Chandler - Basha's loses share to Wal-Mart

Arizona Star 5/18/09

By Ed Taylor

EAST VALLEY TRIBUNE

CHANDLER — Bashas’ would appear to be a company in seri­ous trouble, to judge from the headlines.

In late April, the Chandler­based grocery chain said tough economic conditions would force the closing of a “handful” of underperforming stores, adding to five stores that have al­ready been closed this year.

In addition to the weakened economy, family-owned Bashas’ Supermarkets is coping with a surge of Wal-Mart Supercenters, which predictably have grabbed market share at the expense of incumbent grocers.

And Bashas’ is waging a bruis­ing fight with the United Food and Commercial Workers Interna­tional Union, which wants to or­ganize more Bashas’ employees. The union drive has generated negative publicity about the com­pany that may have weakened the desire of some consumers to shop with Bashas’.

“There is no question these are difficult times, as difficult as any we’ve seen in the history of the company,” said Senior Vice President Edward “Trey” Basha III, son of Chairman Eddie Basha Jr. and one of six Basha family members active in management. Despite those woes, the 77 ­year-old company, which em­ploys 14,000 people operating about 150 stores under the Bashas’, AJ’s, Food City and other brands, has been holding its own. According to Nielsen Co., the Chandler company’s share of the Phoenix-area Valley of the Sun market has only dropped from 16.8 percent in the fourth quarter of 2002 to 15.2 percent in the fourth quarter of 2008, the latest figure available.

In comparison, the market shares of Fry’s (owned by Kroger, another industry giant), Safeway and Albertsons have fallen by greater percentages while Wal- Mart has increased dramatically. The data indicate that Wal-Mart’s growth has come primarily at the expense of the other three.

But Trey Basha admits Wal­Mart has drawn customers from Bashas’, too. “We cannot match their buying power,” he said.

Bashas’ has tried to beat the competition by providing more personalized service, especially in specialty departments such as meats and bakery, he said.

Bashas’ faces some inherent competitive disadvantages against its bigger rivals, said Bob Kammrath, a Phoenix-based re­tail analyst.

The business model for Bashas’, which requires the stores to be supplied from a cen­tral distribution center in Chan­dler, limits the location of most of its stores to Arizona to keep transportation costs within rea­son. But rivals Wal-Mart, Kroger and Safeway operate stores in many states, which gives them the flexibility to make up any weaknesses in Arizona with profits from other states, he said. As for the union battle, “at a minimum, it’s a distraction,” Kammrath said. “And it costs money just to get your side of the story out there.”

Many Bashas’ employees are interested in union representa­tion but are afraid to speak out because of fears of retaliation, said Cory Owens, a spokesman for UFCW Local 99 in Phoenix.

He cites the example of an AJ’s Fine Foods store in Scottsdale, where 19 people were terminated in February. Various reasons were cited for the firings, but a common thread is they were all interested in the union, Owens said.

“Some had been with the company for 15 or 20 years, and many of them were at an age where they could not easily find another job,” said Julia Bishop, one of the dismissed employees.

Trey Basha confirmed the fir­ings but declined to discuss the causes, saying it’s against com­pany policy to discuss reasons for terminations. But he added: “We don’t know who supports or doesn’t support the union.”