Southern California’s $44 billion in annual grocery sales makes
it the largest U.S. grocery market by far. Above, produce clerk
Veronica Padilla stocks apples at the Ralphs grocery store in
downtown Los Angeles. (Wally Skalij / Los Angeles Times)
The bold Southern California expansion by tiny grocery Haggen
Inc., and the company's abrupt bankruptcy filing only six months
after opening its first store in the region, came as little
surprise to Jack Brown.
Brown is the longtime chief executive of the 168-store Stater
Bros. chain, based in San Bernardino, and he's seen the rise and
fall of many supermarkets since his entry into the business as a
teenage box boy. Now 77, Brown even keeps a list of the chains that
have disappeared — once-familiar names such as Lucky, Alpha Beta
and Mayfair.
"I have seen everything in the food industry come and go in
Southern California," he said.
But as the Haggen bankruptcy filing last week illustrated, Brown
and the rest of the industry are seeing a fresh flurry of activity
among rival stores that has roiled a Southern California grocery
business that already is "arguably the most competitive in the
country," said Ron Johnston, who publishes the industry-tracking
Shelby Report.
In addition to Haggen, Fresh & Easy closed 30 stores in
Southern California after an ill-fated effort in the region.
Stalwart grocers Albertsons and Safeway, which also owned Vons and
Pavilions, merged into one company to better compete against market
leader Ralphs and others.
Discount food chains Aldi and Grocery Outlet Bargain Market plan
new stores in the area. Whole Foods intends to open the first of
its value-oriented stores, called 365, in Los Angeles next
year.
Why do new entrants keep arriving despite the stiff competition
and the troubles experienced by Haggen and others? Because Southern
California's $44 billion in annual grocery sales makes it the
largest U.S. grocery market by far, and that's a near-irresistible
lure, Johnston said.
The market's enormous size also is why big-box discount
retailers such as Wal-Mart Stores Inc., Target Corp. and Costco
Wholesale Corp. have expanded their grocery...
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