By Garrick Brown, Vice President of Research – West Region
There has been plenty of news this past C Users joshua.deale Desktop Shopping Cart in Store resized 600week worth dissecting but none may be as symbolic about what is happening in the marketplace as the news that Haggen is planning on closing and selling 27 locations across four states over the next 60 days. Most of these are Albertson’s, Safeway, Vons and Pavilions stores that it bought earlier this year. Those stores had been ordered sold as part of the Safeway/Albertson’s merger and upstart 18-store regional chain Haggen surprised everyone when it put in the winning bid to acquire 146 of these locations. In one fell swoop, the chain grew to more than 160 units. But it apparently bit off more than it could chew. The rapidity of the closures would seem to support anecdotal evidence that the privately held chain is experiencing severe losses following the purchase and attempted rebrand. The Haggen brand has failed to achieve much traction, particularly in the competition intense southern California marketplace. Further closures and sales have not been ruled out.
The challenge here comes back to something we have been discussing in the Newsline for the past couple of years and that is the softness of the traditional, unionized grocery player. While there are a few regional players that have continued to hold their own, if not beat the competition (Publix and H.E.B. come to mind), the remainder of the field continues to face stiff competition on multiple fronts. Upscale and organic players like Whole Foods and Fresh Market remain active. Meanwhile, discount grocery players like Grocery Outlet, Smart & Final and Aldi are still growing as are ethnic themed groceries. And this doesn’t even include the ever persistent challenges posed to the field from Walmart or Target, not to mentioned non-grocery players upping their inventory of food items. The trend we predicted this year was one of consolidation in the world of traditional grocery stores, as the Safeway/Albertson’s merger demonstrated. What wasn’t expected was Haggen’s surprise move—one that now, at least, appears to have been a poorly timed gamble. What remains to be seen is whether this misstep will be one that the Bellingham, Washington-based chain will be able to recover from.
But while this might be the big “story” of the week, I also thought it would be worth pointing out some of the growth plans that have been released over the past seven days. Actually, the amount of planned new stores that I am tracking is ticking up incrementally… but this has almost been under the radar. The reason is simple; most of it has been in the form of chains upping growth plans by a unit here or a unit there. The last few years’ growth has been more concentrated in fewer retail categories, but led by some players (particularly dollar stores) that were putting up some really aggressive numbers.
That being said, here are some of my notes on retailer growth that I have taken over the past week.
This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Garrick joined Cushman & Wakefield (formerly DTZ / Cassidy Turley) in October 2010. He serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.