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Just weeks after Bellingham, Washington-based Haggen Inc. closed its Tacoma store, which itself was the third store closure in six months, the company said yesterday that it will close its stores in Bellevue and Shoreline, Washington. In the official notification to vendors, the company said that it will "continue to close a number of underperforming locations in order to improve Haggen’s overall business performance and strengthen our position in an increasingly competitive market."

The move will leave Haggen with 23 stores.

The three earlier closures had been of Top Food & Drug stores, but these new closures are of Haggen Northwest Fresh formats. Northwest Fresh was a concept that the company has been counting on to revitalize its image in the marketplace, and the company said yesterday that "even in the shadow of these difficult announcements, we will continue to transform many of our TOP Food & Drug stores into Haggen Northwest Fresh stores, and are examining potential new store locations."

In the letter to vendors, Clement Stevens, Haggen's co-president and senior vice president of merchandising, said that one of the goals is to unite all the Haggen stores under the Northwest Fresh banner.

"Going forward," Stevens wrote, "we will continually engage in an ongoing, thoughtful and thorough examination of all of our stores and identify opportunities to strengthen our overall business. While a difficult decision, closing underperforming stores allows our team and our supplier partners to focus on building a stronger and more viable store base. It also allows us to allocate resources against already-planned future store remodels and other growth initiatives over the next year. The transformation that is underway is part of the evolution of any healthy business. We are confident it will drive Haggen’s growth and success in the years to come."

The Seattle Times writes that Stevens says that the company tried to turn the closing units being around, but to no avail. "Instead of closing these stores when they were struggling as TOP branded stores," he says, "we decided to do all we could do to try and turn these stores around. We invested in both remodeling and rebranding, dedicating our collective resources to give these locations one last chance. Unfortunately, despite our best efforts, we were unable to turn these stores around."

Haggen reportedly has another Top store about to be converted to the Northwest Fresh format, in Olympia, Washington; the grand reopening is scheduled for mid-August.

It has been a turbulent few years for Haggen, which as an independent has had to compete in a market that it concedes is highly competitive. Last December, Clarence Gabriel stepped down as president/CEO of Haggen Inc. No reason was given for the departure, except to say that Gabriel - a former PepsiCo and Albertsons executive - would be pursuing other opportunities. Gabriel took the job in February 2011, succeeding Jim Donald, the former Starbucks and Pathmark CEO who was brought in to run Haggen in October 2009 and get the company into shape so that a majority ownership in the company could be sold to Comvest, a Florida private equity group. Haggen then created a new Office of the President, and the company has been run by three people: Clement Stevens, senior vice president of merchandising; John Turley, chief operating officer, and Ron Stevens (no relation to Clement Stevens), the chief financial officer and chief information officer.
KC's View:
Tough times at Haggen. I hope, for the sake of the company and the good and hard-working people employed there, that this kind of radical surgery can save the patient. I like the Northwest Fresh stores that I've seen during my Pacific Northwest sojourn, though I have no idea if they are quite enough to provide Haggen with the differential advantage it needs to survive. You can't just compete some of the time ... you have to be perceived by the consumer as being competitive every day, and if you get off track, the consumer knows it, and remembers, and goes elsewhere.

These closures may help. But they also may create the wrong kind of momentum. We'll see.