Bashas’ would appear to be a company in serious trouble, to judge from the headlines. In late April, the Chandler-based 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 the Chandler-based firm is waging a bruising fight with the United Food and Commercial Workers 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 the local firm.
“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 Valley 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 Wal-Mart has drawn customers from Bashas’, too.
“We cannot match their buying power,” he said.
Bashas’ has tried to meet the competition by providing more personalized service, especially in specialty departments such as meats and bakery, he said.
LIMITED TO ARIZONA
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 at Scottsdale Road and Lincoln, 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.”
Actually, the company already has to do some business with the UFCW, which represents workers at eight Bashas’ stores.
They were already unionized when the company bought them, but the vast bulk of Bashas’ stores and employees remain nonunion.
The labor battle, which has lasted for three years, has been nasty and bitter. Bashas’ officials say the union has engaged in a “smear” campaign to put pressure on management to let the UFCW represent employees without a secret-ballot vote.
“Rest assured that Bashas’ will never let this happen ...,” the company said in a statement on its anti-union Web site, bashastogether.com.
But Owens said the union does want a vote and would win if the election were conducted “without coercive company tactics.”
In the meantime, the union has publicized allegations that working conditions at the company are unsafe, that Hispanic employees are treated unfairly, that the company repeatedly violates federal labor laws and various other complaints.
“These charges are not being made by us,” Owens said. “They are being made by the National Labor Relations Board, the Equal Employment Opportunity Commission and the Arizona Industrial Commission.”
Bashas’ denies the charges, citing what it calls a strong safety and health record and its listing among the “Best Places to Work in Arizona.”
TURNING THE TABLES
Bashas’ employees also have scored some public relations points of their own. On May 1, a group of about 50 employees, who said they were organizing without company direction, noisily picketed outside the UFCW headquarters in central Phoenix demanding that the union leave them alone.
Organizer Janice Pearson, an employee of Food City, said employees are well treated by the company, and the union couldn’t offer them any more benefits than they already have.
As for the irony of workers picketing against a union, she said,
“I thought we would give them a taste of their own medicine.”
The UFCW’s Owens said differences of opinion are bound to crop up among 14,000 people. “But we think many (Bashas’ employees) desire a choice.”
He said the union will continue its Bashas’ organizing efforts “as long as there are workers who are interested in having a voice on the job.”
Whatever one thinks about the Basha family’s view of labor unions, there’s no doubt about their devotion to the grocery business. While once-familiar names like A.J. Bayless, Lucky’s, ABCO and MegaFoods have come and gone, Bashas’ has remained in business since 1932, when the company was founded by brothers Ike and Eddie Basha Sr.
A critical moment for the company came in 1968 when Eddie Sr. died and Eddie Jr. took over the company. At that time Bashas’ operated only 16 stores and was in serious financial difficulty. Eddie Jr. was able to turn the company around and greatly expand it.
“I have seen what he has accomplished, and I’m amazed,” Trey Basha said.
Bashas’ has developed various formats to appeal to different market segments. Bashas’ is the brand name for traditional supermarkets, AJ’s Fine Foods is the high-end brand for customers who like gourmet foods and Food City caters to Hispanic communities.
Also, Bashas’ Dine Markets are located in Navajo communities. Finally, the company owns three Sportsman’s Fine Wines and Spirits stores in the Valley and a single Eddie’s Country Store in Pinetop-Lakeside.
The company closed its lone Ike’s Farmers Market near Tucson at the beginning of May. The natural-foods concept didn’t work at that location, Basha said.
The company will continue to remake itself, closing stores that don’t draw enough customers and expanding successful Bashas’ stores to include more specialty departments, Basha said.
“We’re looking at every aspect of the company,” he said. “We’re looking at the stores more critically. In the past, it was easier to ride (an economic slowdown) out. We can’t do that any more.”
AJ’s Fine Foods and Food City also are evolving. The company is experimenting with smaller-format AJ’s stores that could be placed in nontraditional locations such as the ground floor of high-rise office buildings. At Food City, the company is expanding its restaurant offerings.
“As tastes change, we will reflect those changes,” Basha said. “We will tailor our stores to the community.”