2015

The CEO and his minions should all be fired, stripped of their bonuses and stock. This will go down as one of the worst business deals in recent history. It is a classic story of to big too fast. They did not know the market or the neighborhoods or the customer base. The did not do their due diligence. The few customers who shopped there out of ignorance or convenience will have to go farther to shop but the real losers are, as always, the employees who will lose their jobs through no fault of their own. I'll bet the CEO and top exes will still get bonuses. Like Javajoe25 said it is no surprise.

Sept. 26, 2015

Haggen stated in a press release that employees would get paid for another 60 days, as the stores move toward closing day around the end of November. We'll see if the company keeps its promise.

Sept. 26, 2015

At Haggen North Park this morning I could have rolled a bowling ball down the aisles, and not hit anyone shopping. Employees must be updating their Facebook these days, as they have little to do. The bread guy was checking inventory, saying they are still getting paid. Half the beer shelves were empty (I don't buy it, so didn't care). Plenty of cereal and coffee, though.

Sept. 26, 2015

There's more to the story than has generally been reported. Albertson's, owned by Cerberus Capital, acquired Safeway, then a publicly-held corporation with its stock listed on the NYSE. In too many places, that meant that a major competitor was being taken out of the marketplace. So, the feds told Albertson's/Cerberus that they had to sell off some of the stores to a viable competitor. Sadly, there wasn't any such competitor that had the resources to buy such a large number os stores. Cerberus, a private equity operation, went out and found ANOTHER private equity firm, Comvest Partners, to buy the stores. But they didn't have any experience with running super markets, and in turn looked for a chain that could run them. What they bought was Haggen, a small group of stores in the northwest, and then added the huge number of mostly-California former Albertson's and Safeway locations to the small chain they had scooped up. (When I mention Safeway, I'm including those named Von's and Pavilions in our region.)

If you go to the Comvest website, there's no mention of owning Haggen, or its BK status, or the lawsuit it filed against Albertson's. Very red faces, anyone? Generally those private equity boys don't try to kill each other, or screw each other. But it seems that Cerberus did a number on Comvest. Just what Comvest/Haggen expected when they made that huge increase to the size of their operation isn't clear. Retailers compete, and vigorously so. Haggen should have expected some start-up bumps in the road, yet based on what we saw, was utterly unprepared for the challenges.

Years ago, when Albertson's, then publicly traded itself, bought up American Stores, which operated Lucky stores, it had to divest some stores here in SD county. Stater Brothers, already an established operation in San Bernardino and Riverside counties, bought those locations, and the cut-over seemed smooth, and they've established the Stater brand here. So, those sell-offs can work to the advantage of everyone, if they're handled right.

Oct. 3, 2015

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