The Basha brothers: Keeping it fresh
The Basha brothers were sitting around a table in the floral section of one of their grocery stores talking about what it takes to thrive in their industry, when a silver-haired woman in a neat shirtwaist dress wheeled by with her cart. “That’s the most beautiful produce department in any store I’ve ever been in,” she said to them. Clearly pleased, the brothers showered her with thanks as she proceeded to the checkout.
Many observers say that the Bashas’ Family of Stores rebounded from Chapter 11 bankruptcy in part because of the loyalty of its customers and the support of its suppliers. Today the company is leaner and more profitable, and though consolidation is sweeping the grocery industry, there’s no talk of selling the company. “It’s not just a company to the people who work here,” said Bashas’ spokesman Ashley Shick. “It’s a legacy, a family history and a commitment to Arizona to stay localized.”
And the family is at the helm: the brothers are the third generation to lead the Bashas’ family of grocery stores. Edward “Trey” Basha III, MBA ’02, is president and CEO; David Basha, MBA ’02, is vice president for real estate; Ike Basha, MBA ’98, is senior vice president for strategic initiatives; and Mike Basha, MBA ’98, is senior vice president for logistics. Their cousin, Johnny Basha, is senior vice president, special projects.
“Everybody likes a personal experience, but if we have to own something, it’s customer service.”
Arizona’s grocer
From the beginning, Bashas’ has been a family affair. The first generation were immigrants who came to Arizona and opened a dry goods store. Sons Ike and Eddie Basha Sr. started their own business in 1932, opening the first of what is today a chain of about 115 stores. Eddie Basha Jr. took over in 1968, and before his death in 2013, he became an Arizona icon. A businessman, humanitarian and art collector, he served on the Arizona Board of Regents and ran for governor. Now four of his sons and a nephew guide the company.
“One of the best things about being in business with family is that we collaborate with and trust each other,” says Trey. Ike chimes in: “I’d say it’s easier to do business as a family, because everybody has a common goal — there are no competing agendas or politics when it comes to the family’s outlook and our focus.”
That sense of family, and the family’s bedrock of fairness and honesty, infuses the business. The people who work at Bashas’ are “members,” not employees. The brothers go so far as to say they are extended family.
“We’ve always been very egalitarian,” explains Trey. “For example, Basha family members have the same medical benefits that a full-time clerk has. That’s something that Eddie started, and we really have tried to blur the lines between management and labor. We all have a job to do, but ultimately we all work for the customers that come through the door. We understand that.”
This family-centered culture, they say, is their competitive advantage.
The razor’s edge
The Bashas’ chain operates in one of the top two most competitive grocery markets in the country, according to Trey. The other is Dallas. At one time metropolitan Phoenix hosted nine major chains, he added. In most other cities two or three big players and an assortment of independents vie for the grocery dollar. Today, the other major players in Phoenix are Fry’s Food & Drug Stores Inc., Albertsons-Safeway Companies Inc. and the juggernaut Wal-Mart Stores Inc., as well as an assortment of specialty and natural foods markets like Whole Foods Market Inc., Sprouts Farmers Market and Trader Joe’s. Target Corp. has added groceries to its footprint, and grocery items can be found in drug and office supply stores — even The Home Depot. So how does a local chain compete?
“It’s incredibly difficult, there are no two ways about it,” says Ike. “I think our culture helps us — that commitment to our fellow members is at a higher level than our competition.” Trey adds, “Everybody likes a personal experience, but if we have to own something, it’s customer service.”
He might also have said that Bashas’ had a head start on differentiation in an industry where chains must either “go big or go niche.” The 49 Bashas’ Supermarkets around Arizona represent the traditional grocery format, but there are three others under the Bashas’ Family of Stores umbrella, each tailored to a well-defined market. The 46 Food City locations focus on the Hispanic community, 11 AJ’s Fine Foods stores cater to the gourmet market and 10 Bashas’ Diné Markets serve the Native American communities around the state.
Another differentiator, and a “saving grace,” was the distribution center in Chandler. In the early years a number of chains were using third-party suppliers, Trey explains. Lacking that wholesale advantage, none of them survived. Today, the distribution center continues to be a big contributor to the company’s success.
Mike directs the center, an around-the-clock operation. He continues to find ways to streamline processes while ensuring that the right products get to the right stores every day. This allows the grocer to be quick on its feet. Orders placed by stores in the morning are filled that day — something very important to customers who follow what’s on sale.
“One of the best things about being in business with family is that we collaborate with and trust each other,” says Trey. Ike chimes in: “I’d say it’s easier to do business as a family, because everybody has a common goal — there are no competing agendas or politics when it comes to the family’s outlook and our focus.”
The best offense
Upon emerging from Chapter 11 four years ago, the company was faced with aging stores and few opportunities to build. “It was really important for us to start updating our stores,” says David. He’s leading a remodeling initiative that will see one-third to one-half of all Bashas’ and Food City stores refreshed by the end of this year.
Just one mile south of a new Fry’s and a new Sprouts, the store at Chandler Heights and Gilbert roads is a case in point for the remodeling program.
“We’re doing this offensively and defensively — and because it’s time,” says Trey. The stores that have been updated are already making an impact.
“It’s been very beneficial — we’ve seen some great increases in sales — new faces, new customers,” David says. “And we’ve seen morale increase. When our members see us putting money back into the stores it shows we’re here to stay.”
Trey says the company is using demographic and psychographic data to determine the work to be done at each store. These are not cosmetic face lifts. “We marry those two data points and come up with a remodeling and remerchandising plan that’s customized for each and every store,” he says. Even the advertising is tailored.
That reliance on data is nothing new to the industry, Trey says. “The grocery business isn’t considered sexy, but we were concerned with logistics before UPS knew what logistics was,” he says. “We’re always on the forefront of technology. We were the early adopters of credit and debit cards. Any technology that’s out there — we look at it and we use it if we can. We’re in the pennies business, so anything that we can do better, faster, cheaper — we’re looking at it.”
Selling in the perimeter
Because grocery is in the retail sector, it goes without saying that the industry is experiencing change. So what will supermarkets look like in five years or so?
“It’s hard to say with all of the interruption, especially from online,” says Trey.
The center of the store is becoming a commodity business, he said, and he expects the square footage to shrink. “The pressure is on to buy consumer packaged products in larger quantities, to get the discounts,” he said. That trend favors big box stores like Costco Wholesale Corp., and Amazon.com Inc., with its automated ordering and home delivery. Bashas’ and other supermarkets will find a different model.
He thinks future grocery stores will be smaller, consisting primarily of the departments that now occupy the perimeter — the deli, bakery, meat and produce departments. And stores will balance two opposing trends: the emergence of foodies who want fresh ingredients, and the young people who are either not interested in cooking, don’t have the time to cook or don’t know how to cook. That will probably mean more freshly prepared foods and meals, similar to the chef-prepared entrees that give AJ’s Fine Foods its cachet. Convenience may also come in the form of ready-to-cook packages that include a recipe and measured ingredients. Moving into services, grocery stores might even begin to offer cooking lessons.
The brothers were getting ready to head out for the day when Shick gathered them for a photo. They lined up in front of buckets of bouquets with store Director Jamie Mathis, who was approaching the 28th anniversary of his employment with the company. There were smiles and laughter all around as Shick snapped the shot.
Whatever the future brings, the Bashas — including their extended family members — are determined to be in the business. “Each generation we’re working to make it better,” Trey says. “The last thing we’re going to say is, ‘We’re there — we’re satisfied.’ Never.”
