Haggen is about to become a much bigger player in the grocery industry.
The company announced on Friday, Dec. 19 that it is acquiring 146 stores as a part of the divestment process brought about by the Federal Trade Commission’s review of the Albertsons-Safeway merger. With the acquisition, subject to FTC approval, Haggen will expand from 18 stores and 16 pharmacies to 164 stores and 106 pharmacies across Washington, Oregon, California, Nevada and Arizona.
None of the current Whatcom County Albertsons or Safeway stores are involved in the Haggen acquisition, but 26 are in Washington state. The new Safeway store scheduled to open at the end of January in Bellingham’s Sunset Square will still open under the Safeway name.
The deal was part of several sales related to the Albertsons-Safeway merger, but the acquisition by Haggen was the biggest. Associated Food Stores is buying eight stores in Montana and Wyoming, Associated Wholesale Grocers is purchasing 12 stores in Texas and SUPERVALU is buying two Albertsons stores in Everett and Woodinville.
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With the acquisition, Haggen will split CEO duties between two people. Current Haggen CEO John Clougher will have the primary responsibility of managing Washington and Oregon stores while newly hired Bill Shaner will handle the southern division of California, Nevada and Arizona.
“With this pivotal acquisition, we will have the opportunity to introduce many more customers to the Haggen experience,” said John Caple, chairman of the Haggen board of directors and partner at Comvest Partners, a private investment firm that owns the majority of shares of Haggen, in a news release. “We will continue our focus on sourcing and investing locally even with this exciting expansion.”
After the close of the transaction in early 2015, Haggen will convert all of the acquired Albertsons and Safeway stores to the Haggen name. All Albertsons and Safeway store employees will have the opportunity to become employees of Haggen as their individual stores are transitioned to the Haggen brand, according to the news release.
The acquisition is expected to grow Haggen’s workforce from around 2,000 people to more than 10,000. In a phone interview, Clougher said they plan on hiring more 200 administrative support positions. Some of those will be in Bellingham, while others will be hired in newly created support centers in Oregon and California. Clougher and the company’s corporate headquarters will remain in Bellingham.
“This is great for the company and Whatcom County,” Clougher said, noting that the company has worked on this deal for several months. “We’re also happy to be bringing the Haggen concept to all of these communities.”
Clougher said being a bigger company will improve the shopping experience for customers as well as increase the company’s purchasing power, meaning that by buying at a greater volume Haggen will be able to pay less to get products on shelves.
As for the new stores in Washington and Oregon, Clougher said the plan is to duplicate the Northwest Fresh concept that is the centerpiece of its 18 current stores. Farther south, it won’t have the Northwest Fresh name, but the focus will also be on fresh and local products.
The move is quite a change in strategy for Haggen, a company that has made many changes in the past three years. After Comvest purchased a majority stake in Haggen in February 2011, Haggen has spent the past few years creating the Northwest Fresh brand and remodeling each of the stores. It also closed some underperforming stores, including eight in 2013. In September Haggen announced the hire of Clougher as its CEO. The hiring of Clougher, who was previously the CEO of Andronico's Community Markets in the San Francisco area, sent a signal that the company had completed its transition period and was ready to move forward.
It was also announced that Unified Grocers, Inc. will be the primary supplier for all of Haggen’s newly acquired stores in California, Nevada and Arizona. It will also become a substantial supplier for the Washington and Oregon stores. This agreement will represent about $750 million annually in new business for Unified, according to a company news release. SUPERVALU announced that it also reached an agreement with Haggen to be one of its primary suppliers for 64 of the Washington and Oregon stores.
Clougher said the distribution agreements will open more product options for Whatcom County shoppers. The current brands will remain, but local stores will be able to add things in the different departments.
“They (Unified and SUPERVALU) are world-class, professional distributors,” Clougher said.