Raley's to buy Arizona chain Bashas'

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Raley's to buy Arizona chain Bashas'

Post by arizonaguy »

Hopefully we won't get any ONE markets here in Arizona.

I question this move and as a supermarket fan, I'm a bit worried. Didn't Raley's enter Las Vegas and Albuquerque with a purchase and then retreat a short time later?

I'm not sure Bashas' has a strong enough store base to not face the same fate.

https://www.bizjournals.com/phoenix/new ... uired.html

It does say that they're interested in expanding the Food City and AJ's Fine Foods banners out of Arizona.
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Re: Raley's to buy Arizona chain Bashas'

Post by retailfanmitchell019 »

WOW. I am a bit shocked this deal is happening.
I wonder if this is the beginning of consolidation with chains using Topco brands.
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Re: Raley's to buy Arizona chain Bashas'

Post by HCal »

Yikes, definitely didn't see this coming.

If Raley's leaves local management in place and only uses this acquisition to increase buying power, then this might help reduce costs for both chains. It may even make them big enough to bypass Topco and buy more items directly. But if Raley's tries to run the stores like the ones they have in Sacramento, they will not be successful.
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Re: Raley's to buy Arizona chain Bashas'

Post by jamcool »

Wouldn’t it been better for Bashas’ and Stater Bros to merge?
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

I probably would have been more positive about this, had it happened sometime before May 1. My opinion of Raleys has dropped exponentially, since the Reno ONE conversion took place and my experiences with that overpriced, poorly rotated store and questionable concept.

And the attitude and arrogance Raley's has displayed toward the customer (telling them what they can and can't buy so proudly) with this Reno ONE Store (just look to their responses to negative reviews on Google, Yelp, Facebook) has not been well received in Reno. If they try that type of attitude in Phoenix or rural Arizona, they are going to think the reaction in Reno was meek.

Honestly this deal confuses me. I note they say it was 14 months in the making. I thought Raleys "thing" was to convert all stores to the ONE Format. Why are they now saying they are interested in expanding into a new (and very competitive) market and now talking expansion of two distinct formats that are polar opposite of "ONE" - AJ's and Food City out of that new market. The Food City card confuses me the most given Raleys has spent the last 2 years closing/selling most of the Food Source Stores, all of which would have been perfect candidates for Food City conversions, and Raleys attempt to have a hispanic format Food Source in Reno was a miserable failure (in major part due to very poor quality perishables and it wasn't a freshness issue it was a buying issue they were just buying garbage).

I am hopeful Raley's current assessment is this ONE thing is not a good path forward so they are ready to go on a different path. I think that could be great- let's go ahead then right now and convert the Reno ONE back over to a standard Raleys, could have it ready for the holiday business in November/December; return it to the old price structure it had before, and get the plans laid to convert the Sak N Save in Reno over to the Food City format. Maybe try to get the Reno Food Source back from the IGA operator who is attempting to run it and convert that over to Food City too- but make sure these Food City things are run by Food City people who understand the format (not Raleys people who have failed with hispanic format and largely failed with Food Source format).

We will see what happens. Raley's is generally a high quality operator when placed in a solid middle/upper middle class location, they shine. They put the resources into their stores to make them well run, clean, orderly places to shop and at their core they source high quality products. Their center store merchandising is great and their mix contains better variety than the major chains.

Sometimes Raley's gets stores that they clearly don't seem very interested in. Most of the former Scolari's Stores they bought (4 lower middle class and/or rural locations) seem to fall into this and with these stores the stores tend to be dirty, not as well staffed, not as well merchandised, very short hours and poorly stocked perimeter departments, and just feel like they don't care much about the stores. I am a little concerned a number of Basha's locations are in these types of locations and am very curious what Raley's wants with those types of stores.

Bashas marketshare in Phoenix is only around 6% at this point in time so this move probably isn't going to impact the market much. I find it interesting they are making this move after the previous failure in Las Vegas and market exit (it was not a failure) in New Mexico. Had this move been part of their long range plans, they should have kept the New Mexico Stores (which were profitable) as it would have been a good compliment.

But one thing I am certain of- this is much better news than hearing Bashas was sold to one of the national chains.
Last edited by storewanderer on October 1st, 2021, 11:28 pm, edited 2 times in total.
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Re: Raley's to buy Arizona chain Bashas'

Post by storewanderer »

I am hopeful Raley's will learn a few things from Bashas while they are at this.

For instance Bashas has an above average scratch bakery program. Raley's bakery program is all frozen bakeoff stuff (a lot of which is quite good) however more recently during COVID Raleys switched its donut program to awful vacuum packed single wrapped donuts that were defrosted and the quality was just horrible- inedible. The bakery quality on core items like cakes in the ONE Store is horrible- inedible.

Bashas also seems to have a consistent hot food program including the usual chicken but also an expanded amount of fried items and in some stores hot slices of pizza. Raley's can't figure out what it wants to do with hot food programs and keeps changing what it is doing, and needs to just come up with something consistent. I've been watching them for 20 years and they can't stop changing their programs.

Also Bashas has Boar's Head lunchmeats. Raley's should have Boar's Head, but it doesn't for whatever reason, then Safeway managed to get on the Boar's Head program in NorCal. Raley's better re-visit this to ensure this line of products stays in Bashas.
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Re: Raley's to buy Arizona chain Bashas'

Post by arizonaguy »

storewanderer wrote: October 1st, 2021, 10:58 pm I probably would have been more positive about this, had it happened sometime before May 1. My opinion of Raleys has dropped exponentially, since the Reno ONE conversion took place and my experiences with that overpriced, poorly rotated store and questionable concept.

And the attitude and arrogance Raley's has displayed toward the customer (telling them what they can and can't buy so proudly) with this Reno ONE Store (just look to their responses to negative reviews on Google, Yelp, Facebook) has not been well received in Reno. If they try that type of attitude in Phoenix or rural Arizona, they are going to think the reaction in Reno was meek.

Honestly this deal confuses me. I note they say it was 14 months in the making. I thought Raleys "thing" was to convert all stores to the ONE Format. Why are they now saying they are interested in expanding into a new (and very competitive) market and now talking expansion of two distinct formats that are polar opposite of "ONE" - AJ's and Food City out of that new market. The Food City card confuses me the most given Raleys has spent the last 2 years closing/selling most of the Food Source Stores, all of which would have been perfect candidates for Food City conversions, and Raleys attempt to have a hispanic format Food Source in Reno was a miserable failure (in major part due to very poor quality perishables and it wasn't a freshness issue it was a buying issue they were just buying garbage).

I am hopeful Raley's current assessment is this ONE thing is not a good path forward so they are ready to go on a different path. I think that could be great- let's go ahead then right now and convert the Reno ONE back over to a standard Raleys, could have it ready for the holiday business in November/December; return it to the old price structure it had before, and get the plans laid to convert the Sak N Save in Reno over to the Food City format. Maybe try to get the Reno Food Source back from the IGA operator who is attempting to run it and convert that over to Food City too- but make sure these Food City things are run by Food City people who understand the format (not Raleys people who have failed with hispanic format and largely failed with Food Source format).

We will see what happens. Raley's is generally a high quality operator when placed in a solid middle/upper middle class location, they shine. They put the resources into their stores to make them well run, clean, orderly places to shop and at their core they source high quality products. Their center store merchandising is great and their mix contains better variety than the major chains.

Sometimes Raley's gets stores that they clearly don't seem very interested in. Most of the former Scolari's Stores they bought (4 lower middle class and/or rural locations) seem to fall into this and with these stores the stores tend to be dirty, not as well staffed, not as well merchandised, very short hours and poorly stocked perimeter departments, and just feel like they don't care much about the stores. I am a little concerned a number of Basha's locations are in these types of locations and am very curious what Raley's wants with those types of stores.

Bashas marketshare in Phoenix is only around 6% at this point in time so this move probably isn't going to impact the market much. I find it interesting they are making this move after the previous failure in Las Vegas and market exit (it was not a failure) in New Mexico. Had this move been part of their long range plans, they should have kept the New Mexico Stores (which were profitable) as it would have been a good compliment.

But one thing I am certain of- this is much better news than hearing Bashas was sold to one of the national chains.
Most Bashas' bannered stores fit the definition of those Scolari's stores. Bashas' strength is in its rural locations where it and maybe Safeway are the only game in town (Fry's typically didn't / doesn't have any rural locations other than those that were former Smith's such as Cottonwood). I can count on one hand the number of high volume, well located Bashas' stores. After they emerged from bankruptcy with a large store purge around 2009 they've been slowly continuing to close stores due to landlords demanding higher leases or redevelopment of the shopping centers where their stores are located.

Food City and AJ's have more of a niche and seem to perform better. Food City tends to be located in old supermarket spaces that used to be conventional grocers but the surrounding demographics have become Hispanic. Their stores tend to be smaller and, while they are a good format, they have also closed stores due to redevelopment / gentrification. AJ's is a destination store that is a unique format (best supermarket bakery in town) but feels stuck as to what a high end store would be in the 1990s as opposed to the newer definition of a high end store (which, coincidentially, is a Whole Foods or Raleys ONE type of offering).

I didn't think Bashas' had much of a future in the metropolitan areas prior to this purchase and I still don't. All of their new stores under the Bashas' banner have been in the Navajo nation where there is little to no competition. Unless Raley's has secret sauce where it can run a conventional store that can compete well against Fry's / Albertsons / Safeway / Walmart / Aldi / WinCO as well as Whole Foods / Sprouts / Trader Joe's I'd expect to continue to see the slow decline of the Bashas' banner (if not a faster decline if Raley's decides to pull out of the market). Bashas' has higher quality perimeters but again they've got subpar locations where the higher quality perimeters don't really matter as much.

As far as Boar's Head goes it's the most common deli program around Arizona. Fry's and Sprout's also are on the Boar's Head program.
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Re: Raley's to buy Arizona chain Bashas'

Post by rwsandiego »

As a single, affluent, picky, fresh-food-loving, chain-avoiding guy, I'm the definition of an independently-owned grocery store's target customer, yet I never shop at Bashas' and primarily shop at Safeway. Why? For every reason @arizonaguy mentioned in his post.
arizonaguy wrote: October 2nd, 2021, 7:05 am Most Bashas' bannered stores fit the definition of those Scolari's stores...
The faded sign in the picture accompanying the Phoenix Business Journal article tells you everything you need to know about Bashas'. Stores have to keep up with the times and Bashas' hasn't.
arizonaguy wrote: October 2nd, 2021, 7:05 am...Bashas' strength is in its rural locations where it and maybe Safeway are the only game in town (Fry's typically didn't / doesn't have any rural locations other than those that were former Smith's such as Cottonwood). I can count on one hand the number of high volume, well located Bashas' stores. After they emerged from bankruptcy with a large store purge around 2009 they've been slowly continuing to close stores due to landlords demanding higher leases or redevelopment of the shopping centers where their stores are located...
I can think of one and they opted not to keep it: Seventh Avenue and Osborn in Phoenix. It was a pit, but a busy pit and the neighborhood loved it. It occupied one half of a building and the other half was the shell of a long-closed Osco. They should have expanded into the Osco years ago but didn't. When the property was redeveloped they opted to leave. Now the location is a Sprouts.

Here in Central Phoenix, Bashas' has one store - Seventh Street and Missouri. It is so out of the way that I don't think of shopping there. It is an old store (former Alpha-Beta/ABCO opened in December 1979) and feels like it. They remodeled it within the last six years yet it feels old and run down. Why would I drive out of my way to shop at a run-down store?
arizonaguy wrote: October 2nd, 2021, 7:05 am...AJ's is a destination store that is a unique format (best supermarket bakery in town) but feels stuck as to what a high end store would be in the 1990s as opposed to the newer definition of a high end store (which, coincidentially, is a Whole Foods or Raleys ONE type of offering)....
With the exception of the Uptown Plaza AJ's (which they remodeled a couple of years ago when the entire plaza was revamped) every AJ's I've visited appears to have been last remodeled in the 1990's. Some are better kept than others, but most need a serious upgrade. That said, if Raley's is serious about expanding AJ's, they could create a hybrid AJ's/Whole Foods concept that blends the old-school "gourmet" products with more contemporary offerings while maintaining the scratch bakery and prepared foods. (Which are quite good).
arizonaguy wrote: October 2nd, 2021, 7:05 am...I didn't think Bashas' had much of a future in the metropolitan areas prior to this purchase and I still don't. All of their new stores under the Bashas' banner have been in the Navajo nation where there is little to no competition. Unless Raley's has secret sauce where it can run a conventional store that can compete well against Fry's / Albertsons / Safeway / Walmart / Aldi / WinCO as well as Whole Foods / Sprouts / Trader Joe's I'd expect to continue to see the slow decline of the Bashas' banner (if not a faster decline if Raley's decides to pull out of the market). Bashas' has higher quality perimeters but again they've got subpar locations where the higher quality perimeters don't really matter as much.....
If Raley's felt like being bold and opened Bashas' in the up-and-coming and already redeveloped Central Phoenix communities they could have a shot at reversing Bashas' decline or, at least, maintain its current position. However, I'm not sure Raley's is the right company to do that. Their experiment at being bold seems to have flopped, but IMO because they miscalculated when choosing the location to convert to Raley's ONE. If they are smart, they will use Bashas' as a test lab. The question is "are they that smart?"
arizonaguy wrote: October 2nd, 2021, 7:05 am...As far as Boar's Head goes it's the most common deli program around Arizona. Fry's and Sprout's also are on the Boar's Head program.
This is another area where Bashas' missed an opportunity and Raley's could find one. Instead of keeping the Boars' Head program, they could curate a selection of different deli products, which would differentiate themselves from the other supermarkets.
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Re: Raley's to buy Arizona chain Bashas'

Post by jamcool »

Supposedly one of the reasons the Bashas boys sold out was the struggle to keep the stores stocked last year… they had a lot of foreign made TP on the shelves and different private label canned goods (such as Parade and IGA-Bashas’ supplies a handful of IGAs in Arizona) This is an increasing problem with the independent chains versus the “Big 5” - supplies go to the big guys first, everybody else last.
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Re: Raley's to buy Arizona chain Bashas'

Post by rwsandiego »

jamcool wrote: October 2nd, 2021, 10:33 am Supposedly one of the reasons the Bashas boys sold out was the struggle to keep the stores stocked last year… they had a lot of foreign made TP on the shelves and different private label canned goods (such as Parade and IGA-Bashas’ supplies a handful of IGAs in Arizona) This is an increasing problem with the independent chains versus the “Big 5” - supplies go to the big guys first, everybody else last.
The funny thing about that is they actually had TP when no one else did.

IMO, the real reason for selling is the Basha children don't want to run a grocery chain nor do they have the vision (or funding) to become something like Wegmann's, which is also family-owned.
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