Haggen Files For Bankruptcy – Was It Competition Or Sabotage That Forced The Company?

Grocery chain Haggen Inc. has filed for bankruptcy protection. The supermarket chain alleged that the rival, from whom the company acquired stores, didn’t stay true to the terms of acquisition, causing it to crumble.

Haggen had sought to rapidly expand in the West Coast and, the quickest way it saw fit was to acquire 146 stores from rival supermarket chain Albertsons. However, now that it seems the company has bitten off more than it can chew and has filed for bankruptcy, according to industry experts. Haggen has been struggling for months after the huge acquisition that may have cost the company a whopping $1.4 billion. In exchange, the grocery chain became the owner of 146 Albertsons, Vons, Pavilions, and Safeway grocery stores, including 83 in California alone, reported the Los Angeles Times.

Interestingly, federal antitrust regulators had ordered Albertsons and Safeway to liquidate the stores that Haggen acquired if they wanted the $9.2 billion merger approved. Within a few short months, Haggen suddenly grew from an 18-store chain in the Pacific Northwest to a formidable West Coast enterprise. Following the acquisition, Haggen set out to plaster its brands on the newly acquired properties, with an implied and advertised promise of offering high-quality meat, seafood, and organic produce at attractive prices.

However, soon after setting up shop, customers started complaining that Haggen was selling merchandise at a price that was higher than what the stores’ previous owners were offering. Hit with sagging sales within a short span of time, Haggen began to take precautionary steps and started to let go some of the 11,000 workers it had acquired as part of the acquisition.

Besides blaming the second-largest U.S. grocer in its bankruptcy filing, Haggen has been complaining about the “unprecedented” competition in the Southwest. As part of the salvage operation, Haggen has decided to shutter 27 of its locations it acquired from Albertsons, including 16 in California, and reorganize its business around its profitable locations.

Times are certainly hard for brick-and-mortar stores. A short while ago, Northeast-based Great Atlantic & Pacific Tea Co, or A&P, had filed for bankruptcy after futilely struggling with growing number of convenience and “dollar” stores. In reality, the majority of the retailers have been losing the battle against eCommerce.

In its filing, Haggen has alleged that Albertsons singled it out for speeding its approval of merger with Safeway. As expected, Albertsons has strongly refuted the allegations.

Given the developments, did Haggen’s ambitions proved to be instrumental in its fall from grace?

[Image Credit | Haggen Inc. via The San Diego Union-Tribune]