The Regional Advantage

Local chains can compete against the big players, but only if they're careful.

By Bill Virgin |   November 2009   |  FROM THE PRINT EDITION

Photo by Hayley Young

George D. Bartell, CEO of Bartell Drugs, has eschewed taking on debt to fuel the company’s growth.

Retailing is a tough business for regional chains in the best of times, having to compete against giant national companies with purchasing power and marketing budgets to match their coast-to-coast networks of stores. With consumers tapped out and finding even window shopping too spendy, these are definitely not the best of times.

So how is it that three family-owned, locally-based chains-Seattle-based Bartell Drugs, Bellingham's Haggen Inc. (which owns the Haggen and Top Food grocery-store brands) and Renton's McLendon Hardware-operating in the toughest economy in decades and in two retailing sectors dominated by huge national companies, are not just surviving but looking at growth opportunities?

Bartell Drugs, for example, plans to open its 57th store by the end of 2009, having added or replaced several locations this year. George D. Bartell, the company's chief executive and grandson of the founder, says the firm is working on deals for next year as well, although he notes there's no specific number the company tries to add every year. "If we have the cash, we'll consider them," he explains.

Haggen, meanwhile, last added a new store when it took over the former Larry's Market in Redmond, although it has been remodeling existing stores (it currently has 33 stores in Washington and Oregon under the two brands). "Financing's a little bit of a challenge now," says Haggen Chairman Dale Henley, but the company is looking at opportunities and has properties under option for development.

"We would love to expand," says Mike McLendon, vice president of the namesake company, which currently operates six stores. "We'd like to be a 10-store chain eventually." For the moment, expansion plans are on hold, but McLendon says the company hires and trains with the expectation the new employees of today will someday be managers at those new stores.

And both Haggen and Bartell say their companies are doing well financially. Asked if Haggen is profitable, Henley says "we're doing fine." Asked the same question, Bartell says, "We're profitable, not as profitable as we'd like to be. We're pretty happy with where we are."

While size can be a competitive disadvantage in retailing, regional retailers try to make the disparity work in their favor.

"We're not as bureaucratic" as the national chains, Henley says. "It's easier to make decisions and to get them done. We're probably a lot closer to our people in the stores. I get out and see them all the time. It's pretty hard to do

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