For an updated version of this story go here.
By Doug Porter
Less than six months since taking over 146 Albertsons and Vons locations, the Haggen grocery chain has announced closings for all its locations in California, Arizona and Nevada. Twenty-five stores in San Diego county will be shuttered, just two days before Thanksgiving…
Pope Francis gave his long-awaited address to Congress yesterday. Local faith, community and labor activists took the opportunity to amplify the pontiff’s messages on the social justice and the environment, holding a press conference and a packed interfaith forum at St. Paul’s Cathedral…
There are many noteworthy events coming soon:
- Point Loma Democrats will feature a presentation by Rabbi Laurie Coskey on the fight for $15 movement,
- The Center on Policy Initiatives will hosting the Spotlight on Justice Awards, and
- Organized labor is stepping up its game with the 2015 San Diego Conference on Labor and Community Solidarity…
Haggen Fails, to Nobody’s Surprise
(Except the people who work there)
Empty shelves at the University Ave Haggen (2 weeks ago)
It was a corporate deal bound to fail. Supermarket operator Albertsons bought Safeway. The new company was required by the Federal Trade Commission to divest itself of 146 stores located in Arizona, California, Nevada, Oregon, and Washington, which were purchased by Haggen holdings, LLC.
This was supposed to “ensure that consumers in those communities continue to benefit from competition among their local supermarkets,” according to FTC Chairwoman Edith Ramirez .
Prior to this acquisition, Haggen owned and operated 18 stores with 16 pharmacies in the Northwest. The company had closed 10 locations in the two years prior to this deal.
From the Union-Tribune:
“When a company is required to divest stores, like what Safeway and Albertsons did, they prefer to sell to a weak retailer that will most likely fail,” said analyst David J. Livingston, founder of DJL Research. “My hunch is they are counting on Haggen’s failing. They want to make sure that whoever they sell to will be an ineffectual competitor.”
Haggen last month announced it would close 27 stores, and this month entered bankruptcy court. It sought permission for the additional 100 closures from the judge on Thursday.
The impact in San Diego County could mean as many as 25 closed stores.
From the Los Angeles Times:
The company did not announce how many employees would be affected by the closing, but union leaders estimate that about 8,000 workers could be affected in California alone…
…Analysts said Haggen’s failure had long been expected by experts in the supermarket industry. They pointed to the pricing problems that have plagued the stores since Haggen opened. Industry experts said the company failed to do its own market research, instead relying heavily on Albertsons and Safeway — their seller and rival — as a guide to how to price products.
“Nobody thought they could pull this off,” said David Livingston, founder of supermarket research firm DJL Research. “This isn’t just David and Goliath. This is David and Goliath and Goliath is handing David a faulty slingshot.”
Greed, Greed and More Greed
A Terrible Marketing Campaign
The United Food and Commercial Workers, the union representing many of the employees in the soon-top-be-shuttered stores, has filed grievances with Haggen, Vons and Albertsons alleging that layoffs and reduced hours prior to yesterday’s announcement violated a collective bargaining agreement.
The Times article quotes UFCW Local 324 president as saying “I think this is almost criminal what Comvest and Haggen has done. “I hope the attorneys and the judge involved in the bankruptcy case investigate it fully.”
From the Oregonian:
In court filings, Haggen’s lawyers say the store closures are “imperative” and urged the court to allow the grocer to start the process of closing the stores immediately. Haggen owes its creditors more than $270 million, and the filing says closing the stores would help ease the grocer’s negative cash flow.
According to the filings, together, the 100 stores are losing Haggen about $400,000 per day. Closing the stores, Haggen argues, would save it about $60 million over the remainder of the fiscal year.
Haggen, which has hired investment banking firm Sagent Advisors to explore a sale of its stores, said it expects the sale of inventory and other assets in the 100 additional stores to yield about $125.6 million, giving the grocer a “necessary and significant cash infusion,” the documents say.
No third party has expressed an interest in buying and continuing to operate the stores.
No White Knight Likely
The last sentence in the Oregonian story is the key to understanding the nature of this deal…”No third party…”
The Fresh and Easy stores, backed by British supermarket giant Tesco, lost $2 billion a few years back trying to establish themselves in an ultra-competitive market. Specialty stores, warehouse/Costco operations, and even drug stores with groceries have all fundamentally changed the grocery shopping experience.
I seriously doubt that most Haggen locations will reopen. The newly merged Vons/Safeway and Albertsons stores will end up with a larger client base with increased sales, for those who shop at “traditional” grocery stores. They’re “winners” here.
The Comvest Group, the private investors behind Haggen, will muddle through bankruptcy. A Caribbean vacation or two might have to be rescheduled.
Haggen’s employees are just plain screwed. A government investigation won’t pay January’s rent. Neighborhoods all over the city will have hulking buildings sitting empty. This is the way things are in a society that worships greed.
Here are two final quotes, pulled from the NextDoor.com neighborhood grapevine:
Just dropped by and their last day according to one employee is Nov.24. Another employee is “pretty sure” they won’t be restocking anything during that time. Very sad for those folks; I know of at least one cashier (Lang) who’s been working at that site for at least 10 years.
…
Let’s just hope El Super doesn’t take over the location – I made the mistake of stopping at the location in City Heights. It was filthy and the security measures were unbelievable – security guards were everywhere, as were barriers restricting ingress/egress and locks on certain items.
Many Faiths, One Planet
From Facebook
Nearly a dozen speakers from the San Diego Coalition to Preserve our Common Home spoke before a packed house Thursday night at St. Paul’s Cathedral echoing Pope Francis’ message from his June encyclical and speech before a joint session of Congress.
The evening opened and closed with songs from the St. James and St. Stephen’s youth choirs. Faith leaders, along with labor and community activists spoke, focusing on the message that we must, as a moral imperative, care for our common home and address climate change.
Kent Peters, representing the Roman Catholic Diocese of San Diego:
“The visit of Pope Francis to the United States is a welcome opportunity to begin a dialogue with many Catholics about global warming and our moral imperative to identify solutions that elevate social and economic justice.”
Nana Firman, representing the Islamic Center of San Diego and recently named a “White House Champion of Change” for Faith Leaders on Climate, said that Muslims around the world are being heavily impacted by climate change.
“Our collective future is at stake, which makes it even more important that Muslim voices are lifted up. It is imperative that we take both practical and spiritual steps towards addressing the imbalances and the injustices in our world, as part of being God’s vicegerents upon this earth. Islamic teachings endow us with invaluable sources of ecological consciousness. We must act now!”
The theme of social justice and climate change was taken up by Eddie Junsay of the grassroots climate action non-profit SanDiego350:
“In order to have an effective and vibrant climate movement we must work towards empowering those who are disproportionately burdened by climate change to be leaders in the movement. We need to to make sure the voices of communities of color, poor communities, and youth are heard as these are the very people that are most affected by our decisions on climate.”
The coalition urges San Diegans to sign on to its statement on climate justice, which calls for changing personal behavior as well as asking affiliated institutions and national and international leaders to: limit greenhouse gas pollution; change our economic system from being solely profit-driven to one that is more ethically sensitive to environmental protection and the equality of all nations and individuals; take concrete measures to lower over-production and over-consumption; and raise awareness that we are one world family, sharing the limited resources of our common home striving to live together with dignity and in peace.
Upcoming Events in San Diego
The Fight for $15
Sunday Sept 27th, 4 – 5:30pm, Point Loma Democratic Club
Point Loma Assembly, 3035 Talbot St, San Diego, CA
Rabbi Laurie Coskey of the Interfaith Center for Worker Justice will talk about what the Fight 4 $15 and raising the minimum wage means to real people living in the region. She’ll be joined by Steve Rivera and workers and organizers from the Fight for $15.
San Diego Leadership Alliance Institute Applications
Ongoing through Sunday, Nov 1st, 2015
Application form and guidelines are available at sdleadership.org/apply.
(Members of the community may nominate prospective fellows on the website.)For more information visit: www.sdleadership.org.
Building on the success of the six previous San Diego Leadership Alliance Institutes, and with support from a diverse set of community partners and civic leaders, the ten-session immersive progressive leadership development program equips Fellows with the skills, opportunities, and relationships to make change in San Diego.
The training program is relevant to leaders who work inside and outside of politics, with an emphasis on preparing young professionals to be engaged in civic life throughout their careers. The training programs focuses on a core curriculum of personal leadership development, communications, fundraising, political strategy, traditional and new media, and public speaking. In recent years, the Speaker of the California Assembly Toni Atkins, Activist Judy Ki, CEO Robert Gleason and San Diego and Imperial Counties Labor Council Secretary-Treasurer Richard Barrera have served as institute instructors and/or mentors.
CPI’s Spotlight on Justice Awards
Thursday, Oct 1st, 6:30pm –
Tickets $100 (It’s a fundraiser)
Moniker Warehouse (East Village),
705 16th Street, San Diego – Tickets & Info
The Center on Policy Initiatives (CPI) is casting a spotlight on those who have been critical to the fight for economic justice and who seek to create more vibrant communities.
The 2015 Spotlight on Justice honorees are:
Assemblywoman Lorena Gonzalez, Visionary Leadership
International Brotherhood of Electrical Workers 569, Beacon of Progress
Planned Parenthood of the Pacific Southwest, Courage in Action
Justice 4 SD 33 Coalition, Catalyst for Change
Food, specialty cocktails, local craft beer available, with live music from the Sure Fire Soul Ensemble.
2015 San Diego Conference on Labor and Community Solidarity
Saturday, Oct. 3rd, 9am – $20/$15/$5 Donation
Lincoln High School, 4777 Imperial Ave., San Diego
Sign Up & Info
* Lunch provided with registration *No one will be turned away for lack of funds*
The Labor and Community Solidarity Conference brings together union activists, community organizers, and others committed to building a stronger labor movement committed to social justice.
This year the theme will reflect the growing and diverse efforts to fight poverty on a national and international scale. This includes the growing momentum in the Fight for $15, the struggle for full rights and equal pay for adjunct educators, the farm-workers movement for a living wage in San Quintin, and more.
Read a Banned Book Next Week
Banned Books Week, September 27–October 3, celebrates the idea that the freedom to read and access ideas can transform lives, but when books are banned, readers are blocked from seeing all viewpoints and perspectives.
On This Day: 1891 – Two African-American sharecroppers were killed during a cotton-pickers’ strike in Lee County, Ark. By the time the strike was, 15 African-Americans had died and another six had been imprisoned. A white plantation manager was killed as well. 1975 – Jackie Wilson collapsed while performing “Lonely Teardrops” at the Latino Casino in Cherry Hill, NJ. He had suffered a heart attack that caused brain damage. He was 41 years old. He died in 1984 after spending the rest of his life in hospitals. 1983 – A Soviet military officer, Stanislav Petrov, averted a potential worldwide nuclear war. He declared a false alarm after a U.S. attack was detected by a Soviet early warning system. It was later discovered the alarms had been set off when the satellite warning system mistakenly interpreted sunlight reflections off clouds as the presence of enemy missiles.
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Doug Porter
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To understand the closing of these stores, it is important to understand how we got to this point. The Federal Trade Commission, as a condition of approving the Albertson’s/Safeway merger, required the combined company to offload 168 stores to prevent a “monopoly” in the grocery business.
Think about that. Do San Diego shoppers have a lack of places to purchase food? Of course not. I can buy bananas at Costco, Sam’s, Wal-Mart, Target, Trader Joe’s, Stater Bros., any of the many ethnic stores, CVS, 7-11, and just about every corner gas station mini-mart. There is no danger of monopoloy! This deal however did provide FTC with an opportunity to justify its existence.
Some enterprising reporter should probe for collusion between Safeway/Albertsons and FTC. The FTC mandated store sales allowed Safeway/Albertson’s to offload its underperforming stores while also ridding themselves of Union issues. Safeway/Albertson’s couldn’t have asked for a better deal!
Can’t help but wonder whether the FTC had some of the corporate wool pulled over their eyes, too. In retrospect, of course, that merger should never have been allowed to happen.
S/A overlords got just what they wanted – at the cost of job-losses that could have been avoided, and the continued existence of another company that started out with good intentions but then proceeded to get screwed six ways from Sunday. S/A didn’t care.
I like Haggen, having shopped there several times. A lot of food costs have been going up these days, and that wasn’t due to them (eggs being a good example). And I’m sorry to be seeing them go, especially in such a terrible way.
As to S/A, I for one would be loathe to set foot in any of their stores again…
Seems like there was a simple “We know best” attitude at Haggen; put up a sign and they’ll buy anything. But food shopping has changed.
Fewer people cooking. If they work they’ve switched to fast, or junk, or fast casual. I see a lot of retired, and moms with kids (presumably stay at homes) and ethnic folk at Sprouts who still know how to cook and these people can tell you that prices on wholesome foods have risen steeply. Not long ago I could get the night’s meal in, with alcohol, at around $20. Now, maybe a year later, I pay close to $30. So it’s tempting to get the taco and a beer and call it a meal because that saves money. Supermarkets near me appear empty.
On a whole different subject… the many local stores now occupied by Haggen could be a fantastic opportunity for the city to step in and do deals to establish small produce and specialty shops combined with affordable housing. The parking lots are big enough in many cases to support farmers’ markets. That arrangement promotes walkability and keeps neighborhoods friendly. Remodeling of the sites would employ people paid well enough they’d return to shop.
Some of the sites Haggen is sitting on might be opportunities for local transit centers as well. How ’bout using some as new branch libraries, or satellite government services centers where bills could be paid?
We’re in the habit of sticking with old models, and we’re stuck in old out-moded pathways as a result. Why is imagination in planning condemned to simply follow the rule that “private industry does everything better?” We’re starting to see advanced capitalism fail at the provision of essentials: fuel, energy, food and water.
The simple fact is, Haggen sucked. They were supposed to be the cross between a regular grocery chain and a Whole Foods/Bristol Farms type of store. They were neither. Their selection was sub par with a regular grocery store yet WAY over priced. The few times I went in one it was nearly empty. I’m amazed it even lasted this long. People go in to a Whole Foods (or even Sprouts) expecting to pay more than Ralphs or Von’s. Going in to Haggen’s which had the selection of a Food 4 Less but the prices of an actual high end chain is what did them in. I really cant believe corporate offices thought this would work. Not only were they greedy, they sucked at being greedy.
Mr. Skull, I agree with everything you’ve written about Haggen, but disagree about Sprouts. I find their prices for produce and bulk items always less than the majors.
Take it from someone who worked for haggens. Even though most of us got jobs back at vons and albertsons we lost alot. Wages some of us our management jobs while others our full time status that we worked very hard to get. We drive farther to work while others get lousy work shifts. I really hope haggens get sued for every penny they have and lose everything. Every store in the end. And even that wont be enough for what they did to over 10 thousand workers and how they ruined our lives