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June 23, 2017

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Fresh & Easy closures are the latest change in Las Vegas’ turbulent grocery industry

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A Fresh & Easy market near South Decatur Boulevard and West Cactus Avenue on Monday, March 19, 2012, in Las Vegas.

Fresh & Easy employee Krystal Fox knew something was wrong at her store in Green Valley when she noticed the dwindling meat supply.

Also, the place was usually empty. Having six shoppers was considered a “rush day,” Fox said.

Now, her employer is shutting down and Fox is looking for a new job.

Southern Nevada is getting hit by waves of grocery-store closures. In addition to Fresh & Easy reportedly planning to shutter all 14 locations in the area, Haggen is closing its seven outposts. That follows the closures of eight Food 4 Less locations less than a year ago and some Albertsons stores in 2014.

Not everyone in Las Vegas is contracting — Trader Joe’s opened in Downtown Summerlin last year, its fifth location in the valley, and Save-A-Lot debuted a store in August on Charleston Boulevard at Maryland Parkway, with plans for two more in town by early next year.

But the closures, which come amid heightened competition for shoppers, are putting grocery employees out of work and possibly causing painful ripple effects for others.

A grocery store usually is the anchor tenant in a shopping center, and if it shuts down, foot traffic to the plaza drops off, potentially crimping sales for other retailers there. A vacant big-box scares off prospective new tenants, as well, keeping empty storefronts unoccupied and further hurting the plaza’s chances of a turnaround.

Haggen, for instance, opened in Southern Nevada this year in the shells of former Vons and Albertsons locations it had acquired as part of a massive, Western U.S. expansion. Months later, Haggen filed for bankruptcy protection, and now it’s closing stores in Las Vegas and elsewhere.

“It’s sad for the centers,” said real estate broker Liz Clare, a retail specialist with Avison Young.

U.S. retailers have been ramping up competition in the grocery aisles for years, offering discounted food, pricey organic fare, grab-and-go meals and ethnic specialty items. Southern Nevada is no exception; options include Smith’s, Vons, Albertsons, Whole Foods, Sprouts, Costco, WinCo, Glazier’s, Walmart, Walgreens, Target, La Bonita, Cardenas, El Super and 99 Ranch Market.

“It’s a very competitive business with very low (profit) margins, and that means people are going to fail,” said real estate broker Matt Bear, of CBRE Group.

Fresh & Easy failed to attract big volumes of shoppers. It sold prepackaged food, including vegetables and meat, which meant shoppers couldn’t touch or customize what they were buying, Clare said. The grocer also entered Southern Nevada and “expanded way too fast,” perhaps without testing the market, she said.

Moreover, the company didn’t establish a clear identity as, say, a discount or an upscale grocer, Bear said.

“When you walked in, you were really disappointed because it wasn’t really either,” he said.

Click to enlarge photo

The Fresh & Easy grocery store at 600 S. Green Valley Parkway in Henderson is shown Thursday, Oct. 22, 2015.

British grocery powerhouse Tesco brought Fresh & Easy to Nevada, California and Arizona starting in 2007, and grew rapidly from the beginning. But the U.S. economy went into a tailspin the next year, and coupled with the chain’s limited popularity in the three states, the venture flopped, costing the company nearly $2 billion by 2013, according to the Associated Press.

Grocery mogul Ron Burkle’s Yucaipa Cos. acquired Fresh & Easy in 2013. The new owners closed stores and tried new formats, according to reports, but business still slumped.

“It’s so hard to turn around consumer sentiment once they’ve made up their mind,” Bear said.

Fresh & Easy had more than 20 locations in Southern Nevada at one point. It now has 14, according to its website, and reportedly plans to close all 97 of its remaining stores in California, Arizona and Nevada.

A spokesperson did not respond to requests for comment Thursday.

Meanwhile, Haggen ran into problems after a massive expansion soured.

The Bellingham, Wash.-based chain grew overnight from 18 locations and 2,000 employees to 164 stores and more than 10,000 workers.

It did this by acquiring 146 stores from Albertsons and from Vons owner Safeway Inc. Albertsons had inked a deal to buy Safeway for about $9 billion, and to get the Federal Trade Commission’s approval, the companies agreed to sell 168 stores nationally.

Haggen bought most of them, reportedly for $300 million, but business quickly went south.

In July, Haggen said it was laying off employees locally and in California and Arizona; in August, news reports said the company planned to close or sell 27 stores, including in Nevada; and in a 10-day span in September, Haggen sued Albertsons for more than $1 billion in damages, filed for bankruptcy protection and announced that, given its need to slim down and save money, its Pacific Southwest regional CEO had “left the company” amid a corporate consolidation.

Haggen spokeswoman Deborah Pleva said Thursday that all of its Las Vegas area stores will close by the end of November.

An employee at Haggen’s Anthem location — who worked there since the store was an Albertsons — said the news was upsetting.

“They didn’t even give us a chance,” said the employee, who asked to remain anonymous. “You’re just stuck in this nightmare.”

He blamed the stores’ fate on a failure to offer competitive prices.

“They don’t offer any specials,” he said. “You go to Vons and (others) and they always have deals.”

Anthem resident Monique Moulton agreed.

“The prices here are very high,” she said of Haggen. “I didn’t even really see a change in what they offered when it was an Albertsons to now.”

Because of the price difference, Moulton says she only shops at Haggen when it is absolutely necessary and buys all of her meat and dairy products at the Vons down the road.

Since the news came out, the Haggen employee has since found a job at Vons, which he starts Monday, but he said others on the 20-member staff have not been so lucky.

“Staff morale is pretty low,” he said. “They already laid off about 20 employees over the summer.”

Elton Ebarb, a loyal customer of Fresh & Easy, learned of the closing Thursday.

“Oh, my goodness!” he said. “All of them?”

Ebarb has shopped at just about all of the grocery chains in the valley, including Smith’s, Vons and Albertsons. All of them pale in comparison to Fresh & Easy for him.

“It’s the cleanest. It’s the tastiest,” he said. “The employees are also remarkable.”

Fox, who is leaving the grocery industry, is optimistic she’ll find a job eventually but sympathizes with her colleagues, a staff of about 18.

“If I had one word to sum this all up, it would be unfortunate,” she said. “For a lot of us, this is our only job.”

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