Haggen Yesterday’s Grocer Can’t Find Footing Today

The food retail business continues to be a conundrum for many legacy grocery store retailers. Foodservice Solutions® Grocerant Guru™ continues to cry-out that” the consumer is dynamic not static and grocery retailers must be as well” apparently a few legacy retailers have not been read this blog or don’t want to evolve with their consumers.

Haggen might just be one of those companies.  In the past 3 years Haggen has been closing one by one some its own banner stores both Top Foods and Haggen stores in the Northwest its home trading territory reducing itself from 25 units to 18 units.  So it came as no surprise when Haggen CEO Bill Shaner released a statement Tuesday saying that efforts to gain customers in their new regions has been harder than expected. While struggling at home, Haggen none the less went decided growth was the answer. 

Haggen had a difficult time running profitable stores within its core market.  So when they announced that the chain bought 146 Albertsons and Safeway stores in Southern California, Arizona and Nevada in December as part of a government required divestiture when Albertsons and Safeway merged our Grocerant Guru™ intrigued to say the least. 

Now that Haggen announced Tuesday that it is reducing staff hours across the southwest because it's having trouble competing  with the 25 stores they reopened as Haggen stores in San Diego County earlier this year we can’t say we are surprised.  Haggen is lacking differentiation and price competitiveness simply put what is the draw for consumers?

CEO Bill Shaner has described the grocer as “somewhere between a Vons and a Whole Foods” clearly there is no hook there for the consumer in ‘somewhere’.  Haggen advertises itself as “a one-stop shop for brand-name staples as well as offering a wide array of fresh, natural and local food options at mainstream supermarket prices”.  Ok simply put that that may have worked in 1980, 1990, but not today. Haggen has positioned it brand as yesterday’s grocery store.  Unfortunately they operate in today’s reality.

Today’s consumers are in search of Ready-2-Eat and Heat-N-Eat grocerant niche fresh prepared food.  Haggen wants to be a ‘mainstream supermarket’?  We ask why?  Even Willard Bishop (WB) consulting thinks the future is not in mainstream supermarkets.  Look at some facts from a recent Willard Bishop study:

1. WB found, the traditional grocery channel's dollar share has decreased by about half since 1988, while non-traditional grocery and convenience stores competed for the food dollar.
2. Specifically, the non-traditional channel's dollar share jumped from 2 percent in 1988 to 39 percent in 2014,
3. The convenience channel's dollar share almost doubled from 8 percent to 15 percent over those 25-plus years.
4. By 2019, Willard Bishop predicts traditional supermarkets will continue to lose dollar share to other segments of the traditional grocery channel, like fresh format and limited assortment.

It’s time for legacy retailers the ilk of Haggen to rethink their current strategy.  Companies the ilk of Haggen are simply out of touch with the marketplace. Haggen’s CEO stated "The competitive activity launched in response to our entry into the marketplace – while expected – has been unprecedented," It’s not the competitive activity that is Haggen’s problem it’s the consumer.  The consumer has moved and Haggen has not. 

The consumer has moved on the Willard Bishop study states since 1998. Most important the marketplace has been halved.  Since the merger Safeway continues to close stores, recently 9 units in Denver, Colorado.   Haggen itself has been closing stores over the past three years.  Doing what you have always done and doing it the same way does not work forever.  

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.