Raley's to buy Arizona chain Bashas'

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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

storewanderer wrote: March 4th, 2022, 10:43 pm 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.
Stores tend to be smaller in California mainly because land is more expensive. Also, population density is higher, so rather than having a big one-stop-shop in a large shopping center to serve the whole town, it is more efficient to have a larger number of smaller stores in various neighborhoods.
storewanderer wrote: March 4th, 2022, 10:43 pm 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.
How do you deem these stores to be inferior? I would prefer a Sprouts or Trader Joe's to some generic oversized midwestern supermarket. Like many people, I don't really care about perimeter departments, because I would rather go to an independent deli, bakery or farmer's market, which are plentiful and provide far better quality than even the best supermarkets. Bigger isn't always better.
storewanderer wrote: March 4th, 2022, 10:43 pmTalk 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.
That may be the case, I haven't seen any numbers. All of this is anecdotal. That's not to say it isn't true, but it may be exaggerated. I haven't seen any indication of theft concerns at stores in my part of town, and I'm in one of the highest-crime parts of the state.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

HCal wrote: March 5th, 2022, 12:54 am

Stores tend to be smaller in California mainly because land is more expensive. Also, population density is higher, so rather than having a big one-stop-shop in a large shopping center to serve the whole town, it is more efficient to have a larger number of smaller stores in various neighborhoods.



How do you deem these stores to be inferior? I would prefer a Sprouts or Trader Joe's to some generic oversized midwestern supermarket. Like many people, I don't really care about perimeter departments, because I would rather go to an independent deli, bakery or farmer's market, which are plentiful and provide far better quality than even the best supermarkets. Bigger isn't always better.


That may be the case, I haven't seen any numbers. All of this is anecdotal. That's not to say it isn't true, but it may be exaggerated. I haven't seen any indication of theft concerns at stores in my part of town, and I'm in one of the highest-crime parts of the state.
If you have a major chain which I won't go into names, that operates primarily conventional format stores over 65k square feet over in AZ or NV, then in CA barely runs any conventional format store above about 55k square feet, those CA Stores are inferior to what is in the neighboring states. Add to it their CA Stores have drastically higher prices than what they have in AZ/NV for the exact same products and the exact same level of service, and it just adds to the experience being even worse in CA for the consumer. If the stores did a good enough job on perimeter departments you would at least use them sometimes for those items and not always feel the need to go to various other places like independent delis (not sure how many of those there even are... I can count on one hand how many are in Sacramento metro and one is a 25k square foot grocery store), Farmer's Markets that aren't even present various weeks of the year, or independent bakeries (again not very present and often focused on specific like cakes only, breads only, etc.).

Also many chains in CA have in their lease that someone cannot open an independent deli, independent bakery, etc. in the same shopping center as the store so the store does not have competition. Now up in Canada as I have posted before this is a little different and I realized up in Vancouver 2 concepts I kept seeing in shopping centers with a grocer present- Cob's Bread and a Kin's Produce. These two stores captured me due to having a superior mix to the grocer in the center for their categories and absolutely deemed the grocery store pretty much useless for those items. But I am going to tell you- if I were in the midwestern US or eastern US- a Hy Vee or Wegman's would have been every bit as good on bread/pastry and on produce as those two independent concepts in Canada were.

High crime and high theft do not always correlate to the same area either. Often they do, but not always, for whatever reason. So your stores have no locked cases, no security alarms, no "this item was purchased at (store name)" tags on various products, no random items kept behind customer service, no locked restrooms? That is pretty impressive for a store in CA. You see those things which are indicative of high theft even at higher end neighborhoods in the bay area and Sacramento now. You don't see them in a place like Susanville or Bishop yet though.
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Re: Raley's to buy Arizona chain Bashas'

Post by bryceleinan »

storewanderer wrote: March 5th, 2022, 1:09 am
If you have a major chain which I won't go into names, that operates primarily conventional format stores over 65k square feet over in AZ or NV, then in CA barely runs any conventional format store above about 55k square feet, those CA Stores are inferior to what is in the neighboring states. Add to it their CA Stores have drastically higher prices than what they have in AZ/NV for the exact same products and the exact same level of service, and it just adds to the experience being even worse in CA for the consumer. If the stores did a good enough job on perimeter departments you would at least use them sometimes for those items and not always feel the need to go to various other places like independent delis (not sure how many of those there even are... I can count on one hand how many are in Sacramento metro and one is a 25k square foot grocery store), Farmer's Markets that aren't even present various weeks of the year, or independent bakeries (again not very present and often focused on specific like cakes only, breads only, etc.).
Something strange I noticed at the Raley's in Carson City is that they now carry some breads bearing the Panera Bread name, along with the soups. I am not sure what is going to happen when Panera opens down the street from this store over the summer, however, it is kinda weird given that it's probably a par-baked product. They're also famous for their non-competes, as evidenced by the formerly nearby Walmart moving a couple miles south due to a deed restriction from Raley's preventing a supercenter.

That is also another reason Panera did not proceed with their south Reno location - Safeway has a non-compete clause, and when you read it, Panera is basically in it, and I don't think I have seen too many centers with a Panera and a Safeway together, except for South Shore Center in Alameda.
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

I've never seen an actual Panera restaurant inside a supermarket. I assume you're talking about Panera products (bread, soup, etc.) being sold by the supermarket, which is quite common. Many restaurants license their name to manufacturers for the sale of such products, including Panera, California Pizza Kitchen, Taco Bell, etc. I don't think this should raise any non-compete concerns, as they are completely different market segments.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

bryceleinan wrote: March 5th, 2022, 1:34 pm
storewanderer wrote: March 5th, 2022, 1:09 am
If you have a major chain which I won't go into names, that operates primarily conventional format stores over 65k square feet over in AZ or NV, then in CA barely runs any conventional format store above about 55k square feet, those CA Stores are inferior to what is in the neighboring states. Add to it their CA Stores have drastically higher prices than what they have in AZ/NV for the exact same products and the exact same level of service, and it just adds to the experience being even worse in CA for the consumer. If the stores did a good enough job on perimeter departments you would at least use them sometimes for those items and not always feel the need to go to various other places like independent delis (not sure how many of those there even are... I can count on one hand how many are in Sacramento metro and one is a 25k square foot grocery store), Farmer's Markets that aren't even present various weeks of the year, or independent bakeries (again not very present and often focused on specific like cakes only, breads only, etc.).
Something strange I noticed at the Raley's in Carson City is that they now carry some breads bearing the Panera Bread name, along with the soups. I am not sure what is going to happen when Panera opens down the street from this store over the summer, however, it is kinda weird given that it's probably a par-baked product. They're also famous for their non-competes, as evidenced by the formerly nearby Walmart moving a couple miles south due to a deed restriction from Raley's preventing a supercenter.

That is also another reason Panera did not proceed with their south Reno location - Safeway has a non-compete clause, and when you read it, Panera is basically in it, and I don't think I have seen too many centers with a Panera and a Safeway together, except for South Shore Center in Alameda.
The grocery store Panera products have nothing to do with whether or not a Panera unit can open in a shopping center. That is a completely separate product line run by a different group. Panera has par baked breads in many grocery stores, as well as heat and serve macaroni and cheese, and other items. I think I've seen some of these at Smiths and have definitely seen them at Save Mart as well.

The reason the Panera in South Reno was shelved was because the franchisee who was going to develop it ran into financial problems and that franchisee did not go through with developing the locations in the Reno market as planned. The franchisee who assumed the market did not want that location. I think that franchisee also is no longer developing this market and at this point we are either on about the 5th franchisee they've tried to get to develop this market or they are going to just open sites up as corporate sites here. This is why there are still no Paneras open in Reno. The latest plan for South Reno is they plan to open behind the Taco Bell at South Virginia and Neil in Reno with a new construction unit. Also a new unit at Legend's in Sparks near the Chickfila, not sure any construction has started there either. I think both of those approved by the respective city. The Carson City Panera has been a finished shell for months but so far nobody has installed any fixtures inside and it does not appear like anyone is in any hurry to open it. That does not strike me as a great spot for Panera but we will see how it does. The Panera at University of Nevada Reno opened as a corporate Panera after significant delays (COVID related among other issues) and it was not originally planned to be a corporate unit.

Typical Panera locations are not in grocery anchored centers but rather in power centers or near office buildings (would expect to see one somewhere around Kietzke and McCarran in Reno).

The Panera brand is weaker than it once was and I feel its best days are behind it. Another wrinkle now is the franchisor rolled Einstein Brothers and Caribou into Panera as well.
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Re: Raley's to buy Arizona chain Bashas'

Post by pseudo3d »

storewanderer wrote: March 4th, 2022, 10:43 pm 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.
Is there a particular reason why large stores don't work in California like they do the rest of the country? The labor prices are probably unfeasible for something like that, and the land value is probably too high for a traditional store with a large parking lot, but even when those were less of an issue, why did it never catch on? Was the failure of Smith's large stores back in the 1990s enough of a problem that no one wanted to try it again?
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

pseudo3d wrote: March 5th, 2022, 9:34 pm

Is there a particular reason why large stores don't work in California like they do the rest of the country? The labor prices are probably unfeasible for something like that, and the land value is probably too high for a traditional store with a large parking lot, but even when those were less of an issue, why did it never catch on? Was the failure of Smith's large stores back in the 1990s enough of a problem that no one wanted to try it again?
I don't think there is a great reason. I think it is a matter of the stores just not being operated correctly to drive the volume needed for a large format store. All of these CA grocery chains are very overpriced. There are always discount formats in the background in CA which I think also makes it more difficult for a large format store to maximize its volume. To drive volume in a large store you need to have competitive prices, a wide mix of items, and/or you need to have an outstanding/exceptional perimeter offer. These CA chains offered none of that (that ship on price and variety sailed for good when Lucky went away). There is a reason why you don't see CA grocery chains doing organic expansions outside of CA into new territories with new distribution centers like you see chains such as Hy Vee, Wegmans, and Publix doing. The CA chains can't make it outside CA on any sort of a wide scale with their format/offer. It is too inferior and too overpriced. The competition is too tough.

Safeway never had a clue how to do a large format store and anything over 55,000 square feet was beyond their ability to merchandise. So when the main/dominant grocer in a market is not building large stores, why should anyone else stick their neck out and do it? Same situation with Publix in FL. Safeway has some larger stores sitting around (old Pak N Saves, etc.) but they are oversized, undermerchandised, and have a lot of open space.

Since this is the Raleys thread let's look at Raleys. Raleys over the years in the 80's and 90's built large stores, food and drug combo stores, called a "superstore." Most approached 65,000 square feet, give or take, depending on the location. Raleys capture was always in offering the widest product variety and having the best quality fresh items (I would debate that in the past, but I will call their fresh items above average at present). As a result they always captured the upper middle class customer. As time went on the drug areas just got scaled back more and more. I don't think the scale back of the drug areas lost them one customer- because nobody else in CA had extensive drug departments either (after Lucky went away). Now look at what Raleys builds today and the new builds have been primarily 45,000 square foot models lately (except a bit larger for a replacement in Sacramento).

I'd like to see Kroger try a few Marketplace format stores in middle class suburban areas of CA. They would need to price them the way they price a store outside of CA (not priced like a Ralphs which is outrageous). I think they could be successful. But it won't happen. It is also somewhat debatable if Smiths failed in SoCal or it was larger corporate issues that caused the demise.

But let's say HEB and/or Hy-Vee came in and said we are going to open in CA, we are going to build a distro center and we are going to build 50 80k square foot stores in the market over a 5-year period. First off, good luck getting past permitting on half of those new sites in a 5-year period. Also they would have to make various changes to their buying and merchandising due to CA-specific laws/regulations on various products and product labeling (up go costs). So at this point I think CA has done a great job of making itself a closed market that outside companies simply do not find it desirable or a good use of capital to expand into. As a result CA gets undersized, overpriced stores. But even the established businesses (who are basically protected from being run out by out of state competition due to nobody new wanting to expand into the state) are getting fed up with the business environment there.
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Re: Raley's to buy Arizona chain Bashas'

Post by veteran+ »

Wow........................

and sigh.............................

:roll:

It's always the business environment and the Cali government and NOT the corporations and their leaders.

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

Post by jamcool »

SoCal did have larger stores until the 90s. Ralphs had its “Giant” format, there were a number of Skaggs Alpha Beta stores, FedMart started there. Even in the 50s there were concepts like Owl Food/Drug and Safeway/Super S.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

veteran+ wrote: March 6th, 2022, 8:05 am Wow........................

and sigh.............................

:roll:

It's always the business environment and the Cali government and NOT the corporations and their leaders.

Got it ;)
I think initially it was the decisions made by the store chains that led to the development of larger stores not happening again in the state (after the mid 90's with Smiths and late 90's with some Lucky/Sav-On combos and Ralphs Marketplaces). Basically what it comes to is after the 2008 recession and the SoCal strike period nobody was motivated in the state to do better (to the customer) with larger stores anymore. Instead they chose minimum effort. The only chains showing success at that time were Safeway and Stater both build smaller stores and never showed any interest in large format so they kept building little 45k-55k square foot stores. Albertsons under Supervalu had imploded and wasn't developing anything anymore and Save Mart's new builds were in that 55k square foot range historically too and even that stopped after they bought Albertsons NorCal.

But looking at right now- in 2022- why is nobody building new large 80k square foot grocery stores in California? I put that solely on the above analysis- the business environment has been made difficult for outside entities to enter without very time consuming activities and significant expenses. Whether or not you want to place the blame on the politicians for that, the groups (which in some cases have been the retailers themselves, but in most cases it is activist groups) who have lobbied the politicians to make laws that essentially turn CA into a closed market due to various "differences" on product labeling, sourcing, etc. from other states, or the theory "there is already a lot of other competition in the state and it just wouldn't make sense" or the theory "CA shoppers do not like big stores (I disagree with this- every Wal Mart, Costco, Target and WinCo in the state is jam packed with shoppers)- the net result is the same. Inferior undersized and overpriced grocery stores compared to much of the US.
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