Raley's to buy Arizona chain Bashas'

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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

arizonaguy wrote: December 17th, 2021, 7:04 pm The deal is complete. Bashas' is now part of Raley's.

https://www.supermarketnews.com/retail- ... as-company

Also, it appears that at least initially, 3 Basha family members will remain part of the leadership team of the Bashas' division.
It will be interesting to watch how/if they integrate the chains, or literally keep them separate entirely from a merchandising/systems perspective.

My guess is the Basha family members need to stick around as they are needed to continue running the chain. Raleys has had some retirements lately of a couple key people. Trying to digest a big acquisition as key people retire in your organization and the thing you acquire doesn't give you any management is a formula for disaster (ask Save Mart). Raleys may learn a few things from Bashas in the process. But I think what Bashas really needs- is money. Lots of stores need to be remodeled thoroughly with some new flooring and new equipment. They need to sharpen their marketing up too (I don't think Raleys marketing will work in AZ either).
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

Interesting article here about Raleys purchasing stuff outside of California. Really good article and excellent points brought up by their CEO who is the person they hired from Kohl's a number of years ago.

https://www.bizjournals.com/sacramento/ ... panel.html

Would love to see them be as candid about the ONE Format's performance, and customer reactions compared to the standard Raley's format, as they are being about the business environment in California compared to that of AZ/NV.
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

storewanderer wrote: March 1st, 2022, 9:39 pm Interesting article here about Raleys purchasing stuff outside of California. Really good article and excellent points brought up by their CEO who is the person they hired from Kohl's a number of years ago.

https://www.bizjournals.com/sacramento/ ... panel.html

Would love to see them be as candid about the ONE Format's performance, and customer reactions compared to the standard Raley's format, as they are being about the business environment in California compared to that of AZ/NV.
Recently it seems to have become fashionable for businesses to whine about how terrible it is to do business in California. A lot of this seems to be politicially motivated by conservatives who are trying to drum up opposition to labor and environmental protections.

Unlike, say, a tech company or a manufacturing facility, which can simply move to a cheaper location, a supermarket chain can't exactly serve a market from stores out-of-state. At the most, Raley's might move warehouses into Nevada, but given their concentration of stores in California, I doubt even that would make any sense for them.

As for the $270 million out-of-state investment, I wonder if that includes the purchase price of Bashas. I don't see what else they would spend that much money on, considering that before the acquisition their only out-of-state presence was a few stores in Nevada.
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Re: Raley's to buy Arizona chain Bashas'

Post by veteran+ »

Exactly!

Instead of "whining", why not just get out of dodge?

Next please.........................................


:lol: :lol: :lol:
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Re: Raley's to buy Arizona chain Bashas'

Post by ClownLoach »

HCal wrote: March 3rd, 2022, 1:12 am
storewanderer wrote: March 1st, 2022, 9:39 pm Interesting article here about Raleys purchasing stuff outside of California. Really good article and excellent points brought up by their CEO who is the person they hired from Kohl's a number of years ago.

https://www.bizjournals.com/sacramento/ ... panel.html

Would love to see them be as candid about the ONE Format's performance, and customer reactions compared to the standard Raley's format, as they are being about the business environment in California compared to that of AZ/NV.
Recently it seems to have become fashionable for businesses to whine about how terrible it is to do business in California. A lot of this seems to be politicially motivated by conservatives who are trying to drum up opposition to labor and environmental protections.

Unlike, say, a tech company or a manufacturing facility, which can simply move to a cheaper location, a supermarket chain can't exactly serve a market from stores out-of-state. At the most, Raley's might move warehouses into Nevada, but given their concentration of stores in California, I doubt even that would make any sense for them.

As for the $270 million out-of-state investment, I wonder if that includes the purchase price of Bashas. I don't see what else they would spend that much money on, considering that before the acquisition their only out-of-state presence was a few stores in Nevada.
Their cost statements there all seem suspect. They say their labor cost with benefits averages $40 an hour in California?!! I don't think so.

$20 million to build a new store? Again that seems very inflated or they're getting ripped off left and right by their contractors. If it's really $20M I am assuming they own the building outright, pay no rent, and are the developer of the shopping center. But why would you want all that on your shoulders? Are you a developer or a grocer? Pick one!

But the real red flag to me is probably true: they do $3 Billion a year in sales, but they only are making $65 M in profit. If it is really that low they have a serious problem with the way they are running their business as they are not delivering the profits other retailers are, not even close. Walmart is famous for a fairly low profit margin from rock bottom prices which is why they operate at low cost everywhere, and they make a 6.3% profit which is about $33 B a year on $559 B in sales. Again Raleys is saying they make 2%. Something isn't right especially if they own their buildings. That isn't California's high costs. That is a sign that they are not a viable operator and their business is struggling while the competition bales the bucks.
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Re: Raley's to buy Arizona chain Bashas'

Post by veteran+ »

My observations as well!

;)
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

Given they are privately held if they are satisfied with the profit amount being described, I would argue that is certainly within their ability to be operating making that amount of profit. It would certainly not be acceptable for a publicly held company, but that is okay. They have chosen to spend more money on labor and other things.

Back when Stater issued financial statements publicly (something about publicly held debt, this was many years ago) I was surprised to look at their financials and see just how little profit the chain actually was making at the bottom line. But again that is a chain that staffs heavily, prices lower, and spends money to maintain and upkeep their stores. They chose to operate in that manner and it worked for their customers and their communities that they operate in. They have closed far fewer stores in SoCal than the other Unionized operators.

Back to the topic at hand:

I don't think Raleys owns many of their buildings (might be owned by related entities but not the grocery chain itself though).

Raleys a chain that staffs its stores, rather heavily. This is a chain that spends far more money to make stores look nice, than any other chain in CA. They spare no expense to make stores look good (though some stores they don't spend a dime on look pretty bad, but that is not the majority of their chain).

I am guessing the $270 million includes the purchase of Bashas, the purchase of the 6 stores from Scolaris, and a handfull of store remodels done in Nevada in recent years (including the ONE fiasco in Reno which I am sure cost millions).

Folks who think these high costs in CA are not a problem- well, okay... as long as you have enough money to make it, I guess it is okay. But the high costs trickle down to the consumer and it is no good. And the point the Raleys person was trying to make is why deploy capital in CA where it takes so much more capital/effort to get a ROI, when you can deploy the same amount of capital elsewhere with lower costs and get a better return there. The point is eventually businesses will not deploy capital in CA if this trend continues.

The businesses in CA who respond to this environment simply increase their prices in order to make up for the increased costs there. Eventually the prices get so high on the goods in the stores, people can't afford them, then I guess they can just go ahead and shoplift, under $950 at a time of course (oh wait... maybe that is the problem already...).........
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Re: Raley's to buy Arizona chain Bashas'

Post by veteran+ »

So why are groceries so high in Florida?

Cost of business in Cali renders "things" that other States don't provide to their citizens, customers and employees.

California bashing is entertaining, convenient, opportunistic and extremely popular.

And that's okay ;)
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

storewanderer wrote: March 3rd, 2022, 5:13 pm Given they are privately held if they are satisfied with the profit amount being described, I would argue that is certainly within their ability to be operating making that amount of profit. It would certainly not be acceptable for a publicly held company, but that is okay. They have chosen to spend more money on labor and other things.

Back when Stater issued financial statements publicly (something about publicly held debt, this was many years ago) I was surprised to look at their financials and see just how little profit the chain actually was making at the bottom line. But again that is a chain that staffs heavily, prices lower, and spends money to maintain and upkeep their stores. They chose to operate in that manner and it worked for their customers and their communities that they operate in. They have closed far fewer stores in SoCal than the other Unionized operators.
I think a lot of these privately owned chains are simply chugging along as a matter of family pride. Some are in their 3rd gneration, and the kids are probably satisfied with the income and don't want to be the ones to sell the business that their grandparents established. They will keep going until profits drop enough (see: Bashas) and then start looking for a buyer.
storewanderer wrote: March 3rd, 2022, 5:13 pm
Folks who think these high costs in CA are not a problem- well, okay... as long as you have enough money to make it, I guess it is okay. But the high costs trickle down to the consumer and it is no good. And the point the Raleys person was trying to make is why deploy capital in CA where it takes so much more capital/effort to get a ROI, when you can deploy the same amount of capital elsewhere with lower costs and get a better return there. The point is eventually businesses will not deploy capital in CA if this trend continues.
If businesses stop deploying capital in California, that will increase the return for whoever does, and cause a new equilibrium to be reached.

Obviously other states with lower populations are going to be growing faster and have more investment opportunities than a mature market like CA, and that's perfectly okay. Companies may choose to chase higher returns elsewhere, but this isn't going to hurt California's economy because, as I mentioned, the lack of investment will increase returns for willing investors.
storewanderer wrote: March 3rd, 2022, 5:13 pm The businesses in CA who respond to this environment simply increase their prices in order to make up for the increased costs there. Eventually the prices get so high on the goods in the stores, people can't afford them, then I guess they can just go ahead and shoplift, under $950 at a time of course (oh wait... maybe that is the problem already...).........
I don't think shoplifting has anything to do with price levels or inflation. It happens all over the country, but of course the media likes to report on it when it happens in California because it fits a certain narrative.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

HCal wrote: March 4th, 2022, 4:24 pm

If businesses stop deploying capital in California, that will increase the return for whoever does, and cause a new equilibrium to be reached.

Obviously other states with lower populations are going to be growing faster and have more investment opportunities than a mature market like CA, and that's perfectly okay. Companies may choose to chase higher returns elsewhere, but this isn't going to hurt California's economy because, as I mentioned, the lack of investment will increase returns for willing investors.



I don't think shoplifting has anything to do with price levels or inflation. It happens all over the country, but of course the media likes to report on it when it happens in California because it fits a certain narrative.
No, it will mean whoever does deploy capital in California will end up cutting corners to get an acceptable return and since there isn't as much competition they will get away with it- making the stores smaller than new stores in surrounding states, jacking up the prices to come even close to getting an acceptable return on investment in the state, etc. Why do you think nobody to speak of is building 80k square foot heavy perimeter service counter model type grocery stores in California like we see in the midwest, South (excluding FL..), and Eastern US? It is because the idea doesn't pan out in CA. Nobody does it. So you get the few operators willing to deploy capital in California and they put up undersized 50k square foot stores that are inferior to stores in surrounding states. So you end up with a bunch of new Sprouts, Trader Joe's, Grocery Outlets, or dumbed down Whole Foods (365 like stores but with the full prices of a normal Whole Foods) stores that are undersized with limited or even no perimeter service counters (to save labor and save space) instead of a nice new Wegmans or Hy Vee or even a marketplace format Kroger Store or a Market Street format Albertsons Store you get a smaller limited service format. At least in the case of Trader Joe's the prices are pretty good.

Talk to anyone involved in retail loss prevention about theft rates in CA vs. those in the rest of the US. For an even more like for like comparison, go with major metro areas in CA vs. major metro areas elsewhere in the US. The difference is, not to bag on any one place, let's just say Tulsa. You may have 1/2 of the stores in Tulsa considered very high theft. For whatever reason the theft rings stick to a certain portion of the city and don't really go into other parts or far reaching outer areas of the metro at least not to the extent to make a noticeable theft uptick and kick the store into the high theft column. But if we are talking metro Los Angeles, Oakland, etc. you are talking basically 90% of the stores being considered very high theft due to the theft rings that have penetrated the entire metro areas. Even areas in CA that previously had little problem with theft, such as places far outside the large cities (let's use Roseville as an example around Sacramento) since COVID hit, have seen pretty significant theft upticks in those stores. Yes, it happens in other states, but not to the degree it is happening in CA, yet.
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