Raley's to buy Arizona chain Bashas'

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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

HCal wrote: October 5th, 2021, 2:58 pm
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.
Kroger overlaps Raleys with 6 Smiths locations in Nevada:
Smiths:
Reno-Lemmon
Reno-South Meadows (questionable if really overlap)
Gardnerville
Sparks
Elko
Carson City (questionable if really overlap)

The Smiths are all very high volume operations. Middle-lower middle class locations. Double to triple the volume of nearby Raleys which are similar in size in every case (except maybe Gardnerville). 15-20 years ago it was the opposite and the surrounding Raleys did more volume than the Smiths every time. Smiths has increased business exponentially over the past 20 years. Raleys has largely held its own.

At the present time I do not think FoodsCo would be considered to overlap Raleys at all. Raleys has closed most of the stores that were near the FoodsCos (which were mostly Food Source locations).

I would say Save Mart overlaps Kroger in the following locations:
Sacramento: Northgate FoodsCo/Truxel Food Maxx
Sacramento: Gerber FoodsCo/Gerber Save Mart
Sparks: Baring Smiths/Prater FoodsCo
Carson City: Smiths/N. Carson St. Save Mart (could argue the Food Maxx instead perhaps)
Santa Maria: 1 FoodsCo/sits right in between 2 Food Maxx
Might be a store or two in Fresno and Bakersfield too...
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

Oh right, I was just referring to California. Nevada may be a different story. I suppose Kroger could divest Raley's locations in Nevada to settle with the FTC.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

HCal wrote: October 5th, 2021, 6:17 pm Oh right, I was just referring to California. Nevada may be a different story. I suppose Kroger could divest Raley's locations in Nevada to settle with the FTC.
I just don't see a Kroger-Raleys deal. Especially given the Bashas thing. Also Raleys has in the past decade been building much smaller stores than they used to, and has downsized some other stores (Windsor, Elko). Kroger seems to tend to go for big stores (similar to what Raleys built through the 00's).

I think Raleys is making a statement with the Bashas transaction that they want to expand and change their focus. Also diversifying out of California may be part of the idea as well. But I just can't get past that I think Bashas is a chain that I have always considered to be in bad shape. Past couple trips to AZ after they did some remodels and price changes they had been looking a little better but still hardly any customers. I almost wonder if Raleys could take the few Bashas in the middle-upper middle class areas, do full remodels, convert to Raleys banner... and basically fade the Bashas banner out entirely.
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Re: Raley's to buy Arizona chain Bashas'

Post by pseudo3d »

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.
My thoughts exactly. If Raley's had stayed course and not sold the divested stores it picked up in LV and NM in 1999 (which I believe they sold to Smith's and Albertsons, respectively) then it would make sense. It sounds like Raley's is not going to integrate Bashas' and start flipping stores to Albertsons or Kroger while letting the remaining stores fall into waste.

Unfortunately, thinking that Raley's will reinvest money back into Bashas' and renovate/build new stores is just dreaming.
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

storewanderer wrote: October 5th, 2021, 6:25 pm I just don't see a Kroger-Raleys deal. Especially given the Bashas thing. Also Raleys has in the past decade been building much smaller stores than they used to, and has downsized some other stores (Windsor, Elko). Kroger seems to tend to go for big stores (similar to what Raleys built through the 00's).

I think Raleys is making a statement with the Bashas transaction that they want to expand and change their focus. Also diversifying out of California may be part of the idea as well. But I just can't get past that I think Bashas is a chain that I have always considered to be in bad shape. Past couple trips to AZ after they did some remodels and price changes they had been looking a little better but still hardly any customers. I almost wonder if Raleys could take the few Bashas in the middle-upper middle class areas, do full remodels, convert to Raleys banner... and basically fade the Bashas banner out entirely.
The article says that Raley's approached Bashas with an unsolicited offer, so maybe they were just contacting a bunch of small companies looking for someone to buy. Bashas was definitely small and dingy, but if the price was good enough (both are privately held so they don't have to disclose what they paid) then it may make sense. They could shut down unwanted locations, clean up the remaining ones, and then either operate them long-term or sell to someone else like they did in New Mexico.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

HCal wrote: October 5th, 2021, 6:44 pm
The article says that Raley's approached Bashas with an unsolicited offer, so maybe they were just contacting a bunch of small companies looking for someone to buy. Bashas was definitely small and dingy, but if the price was good enough (both are privately held so they don't have to disclose what they paid) then it may make sense. They could shut down unwanted locations, clean up the remaining ones, and then either operate them long-term or sell to someone else like they did in New Mexico.
What I wonder about is Food City. It seems to me Food City could easily be sold to someone else or even split off as an independent operation and self distribute a large number of goods. I am suspicious Food City was what kept the rest of Bashas going. I like the AJ's stores but realistically how much money do they make? They don't seem to have much traffic and they are heavily staffed. I think there are some marginal performing stores out there with the Bashas name but again just not sure they do well enough to justify being a chain.

It will also be interesting to see how Raleys handles pharmacy given they previously closed a lot of their pharmacies. Not much of a trend to how Raleys picked which pharmacies to close. In Reno, the ones they closed were in the lousiest stores (the Food Source now closed, the Sak N Save, the Reno Keystone Raleys) also the Elko Raleys which is odd as Elko only has a few pharmacies. In CA the pharmacy closures tended to be in locations where there was a drug anchor in the shopping center with Raleys.
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Re: Raley's to buy Arizona chain Bashas'

Post by arizonaguy »

storewanderer wrote: October 5th, 2021, 6:57 pm
HCal wrote: October 5th, 2021, 6:44 pm
The article says that Raley's approached Bashas with an unsolicited offer, so maybe they were just contacting a bunch of small companies looking for someone to buy. Bashas was definitely small and dingy, but if the price was good enough (both are privately held so they don't have to disclose what they paid) then it may make sense. They could shut down unwanted locations, clean up the remaining ones, and then either operate them long-term or sell to someone else like they did in New Mexico.
What I wonder about is Food City. It seems to me Food City could easily be sold to someone else or even split off as an independent operation and self distribute a large number of goods. I am suspicious Food City was what kept the rest of Bashas going. I like the AJ's stores but realistically how much money do they make? They don't seem to have much traffic and they are heavily staffed. I think there are some marginal performing stores out there with the Bashas name but again just not sure they do well enough to justify being a chain.

It will also be interesting to see how Raleys handles pharmacy given they previously closed a lot of their pharmacies. Not much of a trend to how Raleys picked which pharmacies to close. In Reno, the ones they closed were in the lousiest stores (the Food Source now closed, the Sak N Save, the Reno Keystone Raleys) also the Elko Raleys which is odd as Elko only has a few pharmacies. In CA the pharmacy closures tended to be in locations where there was a drug anchor in the shopping center with Raleys.
Bashas was kept going by Food City and the rural stores. It's why the last 2 store openings have been the Navajo nation and why most of the remodels have been of Food City stores. It was also Bashas last major avenue of growth (they purchased 23 Southwest Supermarkets stores in 2001 which was the last major expansion phase of the company prior to its 2009 bankruptcy).

The Bashas banner doesn't have a future in metro Phoenix. The stores that remain in metro Phoenix are a collection of stores that absolutely nobody else would want (too small, too old, poorly located). Many of these stores are secondhand and are former Lucky, Albertsons, or Alpha Beta stores. The nicer locations have been closed and/or sold from the bankruptcy in 2009 all the way to the present day. I can't see Raleys investing much in more than a handful of the metro Phoenix stores and honestly metro Phoenix should be exclusively Food City / AJ's.

The stores in the Tucson area are all newer, nicer, larger stores that were opened organically by Bashas' in wealthier parts of town. Essentially Tucson Bashas bannered stores are "AJ's lite" and are nothing like the trashy stores in metro Phoenix. These actually seem like they'd be a good fit for Raleys.

AJ's has a cult following and I believe the perimeters do pay for themselves.
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Re: Raley's to buy Arizona chain Bashas'

Post by retailfanmitchell019 »

pseudo3d wrote: October 5th, 2021, 6:40 pm It sounds like Raley's is not going to integrate Bashas' and start flipping stores to Albertsons or Kroger while letting the remaining stores fall into waste.

Unfortunately, thinking that Raley's will reinvest money back into Bashas' and renovate/build new stores is just dreaming.
If Albertsons were to acquire Bashas, they would get 21.1% market share in Phoenix (tied with Walmart, but behind Fry's).
I can imagine if this were to happen, Bashas stores would hypothetically be converted to the Albertsons banner, as both are non-union. Bashas currently has only 6.6% market share in Phoenix. With that amount of market share and little investment around Phoenix, they are definitely screwed in the long run.
https://infogram.com/2020-phoenix-groce ... n1oogzp6x3
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Re: Raley's to buy Arizona chain Bashas'

Post by arizonaguy »

retailfanmitchell019 wrote: October 5th, 2021, 9:29 pm
pseudo3d wrote: October 5th, 2021, 6:40 pm It sounds like Raley's is not going to integrate Bashas' and start flipping stores to Albertsons or Kroger while letting the remaining stores fall into waste.

Unfortunately, thinking that Raley's will reinvest money back into Bashas' and renovate/build new stores is just dreaming.
If Albertsons were to acquire Bashas, they would get 21.1% market share in Phoenix (tied with Walmart, but behind Fry's).
I can imagine if this were to happen, Bashas stores would hypothetically be converted to the Albertsons banner, as both are non-union. Bashas currently has only 6.6% market share in Phoenix. With that amount of market share and little investment around Phoenix, they are definitely screwed in the long run.
https://infogram.com/2020-phoenix-groce ... n1oogzp6x3
None of the Bashas bannered stores in metro Phoenix would be of any value to Albertsons. They're too old, too small, or too close to a current Albertsons or Safeway store. I can't imagine Albertsons keeping any of these stores (except for maybe the former Albertsons at 99 S Higley Rd in Gilbert). The valuable stores in metro Phoenix are Food City (a Hispanic grocer) and AJ's (a gourmet grocer). Unless Albertsons wants United to take over Bashas' I don't see this making a lot of sense (and the Bashas' stores are by and large going to cost a lot of money to bring up to United's standards.
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Re: Raley's to buy Arizona chain Bashas'

Post by rwsandiego »

After Stater Bros and Raley's merge, Bob Mariano will become chairman and the company will acquire Price Chopper/Tops, Big Y, both Market Basket chains, and both Brookshires chains. The company will change all stores to a new format called "Bob's," which will out-Wegman Wegman's. It will all be financed by treasure found buried in the backyard of the house Dominick DiMatteo used to live in. As it turns out, he didn't trust banks with the proceeds of the sale of Dominick's to Fisher Foods and instead bought gold bars on the cheap and planted them. His kids took a cue from him and did the same with the proceeds from the sale of Dominick's to Yucaipa.

But seriously...

One of the articles in the local Phoenix press mentioned that Bashas' will operate as a separate company, albeit without the family running it, with the exception of one Basha who has a logistics role. Who knows how long that will last.

My guess is AJ's will switch to all-organic and natural (they are almost there now) and be expanded, many Bashas' locations will become Food City, and others will be converted to AJ's or a format similar to Raley's ONE. That might work, as no one seems to love their Basha's and the only thing that distinguishes them from Safeway/Albertson's and Fry's is their produce and bakery. Most of their stores need a to-the-studs reno, which is a great time to change formats.

Full disclosure - I'd LOVE a store like Raley's ONE if it was properly executed. However, if my mainline supermarket was replaced by one I probably wouldn't be happy because I'd have to travel to get mainline products.
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