Haggen expands in Skagit County with major store in Burlington

New supermarket expands range of consumer shopping

by R.W. Clever

It was probably inevitable that the Haggen would choose to put a store in Burlington, the retail center of Skagit County. A wide range of shopping choices already existed but not for the Haggen type of operation and service.

The opening of Haggen Food and Pharmacy’s 63,000-square-foot store on 28 acres near Interstate 5 and Highway 20 in January rounded out the city’s grocery shopping options from discount to high end. It also provided a quality retail anchor for the north end of bustling Burlington Boulevard.

The Burlington Haggen is the 28th jewel in the crown of one of the Northwest’s most successful privately held companies, with two more stores set to open later this year. Dale Henley, chief executive officer of the expanding chain, expects company-wide sales to exceed $700 million this year.

After the grinding court battles over the building of the Haggen store on Division Street in Mount Vernon, which opened in late 1999, the road to completion of the Burlington store was relatively trouble-free.

Margaret Fleek, Burlington’s city planner, said that, since the property Haggen sought to build on was already fully zoned for commercial development, there were few obstacles to the project.

She said Haggen was a welcome addition to the city’s tax base. Because of Burlington’s extensive retail development, which includes Cascade Mall, Costco and the outlet malls, Fleek said that the city has not raised sales taxes in 10 years.

Haggen’s entry into Burlington is paying off in other ways. Once negotiations with nearby property owners and the state Department of Transportation are completed, there will be a road linking Highway 20 to Cascade Mall between Interstate 5 and the west side of the Haggen property. Fleek said that that link would do much to relieve congestion on Burlington Boulevard.

Then there is the economic impact, both from the regional draw of the store as well as its payroll of 165 employees, almost all of them from Skagit County, according to Henley.

With the store open just over four months, Henley said it was difficult to tell what, if any, impact it might have on competitors along Burlington Boulevard. He said that it could increase business for everyone.

“We know that this store has not had any apparent impact on our Mount Vernon store customer base,” said Henley. “Mount Vernon is viewed as more of a neighborhood store while we see Burlington as a regional store.”

Henley, descending from a pioneering Skagit Valley family, seems particularly proud of having two Haggen stores in his old back yard. He graduated from Mount Vernon High School in 1963 and received a degree in accounting at Western Washington State University. When managing partner of an accounting firm, which had the Haggen company among its clients, he was hired away by Haggen. In 1996, Henley became the company’s chief executive officer.

Henley has guided the Haggen growth over the past several years.

Don Haggen, co-owner of the company with his brother, Rick, credits Henley with much of the growth.

“We were doing about $48 million (per year) when he came here,” said Haggen of Henley in a recent interview.

Over time, Haggen stores have increased sales to last year’s $665 million gross.

The Haggen growth has been deliberate, but solid over the past decade, said Henley. He added that one of the advantages of working for a privately owned company is the ability to make decisions and do long-range planning without worrying about the daily gyrations of the stock market.

In overseeing the development of both the Mount Vernon and Burlington stores, Henley was exposed to the best and the worst that can happen in getting a new store launched.

In contrast to the relatively smooth regulatory and permitting process for the Burlington store, the Mount Vernon store had to weather some outspoken neighborhood opposition and an adverse decision of the State Supreme Court reversing a city hearing examiner’s permit approval.

Ultimately, the Mount Vernon store was opened and the dire predictions by opponents about traffic congestion along Division Street near the store never materialized.

But in their physical appearance and service culture, both stores are pure Haggen – housing banking, video rental, delicatessen, bakery, pharmacy, and live plant sales all under the same roof. Then there’s dry cleaning, instant hot meals to go, floral delivery and the café, a natural food section, parcel pickup and sushi to go.

And the service philosophy remains the same – take care of the customer.

“Everybody is very competitive price wise,” said Henley. “Our service culture is the major difference. We try to be a bright, fun place for the shopper to be.”

The key ingredient is the motivated employee. Shoppers are greeted by cheery, smiling clerks, helpful, but not pushy, meat counter personnel and the sumptuous smells from a well-stocked deli and prize-winning in-store bakery.

On a walking tour of the Burlington store, Henley stopped to test out one of the newest bakery offerings, a sweet, crusty pistachio muffin. Heidi Longnecker, one of the bakery staff, vouched for the muffin’s quality as a few crumbs rolled off of Henley’s chin.

“Oh, that is good,” he enthuses, offering his guests a bite.

As Henley made his way through the store, he chatted amiably with several employees. He shared a laugh with Ruth Steinmetz, a meat department employee and Salvadoran immigrant who has worked for Haggen’s stores for three years.

“This is one of the best places to work,” said Steinmetz to a visitor. “I’ve had better opportunities to advance here than where I worked before. When people are proud of what they do it makes a big difference.”

The sentiment was echoed by Tammy Massingale, who said that Haggen’s gave her a chance to be a meat cutter when companies were reluctant to put a woman in that job. A former QFC employee, Massingale said she began looking for another job after that chain was purchased by Kroger.

“I took a small pay cut when I came here, but this is a much better place to work,” said Massingale.

Haggen begins by selecting employees that it thinks will buy into its service culture. Those employees are then given an immediate orientation that introduces them to the basics of the Haggen service philosophy. Later, employees are given a more intensive program of customer care.

The customer first encounters these converts to the Haggen way as they come through the main entrance. If one looks uncertain as to which way to turn upon entry, a smiling young employee steps forward to assist.

Beginning with the deli section and the free samples proffered by counter personnel, a customer can sample his way through the cheese department, the bakery section and occasionally find a sample tray of smoked meats en route to the check stand.

Clerks make eye contact, smile and chat amiably, perhaps share a little joke.

The Burlington store’s 165 jobs came to town at a time when the economy was still on a downward cycle. There had been layoffs at several major companies along the Interstate 5 corridor; with the most serious hit at Boeing’s Everett plant. During the hiring process, store management sifted through more than 800 applications.

Another critical ingredient to the Haggen success formula is to build their stores from scratch rather than purchase stores or properties given up by previous grocery outlets. Marketing studies are undertaken. Locations are thoroughly researched before the Haggen real estate branch, Briar Development, moves in to purchase the property, sometimes through an option pending final permit approval.

The design and layout of the stores reflects the Haggen philosophy of customer comfort and service. Aisles, for example, are wide enough to allow two carts to pass with customers on either side. Lighting is soft, without the neon glare of some stores.

Colors are somewhat muted, except for the bulk candy section where the kaleidoscope of bright red, greens, blues and yellow candy products in clear display tubes which Henley points to with delight.

Although the Haggen stores are generally considered to be high end for the grocery business, Henley said pricing is kept competitive with other grocers. The Haggen green card is one bargain tool used to discount featured items on a given day. Through customer use of the card, Haggen can track purchases, price level acceptance and more.

The company has also had considerable success marketing its own food label.

Haggen’s brand adorns everything from soup to cooking oil; paper towels to toilet paper, and gives customers a reasonable price break from national brands. Henley explains that the company is able to leverage its purchasing power as a member of the Topco co-op, based in Chicago.

In addition to its purchasing function, Topco constantly tests the products it acquires for quality.

The Haggen brothers stepped away from day-to-day management of the company, leaving the responsibility in the hands of Henley, who with Don and Rick Haggen comprise the entire board of directors of Haggen Inc.

Henley likes the idea of Haggen continuing as a private, family-owned business and doubts if the company would ever go public.

“Even though we’re large by Washington state standards, it’s hard to make long-range decisions as a public company,” he said. “This way we just work on our niche, which is taking care of our customers.”