Saturday, September 5, 2015
Haggen Sues Albertson's for Antitrust/Sabotage: Next Stop Is Bankruptcy Court
The Haggen saga, or debacle, take your pick, continues. Albertson’s sued Haggen for failure to pay for the purchased inventory in acquired stores,. That was a sure sign Haggen was running out of cash. Haggen suppliers then complained Haggen was not paying its bills. That is a worse sign of impending insolvency. The significance is that suppliers will no longer ship merchandise to the company without payment up front. You can’t sell what you don’t have. You also can’t sell overpriced merchandise in a competitive environment. One refuge is that “Patriotism is the last refuge of scoundrels.” Antitrust is also a last refuge for economic losers. They blame others for their own incompetence. They hope to succeed in court what they failed at in the marketplace. Haggen accused Albertson’s of dirty tricks in the form of false, misleading, and incomplete pricing data” which caused Haggen to overprice the products on the shelf. That does not explain the overpricing at the Vons stores. Discovery will determine which Haggen idiots made the decision to overprice the products. The employees spent 24-36 hours, including overnight, repricing the products on the shelves. Consumers will pay more for perceived value, such as with Apple and Nordstrom’s. They will not pay more for overpriced commodities when alternatives are available. A standard marketing tool when entering a new market is to offer lower prices and specials in the market, build up goodwill, restock with your special products, and then raise prices to a competitive level. Not Haggen! They jacked up prices on staples left over from Alberson’s and Vons. Consumers came and looked, not to return. One and done! Haggen’s weekly ads gave consumers no reason to return. Haggen also claims Albertson’s stocked the shelves with short life perishables. The solution again is obvious, except to the hedge fund managers owning Haggen. Blow it out! Blow it out, and then seek recovery from Albertson’s. Not Haggen! They jacked the prices up on the short life perishables. The Haggen leaders were also incompetent in drafting the purchase agreements. They could easily have provided for that highly foreseeable contingency. Haggen also complains that Albertson’s engaged in highly competitive marketing with its remaining stores, such as dollar off coupons and discounted prices (sales). That’s what Haggen should have done in entering the market. Albertson’s simply engaged in its standard marketing practices, which we have periodically witnessed. Haggen will be a business school case study in both how to do everything wrong in entering a new market, and to do so in record time. The incompetent management is still running Haggen. The only remaining question is: Chapter 11? Chapter 7? Chapter 11 is voluntary reorganization. Chapter 7 is liquidation. There’s not much to reorganize.