Raley's to buy Arizona chain Bashas'

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Re: Raley's to buy Arizona chain Bashas'

Post by Romr123 »

Exactly--my aunt/uncle shop at Bashas' in Sedona and really like it. They moved down from Chicago where they lived equidistant from Jewel/Dominicks. We visited them in 2019 and noticed their excellent bakery--they had some amazing paczkis during the season.

Stater Bros could convert one or two stores in the Coachella Valley to an upscale format and make bank--they have an amazing density of stores.
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Re: Raley's to buy Arizona chain Bashas'

Post by bryceleinan »

retailfanmitchell019 wrote: October 4th, 2021, 10:38 am
ClownLoach wrote: October 4th, 2021, 9:42 am Could this just be the precursor for another transaction?

Seems the only vision current leadership at Raley's had was to try to establish ONE, which if done correctly could have been a valuable asset as an operating model. Obviously we know that hasn't worked out well. Clearly the reason for ONE was to raise the value of the company overall to prospective buyers who could have helped fund the conversion of the chain to the model and profited in the process. ONE is a precursor of a future sellout.

Now they're trying to force growth through acquisition, and being a family owned company Bashas leaped over Albertsons dollars to take what might be pennies from what appears to be another credible independent company.

The red flag to me is the fact that the Bashas senior leadership wasn't invited along for the ride. Even if they didn't want to be a part of it long term usually the previous leadership gets a one or two year contract which smooths the transition on these type of deals. Again doesn't appear to be the case here based on that journal article.

That leads me to believe that this is a half hearted attempt to consolidate a few regional players only to A) shed valuable assets along the way for top dollar (Maybe the Good Food Holdings folks take AJ's off their hands with the deep pockets of their new foreign owners) and B) sell the now larger chain, likely after shedding unprofitable locations, to a bigger fish. The real question is how exactly is the transaction occurring? If the answer is an asset sale of the profitable stores and intellectual property to Raley's then a Chapter 7 of the Bashas shell company still containing the unprofitable or problematic stores - then it is likely that "get bigger fast and sell" scheme. And if the stores that go away in a Chapter 7 resemble what would be overlapping stores in a future merger - either stores across from a Safeway or a Fry's - that will further validate what the real intentions are.

I just hope the Stater Bros. family doesn't want to sell. I would hate to see something like a new "Southwest Grocers Inc." established only to see it go either to a private equity firm that jacks the prices through the roof to fund debt servicing that enables the acquisition, or to just be sold to Kroger or Albertsons later.
I can definitely imagine AJ's merging with Bristol Farms. The formats are very similar. Or maybe they can merge with Gelson's.
I can imagine Raley's will want to buy Stater in the next few years. In SoCal, the upper-middle-class Raley's format would do well on the Central Coast, South OC, and North County in San Diego (around Carlsbad/Encinitas).
Albertsons buying Stater would create significant overlap in the IE, Orange County, and Northern San Diego. I doubt they would do that. Neither would Kroger.
I agree that Kroger and Albertsons can't grow any more in California without running into antitrust issues. I've never been in a Stater, so not sure how it is compared to Raley's. I've only been in one Gelson's (Laguna Beach) - it seemed very similar to a "Snob Hill" that Raley's runs. Another chain worth considering is Save Mart - they couldn't merge with Raley's due to the overlap, don't know how they would fit with another competitor.
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Re: Raley's to buy Arizona chain Bashas'

Post by ClownLoach »

bryceleinan wrote: October 4th, 2021, 8:09 pm
retailfanmitchell019 wrote: October 4th, 2021, 10:38 am
ClownLoach wrote: October 4th, 2021, 9:42 am Could this just be the precursor for another transaction?

Seems the only vision current leadership at Raley's had was to try to establish ONE, which if done correctly could have been a valuable asset as an operating model. Obviously we know that hasn't worked out well. Clearly the reason for ONE was to raise the value of the company overall to prospective buyers who could have helped fund the conversion of the chain to the model and profited in the process. ONE is a precursor of a future sellout.

Now they're trying to force growth through acquisition, and being a family owned company Bashas leaped over Albertsons dollars to take what might be pennies from what appears to be another credible independent company.

The red flag to me is the fact that the Bashas senior leadership wasn't invited along for the ride. Even if they didn't want to be a part of it long term usually the previous leadership gets a one or two year contract which smooths the transition on these type of deals. Again doesn't appear to be the case here based on that journal article.

That leads me to believe that this is a half hearted attempt to consolidate a few regional players only to A) shed valuable assets along the way for top dollar (Maybe the Good Food Holdings folks take AJ's off their hands with the deep pockets of their new foreign owners) and B) sell the now larger chain, likely after shedding unprofitable locations, to a bigger fish. The real question is how exactly is the transaction occurring? If the answer is an asset sale of the profitable stores and intellectual property to Raley's then a Chapter 7 of the Bashas shell company still containing the unprofitable or problematic stores - then it is likely that "get bigger fast and sell" scheme. And if the stores that go away in a Chapter 7 resemble what would be overlapping stores in a future merger - either stores across from a Safeway or a Fry's - that will further validate what the real intentions are.

I just hope the Stater Bros. family doesn't want to sell. I would hate to see something like a new "Southwest Grocers Inc." established only to see it go either to a private equity firm that jacks the prices through the roof to fund debt servicing that enables the acquisition, or to just be sold to Kroger or Albertsons later.
I can definitely imagine AJ's merging with Bristol Farms. The formats are very similar. Or maybe they can merge with Gelson's.
I can imagine Raley's will want to buy Stater in the next few years. In SoCal, the upper-middle-class Raley's format would do well on the Central Coast, South OC, and North County in San Diego (around Carlsbad/Encinitas).
Albertsons buying Stater would create significant overlap in the IE, Orange County, and Northern San Diego. I doubt they would do that. Neither would Kroger.
I agree that Kroger and Albertsons can't grow any more in California without running into antitrust issues. I've never been in a Stater, so not sure how it is compared to Raley's. I've only been in one Gelson's (Laguna Beach) - it seemed very similar to a "Snob Hill" that Raley's runs. Another chain worth considering is Save Mart - they couldn't merge with Raley's due to the overlap, don't know how they would fit with another competitor.
The Laguna Beach store is a Gelson's in name only that is assorted and operated more or less like a convenience store for the Montage Resort across the street. It's a lightly remodeled Haggen that underperformed as Albertsons before. It was a Lucky before that. The only Nob Hill I have ever seen was in Salinas near Monterey. Much nicer store than that terrible Laguna Gelson's which is probably only 20K Sq ft and still looks like a Lucky store with Gelson's signage.

I forgot about Nob Hill concept changes. Before ONE the Raleys folks were trying a new version called Nob Hill Trading Co. that was supposed to have more upscale perimeter and a focus on more organics. Basically ONE without censoring 'bad for you ingredients'. Wonder what happened to that?

Stater is like a downscale Raleys but they are very capable of adjusting to their neighborhood in newer stores. They used to be a lower priced operator until the last couple of years, now it seems they have less "deals" and more hoops to jump through such as requirements to buy 3 units when something is 3 for $5 (if you only buy one or two you pay full price now), or their terrible online coupon deal system which is like a version of Albertsons Just4You that was designed for the age before smartphones. Generally their stores are clean and well stocked with massive full service meat departments (although most top out at "choice" with few "prime" cuts available). They do have a handful of very old stores though that are tired, small and full of malodors.

As the market share for Ralphs and Albertsons/Vons continues to shrink especially in the Inland Empire where Stater dominates I think there is less and less risk of antitrust action. They would have to sell some overlapping stores in OC although not many. If a combined Raleys - Stater - Bashas were to sell to Kroger I think there would be more risk of overlap in Arizona than anywhere else. And it could spark some reinvestment in the Ralphs division. If antitrust came up in AZ they could unload the AJs stores to Good Food (Bristol Farms) and maybe move the Food City to a Hispanic operator like Northgate.

In fact - I wonder if Kroger came knocking on Raleys door already with a lowball offer only to be turned away? Maybe Raleys was insulted by a proposed price and that is what set them on this campaign to expand into Arizona through Bashas?

I just hope that we don't give them any ideas about Stater Bros as I would really like to see them stay independent.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

Let's let Raleys digest Bashas first and see how that goes before getting the idea they could merge Stater into this fold too.

Stater - really needs to stay independent. For a variety of reasons. But it would serve everyone- customers, employees, communities- best. If whoever controls Stater (I don't even know who controls Stater...) decides they want out, I'd love to see them go employee owned. The bigger concern with a Stater sale would be store closures/stores sold to non-union operators and I think there would be a big fight in a sale to a union operator to keep as many stores with them as possible vs. divesting off to non-union operators or shaky buyers who offer to maintain the union- I think Haggen in CA will not soon be forgotten. That would also be a really sad fate for many Stater employees who have had a good employment path with Stater as it has been much more stable than the other chains.

Nob Hill Trading Co. seems to have gone the way of many other good Raleys concepts over the years. It is like they got bored with it after a few months and that was the last anyone heard of it. Nob Hill does not strike me as a high performing block of stores in general for some reason (they have closed quite a few of those stores) and it confuses me why that is the case. Nob Hill is just a smaller Raleys in all but name. There is nothing special or unique to Nob Hill.

Those Kroger-Raleys rumors have been going on for the last 20 years and it has never happened. Raleys has expressed an interest in growth over the years. Had the Las Vegas expansion worked out for them I suspect they would have been over 200 stores 15 years ago (then who knows what would have happened to them in 2008). Previously they have talked expansion into Utah and also the Pacific Northwest and I think they have been wanting it for a long time but could never come to a deal. I really thought they'd buy one of the natural focused chains out in OR or WA especially with the ONE thing but then it seems other players got those.

With Bashas they obviously found a willing seller but I am just a little surprised as Bashas reminds me of a big version of Scolaris which in my view has been a questionable at best acquisition for Raleys and has dragged their brand down by having it on those converted stores (except the one in Reno-Caughlin where they did a full remodel but even that one doesn't quite feel up to the level of the usual Raleys).

I am going to be very interested to see the integration of Bashas into Raleys. They are quite different.
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Re: Raley's to buy Arizona chain Bashas'

Post by veteran+ »

Romr123 wrote: October 4th, 2021, 5:56 pm Exactly--my aunt/uncle shop at Bashas' in Sedona and really like it. They moved down from Chicago where they lived equidistant from Jewel/Dominicks. We visited them in 2019 and noticed their excellent bakery--they had some amazing paczkis during the season.

Stater Bros could convert one or two stores in the Coachella Valley to an upscale format and make bank--they have an amazing density of stores.
I do not believe that Stater Bros is fit for that kind of operation. They do what they do proficiently for their specific demographic. They indeed have "upscaled" a bit recently.

If Stater Bros purchased Jensens (surprised that Jensens is still around) and did a knock out job, then perhaps it would make sense.

The Coachella Valley has great affluence but those communities are very small and not contiguous. Location must be extremely precise for an upscale store to thrive and also deal with dramatic retail seasonal changes.
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

bryceleinan wrote: October 4th, 2021, 8:09 pm
I agree that Kroger and Albertsons can't grow any more in California without running into antitrust issues. I've never been in a Stater, so not sure how it is compared to Raley's. I've only been in one Gelson's (Laguna Beach) - it seemed very similar to a "Snob Hill" that Raley's runs. Another chain worth considering is Save Mart - they couldn't merge with Raley's due to the overlap, don't know how they would fit with another competitor.
I don't think there would be any antitrust issues. Kroger has zero overlap with Raley's, other than FoodsCo which has something like 20 stores spread thin over an area serving over 10 million people. Same with SaveMart. Stater Bros. would of course have much more overlap and be harder for either Kroger or Albertsons to acquire, but the government hasn't shown much inclination to block mergers recently.

I got curious about who owns Stater, but all I can find is that it was controlled by Jack Brown until he passed away in 2016.

I really hope none of these chains get acquired by the big two. Competition is sorely needed and California is one of the few states with multiple regional supermarket chains.
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Re: Raley's to buy Arizona chain Bashas'

Post by CalItalian »

HCal wrote: October 5th, 2021, 2:58 pm
bryceleinan wrote: October 4th, 2021, 8:09 pm
I agree that Kroger and Albertsons can't grow any more in California without running into antitrust issues. I've never been in a Stater, so not sure how it is compared to Raley's. I've only been in one Gelson's (Laguna Beach) - it seemed very similar to a "Snob Hill" that Raley's runs. Another chain worth considering is Save Mart - they couldn't merge with Raley's due to the overlap, don't know how they would fit with another competitor.
I don't think there would be any antitrust issues. Kroger has zero overlap with Raley's, other than FoodsCo which has something like 20 stores spread thin over an area serving over 10 million people. Same with SaveMart. Stater Bros. would of course have much more overlap and be harder for either Kroger or Albertsons to acquire, but the government hasn't shown much inclination to block mergers recently.

I got curious about who owns Stater, but all I can find is that it was controlled by Jack Brown until he passed away in 2016.

I really hope none of these chains get acquired by the big two. Competition is sorely needed and California is one of the few states with multiple regional supermarket chains.
I don't think Kroger much cares about California. Over the last 15 years all it has done is retreated, closed many Ralphs, Food 4 Less and Foods Co. locations. It had not opened one new location, either built from the ground up or acquired, during that time, I believe, other than Foods Co. Oakland in 2014 which I believe is the last location they built in California.
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Re: Raley's to buy Arizona chain Bashas'

Post by CalItalian »

veteran+ wrote: October 5th, 2021, 8:24 am
Romr123 wrote: October 4th, 2021, 5:56 pm Exactly--my aunt/uncle shop at Bashas' in Sedona and really like it. They moved down from Chicago where they lived equidistant from Jewel/Dominicks. We visited them in 2019 and noticed their excellent bakery--they had some amazing paczkis during the season.

Stater Bros could convert one or two stores in the Coachella Valley to an upscale format and make bank--they have an amazing density of stores.
I do not believe that Stater Bros is fit for that kind of operation. They do what they do proficiently for their specific demographic. They indeed have "upscaled" a bit recently.

If Stater Bros purchased Jensens (surprised that Jensens is still around) and did a knock out job, then perhaps it would make sense.

The Coachella Valley has great affluence but those communities are very small and not contiguous. Location must be extremely precise for an upscale store to thrive and also deal with dramatic retail seasonal changes.
Jensens store footprints are way too small for today's Stater Bros. There's plenty of land, dated shopping centers in the Coachella Valley that can be easily redeveloped or remodeled into a Stater Bros.
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Re: Raley's to buy Arizona chain Bashas'

Post by CalItalian »

storewanderer wrote: October 4th, 2021, 11:39 pm Let's let Raleys digest Bashas first and see how that goes before getting the idea they could merge Stater into this fold too.

Stater - really needs to stay independent. For a variety of reasons. But it would serve everyone- customers, employees, communities- best. If whoever controls Stater (I don't even know who controls Stater...) decides they want out, I'd love to see them go employee owned. The bigger concern with a Stater sale would be store closures/stores sold to non-union operators and I think there would be a big fight in a sale to a union operator to keep as many stores with them as possible vs. divesting off to non-union operators or shaky buyers who offer to maintain the union- I think Haggen in CA will not soon be forgotten. That would also be a really sad fate for many Stater employees who have had a good employment path with Stater as it has been much more stable than the other chains.

Nob Hill Trading Co. seems to have gone the way of many other good Raleys concepts over the years. It is like they got bored with it after a few months and that was the last anyone heard of it. Nob Hill does not strike me as a high performing block of stores in general for some reason (they have closed quite a few of those stores) and it confuses me why that is the case. Nob Hill is just a smaller Raleys in all but name. There is nothing special or unique to Nob Hill.

Those Kroger-Raleys rumors have been going on for the last 20 years and it has never happened. Raleys has expressed an interest in growth over the years. Had the Las Vegas expansion worked out for them I suspect they would have been over 200 stores 15 years ago (then who knows what would have happened to them in 2008). Previously they have talked expansion into Utah and also the Pacific Northwest and I think they have been wanting it for a long time but could never come to a deal. I really thought they'd buy one of the natural focused chains out in OR or WA especially with the ONE thing but then it seems other players got those.

With Bashas they obviously found a willing seller but I am just a little surprised as Bashas reminds me of a big version of Scolaris which in my view has been a questionable at best acquisition for Raleys and has dragged their brand down by having it on those converted stores (except the one in Reno-Caughlin where they did a full remodel but even that one doesn't quite feel up to the level of the usual Raleys).

I am going to be very interested to see the integration of Bashas into Raleys. They are quite different.
My bet is 5 or 6 years down the line Bashas will be sold off to Albertsons or Kroger.

I have been considering moving to Phoenix and been there multiple times this year. The only stores I have seen that were doing big business were a few Fry's Marketplace locations (Buckeye, incredible business. Never seen anything like it) and a Food City location in Phoenix. Bashas had even less business than the Safeway locations I visited. Bashas website and ads are as dull as it gets in the west.
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Re: Raley's to buy Arizona chain Bashas'

Post by retailfanmitchell019 »

CalItalian wrote: October 5th, 2021, 3:23 pm My bet is 5 or 6 years down the line Bashas will be sold off to Albertsons or Kroger.
The FTC would have a lot to say about that deal for Kroger. Kroger is #1 in Phoenix. Albertsons could get away with buying Bashas, as they would still have less market share than Fry's.
However, there are smaller towns like Nogales, Wickenburg, and Sedona where an Albertsons/Bashas merger would create a monopoly/near-monopoly.
Last edited by retailfanmitchell019 on October 5th, 2021, 9:20 pm, edited 1 time in total.
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