Business - Business News

POSTED: Sunday, Nov. 23, 2008

Haggen continues to grow as shoppers look for value

When Dale Henley takes a stroll through the aisles of a Haggen store, he sometimes gets the feeling his job is a lot like an orchestra conductor.

Henley, who has been the company CEO for 12 years, sees plenty of activity on a Thursday morning walk through the Barkley Village store - employees busily stocking shelves or preparing food and customers comparing prices of different products.

"To me, this business is very much about presenting a message to an audience, and we want it to be a clear one about providing quality products and service at competitive prices," said Henley, 63. "I have an audience with different ears, however, so we have to keep adjusting in order to make that connection to all our customers."

While the day-to-day activities around him have a similar feel, Henley knows making adjustments is a constant in his industry. Internally, the company is marking its 75th anniversary in the same year as it lost matriarch Dorothy Haggen, who died in October. It's a time of reflection as well as preparation for the future as customers' shopping habits change because of hard times.

Even with the economic slowdown, Haggen is moving forward with capital projects, recently completing a $6 million remodel of its Olympia store and looking at other remodels in the coming year. The company is also pondering the idea of adding another store in the Whatcom County market.

The privately held Bellingham grocery company now has 33 stores in Washington and Oregon, reporting revenues of $870 million last year.

The company is also making changes to existing local stores. The Barkley Village store, for example, has expanded its cheese department, giving customers around 300 varieties to choose from. Other changes include a serve-yourself burrito bar and its own chocolate department.

"Americans are much more interested in cheese. I think it's an industry that's in a position where wine was 10 years ago," Henley said.

While doing his walk-through, Henley took some time to answer questions about the company and the grocery business.

What trends have you noticed in the grocery business during this economic volatility?

Our meals-to-go segment is still growing, particularly the simpler items, such as soups. But we also see some moving away from that segment and buying more of the basics, like sugar and flour to make food at home. What we think is happening is the new food-service customers are people who used to regularly eat at restaurants and are now doing that less. Then some of our regular food-service customers are moving into the basics in order to save money. Time is still an issue for many families, though, so meals-to-go is growing overall.

One of the biggest trends is going toward corporate brands. (Henley is referring to brands exclusive to the company, including the Haggen brand for a variety of products, such as canned fruit. Other corporate brands include Premier, World Classics, Full Circle and Valu Time).

It takes quite a bit of effort in order to build up the corporate brand. There is a lot of testing as well as sampling by customers and employees in order for it to gain recognition. But people are drawn to the lower price while getting the same, or better, quality product.

What has the changes in the economy meant in terms of labor?

We're not seeing the sales growth that we had even earlier this year, so we're very careful about labor. We've haven't been hiring as many seasonal workers in order to make sure the store employees we have are getting enough hours.

One aspect being talked about in the economy is deflation. How has that impacted your business?

It's a big issue right now. Last spring costs were going up like crazy and we had to adjust, especially with fuel. Now commodity prices are coming down, but it seems to be sticky for products we're buying, as prices haven't been coming down yet. We're being more demanding with our suppliers, though, because we know customers are watching closely.

We're also talking more about prices in our advertising. In the past we've emphasized quality and we will continue to do so, but our prices are also competitive. It's important to be talking about that as well.

What other trends have you seen?

Organic products continue to be one of our fastest-growing segments. The next is local products, which I think will surpass organic soon. There are a lot of great local products in Western Washington, and I think more will come because of customer demand.

You've had various celebrations throughout the year marking the company's 75th anniversary, but what was the reaction within the company of Dorothy Haggen's passing?

There was obvious sadness, but for a lot of employees it was a time to remember what she meant not only to the company, but to the community. She was with us for 99 years and she touched both younger and older generations of people. I've heard so many great stories from employees and customers about Dorothy; it's showed me how much she meant to people.