In December, 18-store Pacific Northwest grocery chain Haggen entered into an agreement to acquire 146 Albertson’s and Safeway stores as part of the divestment process brought on by the merger of those two chains.

Haggen subsequently announced it would expand its relationship with its current produce supplier, Charlie’s Produce in Seattle, to be the primary supplier of all 164 stores, which are located in Washington, Oregon, California, Arizona and Nevada.

Haggen entered into a deal to expand from an 18-store chain to one with 164 stores. Charlie’s Produce, the chain’s primary produce supplier, will open a division in Southern California to service the newly acquired stores in California, Arizona and Nevada.Charlie’s Produce is a full-service produce company, supplying restaurants, grocery stores, institutions, wholesalers and the marine industry with a full range of conventional, organic and specialty produce, floral items and a wide assortment of fresh-cut produce. The Seattle-based company has distribution centers in Seattle and Spokane, WA; Portland, OR; Anchorage and Dutch Harbor, AK.

In a joint press statement released by Haggen and Charlie’s, the companies announced that once the acquisition is approved and completed (expected by the end of January), Charlie’s Produce will open a division in Southern California to service the 104 newly acquired stores in California, Arizona and Nevada.

The Produce News has learned that Charlie’s is in negotiations with the AFS Warehouse owners in Irwindale, CA, to share that facility, which currently houses Westlake Produce and a commercial cold storage and warehousing facility operated by a separate management. The facility previously served as headquarters and distribution center for the former Hughes Markets chain.

In the statement, Charlie’s Produce said it will serve the additional 22 acquired stores in Washington from its Seattle facility, and the Portland distribution center will service the 20 new Oregon stores.

With this acquisition, which remains subject to FTC approval, Haggen will expand from 18 stores to 164 stores; from 2,000 employees to more than 10,000 employees; and from a Pacific Northwest company with locations in Oregon and Washington to a major regional grocery chain with locations in Washington, Oregon, California, Nevada and Arizona.

“With this pivotal acquisition, we will have the opportunity to introduce many more customers to the Haggen experience. Our Pacific Northwest grocery store chain has been committed to local sourcing, investing in the communities we serve, and providing genuine service and homemade quality since it was founded in 1933,” John Caple, chairman of the Haggen board of directors and partner at Comvest Partners, a private investment firm that owns the majority of shares of Haggen, said in the statement. “We will continue our focus on sourcing and investing locally even with this exciting expansion.”

The company will be led by John Clougher and Bill Shaner. Clougher, chief executive officer of the Pacific Northwest, will have primary responsibility for the northern division of Washington and Oregon, while Shaner, CEO of the Pacific Southwest, will have primary responsibility for the southern division of California, Nevada and Arizona.

After the close of the transaction in early 2015, Haggen announced that it will convert all of the acquired Albertson’s and Safeway stores to the Haggen banner in several phases during the first half of 2015.

In a separate press release, Charlie’s Produce co-founders Charlie Billow and Ray Bowen stated, “This is a very exciting time for Charlie’s as we expand our geographic footprint beyond the Pacific Northwest and into the Southwest. The partnership is a testament to the strength of our relationship with Haggen.”

Charlie’s Produce has been the primary produce supplier for Haggen for almost three decades.

Longtime retail produce executive and current consultant Dick Spezzano of Spezzano Consulting Service said he cannot recall a retail expansion of this magnitude in his career. While large chains have acquired a similar number of stores in quick fashion, he believes a retailer getting nine times larger in the matter of a month is unprecedented.

“It will be a Herculean task,” he said.

From an operational standpoint, Spezzano said Haggen is partnering with some very good suppliers, including Charlie’s Produce for produce, as well as Supervalu and Unified Grocers for other grocery items. He believes those supply companies, which have experience with much larger operations, will be able to handle the transition in a very professional manner.

Spezzano said a greater concern is the ability of Haggen to ramp up its management staff over the next three weeks. He estimated that the company will now have an additional five districts, meaning it needs five new district managers, five new district supervisors, five new produce supervisors, five new meat supervisors, and on and on.

“There are people out there from Albertson’s and Safeway available that certainly will be looked at, but it’s going to be difficult to put all that in place in such a short time,” said Spezzano.

However, he said Haggen is a well-managed company and no doubt has been planning for this for quite some time.

Spezzano also is concerned about the ability of the Southern California market to absorb another major retail banner. In fact, he does not believe there is room for four successful major supermarkets in Southern California.

Prior to the Albertson’s-Safeway merger, there were four: Ralphs, Stater Bros., Albertson’s and Vons (owned by Safeway). He said that everyone assumed that after the divestiture there would be three. “Now there still will be four.”

Over the past decade, Spezzano, who long was a retail produce executive in Southern California, said the major chains have lost market share and store units to smaller independents in Southern California, and he is skeptical that that trend can be reversed.

Spezzano said that in the long run there will be losers and winners, and he believes Ralphs, operated by Kroger, clearly has the inside lane for success.

The other three may be in dog fight for long-term sustainability in the Southern California region.