GHQ Cover Story: Native Wisdom
By John Karolefski
Through special arrangement, what follows is an excerpt of a current story
from Grocery Headquarters magazine, presented here for discussion.
Bashas’ Family of Stores in Arizona is celebrating its 75th anniversary of surviving as the likes of Wal-Mart, Kroger, Safeway, Costco, Trader Joe’s, Whole Foods and Walgreens have opened stores throughout the state.
Today, Bashas’ is the seventh-largest employer in Arizona and its 700,000-square-foot distribution center supplies the company’s 157 stores, as well as 18 IGAs.
Mike Proulx, president and COO of Bashas’ Family of Stores, sees being a family-owned business as an advantage. “Our decision-makers are right here. This is our home. That allows us to know our environment and to make decisions quicker than maybe the other formidable competitors.”
This
grass-roots way of thinking has spawned four distinct store formats: Bashas’,
Food City, AJ’s Fine Foods and Diné Markets. Each serves a specific slice of
Arizona’s diverse demographic with a blend of cutting-edge micro-merchandising
and old-fashioned customer service.
The 74 conventional food and drug stores bear the banner of Bashas’ Supermarkets. Shoppers are drawn to the stores largely for their fresh produce, scratch bakeries and full-service butcher shops.
Many offer pharmacies, childcare services, ATMs, banks and in-store health screenings. The chain’s successful HealthStyles program relies on the latest screening and diagnostic equipment. The wide variety of services the program provides to local neighborhoods includes blood panels; hearing and vision testing; mobile on-site mammography units; screenings for diabetes, bone density, thyroid and prostate cancer; and immunizations for flu and pneumonia.
Food City is a chain offering an EDLP format and catering to Mexican-American shoppers. Operated separately from the rest of Bashas’, the banner boasts its own distribution system, assortments, pricing and community programs.
The 11 AJ’s cater to shoppers with discriminating tastes for gourmet and specialty fare with the panache of high-end customer service.
The assortment of departments includes a Butcher’s Corner offering exotic meats such as venison and ostrich, as well as prime rib and all-natural chicken; Seafood Grotto, with a world-class selection delivered fresh daily; Farmer’s Market, including Asian, Latin and European items among the extensive variety of fresh fruits and vegetables; Wine Cellar, staffed by cellar masters to make recommendations; Boulangerie, presenting signature fruit tarts, tiramisu and truffles, cannolis and croissants; and the Bistro, serving such items as Beef Wellington, pork tenderloin and grilled salmon with mango salsa, as well as gourmet sandwiches and specialty pizza for takeout.
Bashas’
operates seven Diné (pronounced dee-NEH) Markets on the Navajo Nation reservation
and three other stores on the Apache and Tohono O’odham reservations bear the
Bashas’ banner. All the locations are similar to the chain’s conventional stores
but include products and packages that the community is looking for, like mutton,
wool, leather pouches and 25-pound bags of Blue Bird flour for fry bread, a
Navajo staple.
Bashas’ holds down the No. 4 position in the state with a market share of 18 percent, right behind Safeway with 19 percent. Kroger is No. 1 with a 24 percent share and Wal-Mart is second with 22 percent.
“We’ve been successful in holding on and growing our share over the years with our niche marketing and our focus on the customers who we serve neighborhood by neighborhood,” said Mr. Proulx.
That’s the formula that led to the creation of a new format opening in Tucson next month. Ike’s Farmer’s Market will combine the best aspects of such natural food operators as Whole Foods, Trader Joe’s and Wild Oats. The 26,000 square-foot prototype will highlight organic produce, natural foods, and nutritional supplements for health-minded consumers.
Discussion Questions: What is your assessment of Bashas’ Family of Stores and the relative strength/weakness of its banners? Do you think they are making good use of their “grass roots” advantage?
I am a huge fan of Bashas’ and miss them a lot since leaving the Phoenix area almost 2 years ago. The Bashas’ store had the best selection of soft and new age beverage drinks, best selection of products for everyday shopping, and friendly staff. Then AJ’s, the same distance in the other direction, always had something special and delicious. Their outdoor grill was one of my favorites. It’s been almost two years and I have not found a local substitute. Knowing their customers was evident in the selection of products and the differentiation by format. The friendly staff made sure that that differentiation was on target. Keep up the great work!
Bashas’ history, 75 years of being close to the customer and community has worked well for them. They’ve identified micro-markets within AZ (i.e. Native Indian, upscale gourmet, Hispanic) and developed formats to address those specific shopper segments. However, I don’t agree that the “cutting-edge merchandising and old-fashioned customer service” referred to in the GHQ article applies across all banners. This may be true for their AJ’s and Bashas’ stores but not for Food City–which operates separately. Food City is their EDLP Hispanic format (about 40 stores or so) and my experience is that the stores are cluttered, not especially clean and definitely don’t offer old-fashioned customer service. Across town, another family-owned independent grocery store operator, Ranch Markets (owned by the Provenzano family) is eating Food City’s lunch when it comes to appealing to Hispanic shoppers. However, overall, Bashas’ had done well by positioning its concepts as friendly, service-oriented neighborhood stores with roots in the community. Mr. Proulx’s statement that being a family-owned retailer is an advantage maybe true in the case of Bashas’ but it can be both a blessing and a curse. Positives: No SEC reporting and public stakeholders to keep satisfied quarter-by-quarter; if family leadership is by an enlightened owner with great instincts for retail, supported by a strong management team, this can offer competitive advantage over large chains where bureaucracy and size slow down innovation. Negatives: how do you fire an incompetent boss in a family-owned retailer? Or, deal with seven brother/owners in the case of a Los Angeles grocery store where decision-making is by committee?
Bashas’ has succeeded for one simple reason: Customer service. Capturing emerging markets is a great concept, but if you ultimately don’t offer service, you’ll fail.
I used to live in AZ and drove by Kroger, Safeway AND Wal-Mart to get to the Bashas’ store in my “neighborhood.” I drove nearly 20 miles in city traffic to get to AJ’s in Ahwatukee (from Mesa) for seafood. It was all about the service. I could call AJ’s before making the trip and ask “what’s good today?” And, more importantly, they’d have it there for me packaged and ready to go when I got there an hour later.
They once had a promotion for cooking pans. I traveled extensively for work at the time and would be gone sometimes several weeks at a time. The store manager knew I was collecting the cookware and would “save” the pots I missed while I was gone. THAT’s knowing your customers and service. (I still use that cookware set, 10 years later)
Congratulations to Bashas’. It is exciting to hear of a retailer that is passionate about its customers and its stores. Having different store concepts reflects the diversity of the state in which they exist and the many ways they found to cater to those customers. I am not familiar with the stores first hand, but I would expect there is a great deal of customer loyalty because Bashas’ stores respect the customer and treat them with respect. That is the formula for success from my experience.
People are tired of globalization. The last time I went to Paris, I didn’t even shop. Who needs to visit the Gap on the Champs Elysees? I live in New York City, and frequently get asked by out-of-town friends, “Where can I go to get something uniquely New York, that I couldn’t get anywhere else?”
I think this desire is becoming more widespread. People want to shop in stores that are somehow tied to their locale. They want local produce. They want local flavor. I predict there will be a backlash against the “Clear Channel Communications” strategy of broadcasting “local” radio to Burlington, VT from Burbank, CA.
Those familiar with Southeast supermarket history will be reminded of Bruno’s in Birmingham, AL. Twenty years ago they operated six, customer-pleasin’ formats in their immediate geography including their flagship conventionals, C-stores, warehouse stores, limited assortment stores, combo-stores, and stores featuring the freshest local produce, meats, and other perishables. They weren’t as demographically-tuned as Bashas’, but those were different times. Instead, they were tuned to the convenience of location and to every level of disposable income. With a population not nearly as ethnically diverse as Arizona’s, it worked until internal management problems spelled its demise.
And therein lies a lesson, perhaps, for Bashas’: Don’t fall so deeply in love with one of the formats you’ve worked hard to develop that you’re unwilling to give it a major tuneup or even walk away if it isn’t working. They can’t all be winners.
Bashas’ has succeeded in Arizona by identifying emerging markets in their geography and then marketing to these consumers with unique offerings. The identification of the Native American opportunity is a great example. Diverse offerings and multiple formats are difficult to manage but Bashas’ has been successful by keeping the geography compact and remaining true to the market that they understand in Arizona.
Retailers usually grow by going to new geographies. The same concept simply moves to multiple states and regions. Bashas’ is unusual because they have not expanded geographically. Instead, they’ve expanded by initiating multiple formats. Assuming each of the formats is profitable, their accomplishment is relatively unique. Retailers with multiple formats are usually accused of suboptimally managing some or all of them. Wendy’s sold off Tim Horton’s; Sam’s Club isn’t as productive as Costco, Boston Market was a disaster for McDonald’s, Federated sold Aeropostale and David’s Bridal, etc.
Having family in Arizona that I frequently visit, I can tell you first hand that Bashas’ is real loyalty personified. I had a friend work for them as a manager some twenty years ago and he mentioned constantly what a great company it was to work at and that he would never leave. Well, age is creeping up on him but he still says the same thing. What he liked more than anything else was the freedom to do the right thing (even if it cost a little) without a district manager or someone in corporate coming down on him.
In this day in age of us and anyone forward thinking would attest, customer service will win out and that is one of the many advantages Bashas’ has over others. Change?