When Haggen Inc.’s TOP Food & Drug stores first began opening in the 1980s, the focus of the new spinoff brand was right there in its name: TOP, Tough On Prices.
But in the decades since, the grocery industry has evolved, new competitors have arrived and a retail company with a long history in the Pacific Northwest—Haggen celebrated its 80th anniversary last month; the company was founded in Bellingham in 1933—has decided its TOP “tough” strategy is in need of change.
Eight TOP Food stores have closed or are in the process of closing in 2013.
The company continues to move forward with its “Northwest Fresh” rebrand initiative, first started in 2011. The effort will eventually place all Haggen stores under one, singular Northwest Fresh motif.
Clement Stevens, Haggen’s senior vice president of merchandising and a member of its three-person leadership team, spoke with The Bellingham Business Journal earlier this fall about the company’s future.
On the recent closures of the company’s TOP Food & Drug stores:
The closures have been driven by multiple factors, Stevens said, including greater competition from other bargain-brand retailers and changes in customers’ shopping preference.
TOP Food & Drug, which was first introduced and developed in the 1980s, focused on bargain “price brand” products, he said. Today, Wal-Mart and WinCo Foods have emerged as very tough competitors in that arena, with what Stevens called “a very engineered approach to costs and distribution.”
While it is tempting for the company to focus on meeting that level of competition, Stevens said current efforts are to focus on Haggen’s quality and customer service, which have been hallmarks of the company’s mission for decades—hence the end of the TOP brand.
The closures are a culmination of work from various elements within the Haggen company, including landowners, stakeholders and members of the firm’s board of directors, Stevens said. To remain a competitive grocery outlet, Haggen needs to position itself for both long-term growth and long-term stability, he added.
“It has been, over this past year, very difficult to close these stores,” Stevens said. “[The employees there] are members of our team. But as you look at running our business five years from now, these are opportunities we probably should have dealt with a long time ago.”
On the remaining TOP stores:
TOP Food stores remain viable in Woodinville, Puyallup and Edmonds. Stevens said the markets in those cities have are more stable for the TOP brand, and they have built loyal customers bases.
The three stores that remain will each be renovated and reopened as Haggen Northwest Fresh stores over the next two years, Stevens said, as the company moves to complete its rebranding initiative.
On markets where Haggen sees success:
Stevens said Haggen stores’ success is not so much based on geographic location. Instead, success depends a lot on how much competition stores face.
It also has a lot to do with the customers they direct their marketing efforts toward, as well as the amount of available commercial real-estate space in their surrounding areas, which presents opportunities for new competitors to open stores, Stevens said.
Haggen’s five Whatcom County stores, which have all been remodeled under the Northwest Fresh theme, are solid performers, and Stevens said Whatcom is “a strategic location for the company.”
The company is currently focusing its remodeling efforts in Skagit County, including locations in Burlington and Mount Vernon, he said.
On the company’s deadline for its Northwest Fresh rebranding:
So far, 12 stores have received the rebranding treatment, and the completion of the project will be a major focus at Haggen in 2014, Stevens said.
Due to the capital needed for the rebrands, ironclad deadlines can be difficult to predict, he added.
“I know that we’re focused on next year,” Stevens said. “I would like to see it [finished] earlier than the end of the year. But I’m not sure how exactly that will pan out.”
On the new WinCo store in Bellingham:
Haggen’s leadership team had planned for WinCo opening its Bellingham location for several years. It was not a surprise, Stevens said. WinCo is a competitor with Haggen in a lot of its markets.
They invested a lot of time into market impact and analysis of the WinCo addition, he said. Stevens believes Haggen has set themselves up well to face off with WinCo in Bellingham, though he admits it is a difficult competitor to have.
“They are a great retailer. I’ve watched them over the years as they’ve grown,” Stevens said. “They are very focused on cost, and they own an area of the customer base that we’re not always capable of winning.”
Evan Marczynski, staff reporter for The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or firstname.lastname@example.org.