Haggen closing its California stores

September 24, 2015

Haggen 2Grocery chain Haggen announced Thursday plans to close 127 stores in California, Arizona and Nevada. Employees will receive a 60 day notice of pending store and office closures.

Haggen plans to continue operating 37 stores in Oregon and Washington. The other stores are up for sale.
Earlier this year, Haggen purchased 146 Albertsons, Vons, Pavilions and Safeway stores. Before the purchase, it operated just 18 stores.

Shortly after Haggen took over the stores, prices increased and some of the previously stocked items were no longer available. Many of the stores’ customers left.

Earlier this month, Hagen launched a $1 billion lawsuit against Albertsons and then filed for Chapter 11 bankruptcy protection.

Haggen accuses Albertsons of providing false, misleading and incomplete retail pricing data, causing Haggen to unknowingly inflate prices. The grocer also alleges Albertsons deliberately understocked certain items and overstocked perishable items.

Haggen claims Albertsons’s actions led to the bankruptcy filing.

Albertsons also filed a lawsuit against Haggen. Albertsons claims Haggen failed to pay for more than $36 million for merchandise that was included in the sale.


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40 Comments

  1. slolusion says:

    A couple of points; the FTC may not be to blame directly, however, how did haggen show it was capable of actually doing the deal? What if I went down to the bank and pulled a large loan to buy 500 stores, am I just another bidder even though I don’t even have a grocery business? How can a company not have to meet requirements to do a deal like this..

    The second point; the grocery market is not working correctly. Where are the local grocery companies? What has the government allowed which has made it impossible for local people to work in the business? For example Haggens might leave hundreds and hundreds of shopping centers abandoned, and that will devastate the local areas.

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  2. SHADYMILKMEN says:

    First thing first it is horrible for the employees. Haggens had no business in expanding to such a large number. I understand not knowing the market price of your locations but after a month they should of adjusted prices. Not doing that lost customers. For those people that think trader joes should come in there place, no way wrong foot pad for the stores. In Atascadero there will only be Vons, food 4 less and discount market. The discount market is horrible and the good products are not discounted.

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    • hijinks says:

      “I understand not knowing the market price of your locations…” I don’t think that’s a correct understanding of their high prices. Remember, they issued one of their flaming press releases when they first arrived saying their price point would be between Vons (the most expensive general grocery) and Whole Foods (or whole paycheck foods). A lot of people were scratching their heads upon hearing that. So, they INTENDED to raise prices above the market level. Why they thought that would be a winner is another question. But it was their corporate intent to raise prices, and when people stopped shopping at those stores because they no longer offered value, their corporate reaction was to sue Albertsons alleging false information about sales levels. This is just one crazy corporate group. Financed by vulture capital from Wall Street. Alas, they tried to lower prices in mid summer, and keep going, but by then it was too late. Customers had fled, and didn’t come back.

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  3. whatdouno says:

    Another fine example of what happens when government interferes with private sector businesses.

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    • SanSimeonSam says:

      Donald Trump would be proud of you whatdouno, your comment has no relevance to the article. More bumper sticker mentality.

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      • Paso_Guy says:

        Wrong, the government forced a sell off and was the genesis of this cluster _. Am I the only one that lacks a thumbs up or down vote?

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        • racket says:

          If you’re a Republican your vote doesn’t count anyway, but yes, I too lost my thumbs up/down option.

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        • maybe not says:

          “Am I the only one that lacks a thumbs up or down vote?”

          I think it’s the new “Cal Coat News” Way.

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          • racket says:

            Interestingly, When I am logged in to facebook, I have the thumb up/down feature. When I am not logged in to facebook, I do not have the feature. It doesn’t seem to have anything to do with whether I am logged in to CCN.

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    • hijinks says:

      That’s a weird reaction. More like another fine example of how the private sector doesn’t always know what it’s doing. Haggens put themselves out of business — government had nothing to do with it.

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  4. bobfromsanluis says:

    Damn. This screws the employees over again, since most of them had fairly decent jobs with the previous company, be it Albertson’s or Safeway/Vons, and I few I know of had worked for Scolari’s and had gotten kicked to the curb when those two business “giants” tucked their tails between their legs and scampered back to Nevada.

    I do have to wonder if there wasn’t some sort of grand scheme for this fiasco to happen somewhat like it has in order for Albertson’s to show the FTC that only they have the ability to operate those stores that they were ordered to sell. A lot of people want to blame the FTC for this whole mess, but they were doing what they are charged to do, look out for the consumer by trying to make sure that there was competition and not a monopoly.

    While the FTC may have ordered the sale of the stores, I do not believe that they mandated that all of the stores go to only one company; my guess is that Albertson’s wanted a single buyer so it would be an easier sale instead of having to deal with smaller chains buying up 3 or 4 stores each, and possibly leaving some of them unsold.

    I have read the theory about how most CEOs have to be sociopaths in order to make decisions like this that puts thousands of people out of work, yet those CEOs can go home, kiss their kids and still be able to sleep at night.

    Really a sad situation.

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    • BeenThereDoneThat says:

      Really, Albertson’s made Haggen buy all those stores. So what did they lose the ability to say no? Adjust your foil hat.

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      • SLOBIRD says:

        This was another mess created by our government and lack of business sense. Our government cannot do anything right but tax us, argue amongst themselves, and make our life’s miserable.

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        • hijinks says:

          Maybe govt could run a grocery better than Haggens? Oh, no, govt can’t do anything. That’s why you have to drive your stinkin SUV around on dirt roads, right? And the kids don’t have schools to attend? And Chevron can’t fill your gas tank with water and charge you gasoling prices? Geez, we should just get rid of all that junk. No use.

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  5. BeenThereDoneThat says:

    Wish either Stater Bros or Kroger would show interest in this area. They are only stores with size to do. Others like Raley’s, Ralphs (been here tried that) and a few others are the size that Haggens was before expansion and doubtful they wouldn’t want to try same foolish expansion.

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    • SamLouis says:

      Foods Co. (Kroeger), WinCo or Foods4Less would all do well.

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      • BeenThereDoneThat says:

        In Paso they have a Food 4 Less up the street from that location already. I already mentioned Kroger so basically Winco.

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        • SamLouis says:

          Foods Co. is owned by Kroeger but it’s not Kroeger… I think Vallarta Supermarkets (which wants to open in Paso) would do well but they want to own their own dirt. I think SavMor Grocery would also be a logical contender.

          More than “basically Winco.”

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    • FishCambria says:

      Ralphs IS Kroger

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      • BeenThereDoneThat says:

        Didn’t realize they are a subsidiary. In today’s world with so many companies under a parent company, it is hard to know all of them.

        Point was, I got thinking with all these stores that will be empty, who could fill the void.

        Sadly I don’t think a lot will get filled as there aren’t that many large one’s out there that would probably be willing to risk this market.

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  6. Mr. Holly says:

    Looks like another empty grocery store for Atascadero. That leaves Vons and the grocery discount store.

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    • Perspicacious says:

      That just means they need to open the Super Wal Mart poste haste!

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    • Paso_Guy says:

      Food for less is gone?

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    • SpeakTruth says:

      Maybe Ralph’s or Spencer’s will move right in where Haggen was? They’ll need employees too… Perhaps there will be a bunch of previous Haggen employees looking for work? Haggen leaving town is a blessing!

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    • SLOBIRD says:

      Sprout’s or Trader Joe’s ….PLEEZE!

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  7. BeenThereDoneThat says:

    I can’t believe the CEO still has a job. To me the WHOLE MESS falls on him. He is the one making the big money. It is HIS job to understand the territory, the financials etc.

    If I was any of the shareholders I would ask for his head on a freaking platter!! He has caused them untold losses and damaged the store name. Dumb, dumb, dumb.

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    • Fleyshik_Zaftukhus says:

      Except: Haggen has filed a lawsuit alleging they were provided gross misinformation.

      There are voluminous factors (too numerous to even mention) to take into consideration; and the closest the general public will ever get to the truth will only be a semblance of what is won in Court.

      Also, Haggen is a privately held independent retailer.

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      • BeenThereDoneThat says:

        O.k. from size I assumed stock so missed that. BUT again LOOK at all articles about this on net. There are NUMEROUS that said expanding to quick (which traditionally has done in many a business) could undo them.

        And the…………oh they gave us false information. Let me ask you a question. If you have a business and you are buying something from a COMPETITOR are you going to just assume they are looking at a fair deal and your interest and take their word? If you say yes, then you are either a fool or a liar.

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      • hijinks says:

        Haggen isn’t a privately-held independent retailer. It’s mainly owned and controlled by a Wall Street vulture capital fund. The Haggens sold control years ago. Albertsons and Vons have a similar Wall Street vulture capital owner — the SAME owner, which is how all this mess started.

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    • racket says:

      BTDT: Perhaps his shareholders love him for netting 37 quality locations in Washington and Oregon, which is where Haggen does business. Perhaps the CA/NV store closures are collateral damage with no real effect on Haggen’s operations.

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      • BeenThereDoneThat says:

        If this goes to court with these two suits (Albertson’s suing them and they suing Albertson’s) what do you think all those lawyers costs will be? Then any potential settlement? Then unemployment paid for those laid off? There will be costs to them I GUARANTEE IT!!!

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        • racket says:

          Pure speculation on my part:

          Alb made a super-underpriced deal with Haggen for underperforming stores in saturated markets, knowing they would need to close them. Haggen took the deal, knowing they would need to close many of the stores, but would retain the ones they wanted in their core market.

          The rest is showmanship and bluster. And a means of transferring the costs associated with the displaced workers to their UI provider, rather than having to pay them out-of-pocket as would be the case for a breach of the union contract.

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          • BeenThereDoneThat says:

            Yea at the end of the day the whole thing is a cluster fu… and we the consumer have less competition and greater possibilities of higher prices.

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        • racket says:

          What I am saying is that perhaps we should accept as truth that these markets were overserved with grocery stores.

          Then it becomes a case of how to bring the number of stores into balance with demand. Alb knew there were too many stores. Haggen knew there were too many stores. Whatever the negotiations were, Haggen ends up with 37 stores they want, Alb ends up out from under its inferior stores and union obilgations.

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          • hijinks says:

            It’s hard to understand how SLO, for example, with only 5 conventional markets was overserved, and now with only 3, it definitely will not be. People in SLO actually would like more markets, not fewer. The city’s down to Ralphs, Vons and Smart and Final for daily needs, for 46,000 residents and 35,000 commuters. And don’t Costco me — nobody in right mind would go there for daily needs, it takes too long and hardly anybody lives close enough to walk. That’s a totally different sort of store, where you take your truck and load up on a month’s worth of junk thinking that somehow after all the driving and paying your dues and wasting your time you’re “saving money” by buying stuff that’s no cheaper/or marginally cheaper than elsewhere.

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            • SLO93401 says:

              SLO has many more choices for grocery shopping than just Vons, Ralphs, and Smart and Final. Neighboring Food 4 Less and Trader Joes are complimentary and usually busy. The new Grocery Outlet has good prices and an interesting selection of products not available elsewhere. Costco and Target each have considerable grocery selections. The SLO Natural Foods Coop fills a niche. We have a “Whole Paycheck” aka Whole Foods. I have yet to shop at Fresh and easy. We have four weekly farmer’s markets.

              There is a new market about to open in University Square.

              The two locations Haggen will soon close will probably reopen in time with new operators.

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          • BeenThereDoneThat says:

            In Paso in early 80’s we had Safeway, Willie Bros and Lucky, serving a population of about 10k. Today (till Haggens) you had Albertson’s, Food 4 Less and Von’s (I don’t count Smart and Final as they don’t have as many items) serving a population of 30k. Tell me how they weren’t making it again and too many stores???

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            • racket says:

              Costco.

              The pallet of toilet paper you buy at costco is 6000 rolls that Vons/Alb/Slaveway/etc. don’t get to sell you. Maybe you only go once a month, but the $400 you spend there is $500 you are not spending at a regular grocery.

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              • BeenThereDoneThat says:

                Costco? Well then it sounds like you are talking about a price issue. Not the same as over saturation of market. Over saturation of market, to many stores vs customers. Price is customers not wanting to go period BUT I totally disagree with your analogy as people still are doing a lot of grocery store shopping as distance to Costco, not everybody buys 20 years worth of something on everything and they don’t have everything one needs.

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                • racket says:

                  Oops. Read “around” my pricing jab.

                  The point of my post is that Costco is the competitive elephant in the food-dollar room. Much of stuff we buy at Costco is stuff we used to buy at the grocery store. So, while it’s true we still go to the grocery store, we are buying fewer dollars worth of product. Costco has taken the lion’s share of the shopping dollar, leaving the grocers to compete for the changet. I maintain that we are overserved with grocery stores. Well, we were until this painful fiasco brought supply in line with demand.

                  Sorry for the competing animal metaphors.

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