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Analyst: Haggen Supermarkets Doomed The Moment They Came To LV

haggen_storefront.jpg

Only a few months into opening Haggen supermarkets are closing in Las Vegas.

Everyone goes to the grocery store. So when stores close, everyone notices.

Haggen supermarket chain purchased seven Vons and Albertson’s stores in May and opened in June. They also bought several dozen more in California and Arizona. Just three months later, the stores are closing.

What happened?

Supermarket analyst David J. Livingston, of DJL Supermarket Location Research, told KNPR's State of Nevada the "mediocre" chain never had a chance in Las Vegas.

"It seems like you couldn't have done it any worse unless you did it on purpose," he said. 

Livingston was just surprised it took only a few months rather than a year for the supermarkets to fail.

"No one expected them to succeed," he said, "They didn't have expertise in operating stores outside their market area."

According to Livingstone, it usually takes nine months to a year for a company to fully research a new market but that was not the case.

"I think one of the problems is the company did not do any due diligence on pricing prior to opening the stores," he said.

Support comes from

Employees said Albertson's increased prices before selling to Haggen and the company is suing the grocery store chain for $1 billion, claiming it was sabotaged.

Livingstone believes Albertson's sold to Haggen because it wasn't going to be a strong competitor.

"Obviously, Albertson's wanted to sell to a company that was most likely going to fail," he said, "You definitely don't want to sell to a company that is going to compete very hard with you."

Livingstone said he doesn't believe one chain will buy all the stores Haggen is getting rid of, but thinks the stores in profitable areas will get snatched up by other operators, including Kroger, which runs the Smith's stores in Nevada, Whole Foods, Wal-Mart or maybe companies from California.

Guests

David Livingston, owner, DJL Research

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