Bashas' Inc. Business Information, Profile, and History

Company Perspectives

Thousands of Bashas' members have poured labor and love into the company since its founding. Like any family, the personality of Bashas' is a reflection of the quality of the people who work for and grow with the company. Bashas' has survived the ups and downs of the supermarket industry, increased competition and national economic fluctuations because its members are determined to work together to continually make the company better able to serve our customers. Many members choose to remain with Bashas' for decades, and we think that says a lot about Bashas', and a lot about the people who are at its heart, our members.

History of Bashas' Inc.

Bashas' Inc. operates more than 150 supermarkets and superstores primarily under the banners Food City, Bashas' Markets (and its rural counterpart Eddie's Country Store), and AJ's Fine Foods. Bashas' stores are located throughout Arizona, with a couple in California and New Mexico. The company has a handful of stores operating in Navajo (Diné) and other tribal reservations. One of the company's supermarket formats, Food City, is geared for Hispanic communities and accounts for nearly half of revenues. AJ's Fine Foods touts itself as a gourmet and specialty supermarket, featuring extensive wine collections and prepared meals. Bashas' also operates an online grocery shopping operation through its Groceries On The Go service. The Basha family, who founded the chain in 1932, owns the company. The company has a reputation for responsiveness to the shopping preferences of local communities and is quick to introduce new products and services.

Origins: From Lebanon to Arizona

Owing to its standing as a family-run business, Bashas' corporate roots stretch back to the arrival of the first Basha family member in the United States in the 19th century. In 1884, Tanius Basha left Lebanon for New York City, where he opened an import and export wholesale store. Two years later, after his entrepreneurial efforts had shown promise, Tanius sent for his oldest son to come to New York to help him with his store. Najeeb Basha, 16 years old when he arrived in New York to assist his father, made the city his new home and mercantilism his new profession. In 1901, he married a fellow Lebanese immigrant named Najeeby Srour, and together the pair began raising a family from whose ranks Bashas' would be founded. Najeeby gave birth to nine children, all girls except for two boys, Ike and Eddie: the founders of Bashas' Inc.

Ike and Eddie Basha spent their childhood surrounded by the mores of retail trade. Their father left New York in 1910 to join several members of the Srour family in Ray, Arizona. There, Najeeb assisted his in-laws in the operation of a mercantile business. After a stint working for his wife's family, Najeeb was joined by his wife and children in Arizona and opened his own store. The store later burned down, prompting Najeeb to open a second store during the 1920s, by which time his children, Ike and Eddie included, were old enough to lend a hand in the family business. The store, located in Chandler, Arizona, catered to the rural needs of its community, selling groceries, dry goods, and household goods such as furniture.

Chain Beginning with One Store in 1932

Ike and Eddie Basha learned the retail trade from their parents at the Chandler store, eventually deciding to enter the business themselves when they were old enough to set out on their own. They opened their own store in 1932, marking the beginning of what would later become the Bashas' chain. For their first store, they drew on the model created by their parents and took it one step further by placing a greater emphasis on serving the specifically rural needs of their customers. Aside from its primary stock of groceries, the Basha brothers' store carried a range of goods, including blankets, axes, and gasoline, presenting itself as the quintessential country store. The format endured for the ensuing two decades.

Although the two Basha brothers demonstrated their independence by becoming entrepreneurs, they by no means cut themselves free from their strong familial bonds. All family members, with Najeeby Basha presiding as family matriarch, were involved in running the first and subsequent stores. The women in the family played crucial roles in the business, with one sister serving as a buyer for the stores, another responsible for administrative matters, and other sisters working in various capacities to ensure the operational success of the business. With the entire family working in support, the stores secured a lasting presence in Arizona, representing the pillars upon which a legacy of Basha involvement in the grocery business was built.

The success of the first store led to the establishment of additional stores in the Bashas' home state of Arizona. For roughly 20 years, the stores were modeled after the first country store, but by the 1950s a new breed of grocery stores was attracting consumers. Supermarkets, larger and stocked with a more diverse range of merchandise than traditional grocery stores, emerged as the format of the future for grocery retailers, convincing the Basha brothers that the success of their chain called for a revamped merchandising approach. They gradually began replacing their grocery stores with supermarkets, effecting an important strategic transition that positioned their stores to take full advantage of the postwar economic boom period.

Eddie Basha, Jr., Taking Control in 1968

During the pivotal transition from country stores to supermarkets, Bashas' lost the leadership of one of its founders. In 1958, Ike Basha died after a quarter-century of stewarding the fortunes of the family business. His death left his brother Eddie in full control over the enterprise, and he was soon joined by the second generation of Bashas in the business, his son Eddie Basha, Jr. After graduating from Stanford University, the younger Basha joined Bashas', helping his father to lead the company during a period in which expansion of the chain became top priority. The partnership of father and son at the helm continued until 1968, when Eddie Basha, Sr., died. At the time of his death, the Bashas' chain consisted of 17 retail outlets.

For a company whose affairs were governed by a tightly-knit family, the loss of the founding brothers could have marked the beginning of a difficult period, but Bashas' enjoyed a seamless transition from one generation to the next. The ease with which the company passed through this potential sticking point was attributable to the talents of Eddie Basha, Jr. In his early 30s when his father died and he assumed full control over the company, Basha developed into an influential business leader and into a much-admired civic leader. He became renowned for his elaborate pranks and gained widespread notoriety as Arizona's Democratic gubernatorial candidate in 1994, when he ran a "people," not "politics," campaign, deprecatorily referring to himself as the chubby grocer.

Basha lost the race for the governor's seat, but he recorded stirring success in building Bashas' into one of the largest private companies in the United States. His talent for expansion, however, was not fully expressed until he entered his 50s. During the intervening years, as the company progressed through the 1970s and 1980s, methodical expansion took place, as Basha experimented with different merchandising mixtures. Like his father and uncle before him, Basha endeavored to create supermarkets that catered to the needs of individual communities, the tastes and desires of which often changed from one location to another. By searching for the most appropriate mixture of goods and services, he created stores specifically tailored to what the company called demographic neighborhoods. The fine-tuning process was never ending, as was the expansion of the chain, which by the end of the 1980s included approximately 45 units.

The size of the company at this point represented a half-century of growth, the product of the combined efforts of Ike, Eddie, Sr., and Eddie, Jr. During the ensuing decade, expansion occurred at a dizzying pace. In ten years' time, Basha more than doubled the size of the company, adding a stable of retail banners to the company's portfolio.

Aggressive Expansion: 1990-99

Before Basha began expanding in earnest, he built the infrastructure to support the company's imminent growth. In 1991, the company opened a 125,000-square-foot perishables warehouse, built to store the chain's frozen food, meat, and produce. A year later, in December 1992, Bashas' opened a 325,000-square-foot dry grocery facility, replacing the use of a leased facility in Phoenix. The new facilities, located 11 miles from the company's 40-year-old main office, composed Bashas' new distribution operation, which was consolidated with the offices of the buying staff by early 1993. Concurrent with the establishment of a single distribution complex, Bashas' opened its own health- and beauty-care (HBC) depot. Previously, the company had purchased up to 80 percent of its HBC inventory from a distributor named Impact Distributing, but control over its own depot enabled Bashas' to purchase nearly all HBC items directly from manufacturers, giving the company greater control over inventory. In the wake of the March 1993 debut of the HBC depot, sales increased markedly, ignited by the advantages engendered by vertical integration.

Rising sales became the predominant theme at Bashas' during the 1990s, particularly after the company embarked on an acquisition campaign that added several new store banners to its portfolio. Coming off $475 million in sales in 1992, the company made quick use of its new HBC depot and distribution complex by acquiring AJ's Fine Foods, an upscale, specialty chain offering prepared gourmet meals, a large wine collection, and specialty baked goods. Also in 1993, the company acquired a single Food City store in Phoenix. For 50 years, Food City had distinguished itself as a supermarket that catered to the particular needs of the Hispanic community in Phoenix, a tradition that Bashas' continued to observe once it took control of the format. Bashas' operated another format tailored for Hispanics, the company's Mercado store, which operated in southern Arizona.

As expansion moved forward, the company continued to experiment with merchandising mixtures and new services. In 1994, for instance, the company opened its first live video department in a Bashas' Markets--the word "live" designating that the actual videotapes were displayed on the shelves. Designed as a theater-within-the-store, the video department housed 5,000 rental units, or more than twice the number of units available at the company's other stores. Also in 1994, the company began installing two-foot by two-foot floor tiles that bore advertisements from national-brand manufacturers, using a tile system called the In-Floor Advertising Unit, patented by Indoor Media Group. Bashas' units, which secured an added revenue stream by using the advertising tiles, were among the first 100 supermarkets in the country to use the In-Floor Advertising Unit.

By late 1994, Bashas' operated 67 stores in Arizona, making it the third largest grocery chain in the state. Within two years, the company completed its climb up the state's rankings by completing another acquisition. In October 1996, Bashas' reached an agreement to acquire MegaFoods Stores, Inc. MegaFoods, with 16 discount stores in Arizona, was operating under Chapter 11 bankruptcy protection, having declared bankruptcy in August 1994. At the time of the acquisition announcement, Bashas' had 73 stores in operation, 63 of which operated under the Bashas' Market name. The company's other stores included one Mercado unit, two stores that operated as discount units under the Bargain Basket logo, three Food City units, and four AJ's Fine Foods specialty stores. The acquisition of MegaFoods, completed for $22.6 million on the last day of 1996, lifted the number of the company's stores to 89, making it the largest grocery chain in the state.

Following the completion of the MegaFoods transaction, attention was focused on what to do with the addition of the chain. In March 1998, the company announced that it was dropping the MegaFoods name and converting the units to either the Food City or Mercado format.

By 1999, the conversion work had been completed, marking the end of a fruitful decade for the company. Annual sales had reached an estimated $1 billion, representing a more than 100 percent increase from the total recorded seven years earlier. Expansion had taken the chain out of its home state and into New Mexico and California, elevating the company's stature to that of a regional force. For the future, Bashas' appeared well poised to continue its long record of success. Its close attention to the demands of the communities it served and its willingness to change with the times--the company embraced the lucrative prospects of electronic commerce by offering online grocery shopping through its Groceries On The Go Service--promised to produce positive results in the 21st century.

More Growth in 2000 and Beyond

Bashas' was in growth mode for all of its concepts, a spokesperson told the Business Journal of Phoenix in 2001. It was adding up to ten new stores a year, many of them through acquisitions. Bashas' bought 22 Southwest Supermarkets for $9 million at the defunct chain's bankruptcy auction in November 2001. They were slated for conversion to Food City format. Sales were estimated at $1.6 billion for 2002, when the company had 135 stores.

Bashas' opened a dozen stores in 2004. The company was preparing to bring a supermarket to the underserved downtown Phoenix area. A mixed use project was envisioned to revitalize the city's core.

There was a changing of the guard in 2004. Wayne Manning retired as president and was succeeded by Mike Proulx, formerly senior vice-president of retail operations. Proulx had joined the company in 1966 as a "courtesy clerk." The company also was preparing for the eventual retirement of Chairman and CEO Edward "Eddie" Basha, Jr. His cousin A. N. John "Johnny" Basha, a 20-year veteran of the firm's real estate and development department, was designated his successor and named vice-chairman in 2005.

Progressive Grocer pronounced Bashas its national "Retailer of the Year" in 2005. The trade publication praised the company's investment in its employees, community involvement, and Hispanic-oriented merchandising.

Bashas' had doubled in size in the previous ten years, with a total of 153 stores extending throughout Arizona to Needles, California and Crownpoint, New Mexico. These were serviced from a 700,000-square-foot distribution center in Chandler, Arizona, which began supplying some IGA stores in Arizona and New Mexico in 2003.

The company's $2 billion in sales (nearly half of which came from Food City) ranked it third in Arizona's increasingly competitive grocery market, behind Safeway and Fry's (a unit of The Kroger Co.). Bashas' was the only locally owned supermarket chain in the state. The company had 14,000 employees.

Bashas' was one of the few grocers to experience rising sales. Proulx credited the performance with responsiveness to local market conditions. While its competitors' executives pored over demographic reports at their home offices hundreds of miles away, Bashas' was intimately in touch with the community and capable of tailoring its stores to serve individual neighborhoods.

Prepared meals were becoming ever more important in the grocery business, and Bashas' offerings in this department were a key competitive advantage. According to Progressive Grocer, all Bashas' stores had a full kitchen; an executive chef developed an extensive menu featuring items such as coconut-crusted chicken (a bestseller) and boneless stuffed pork loin. About three dozen stores had a stone oven for pizza. At least one site, in the Grayhawk resort town near Scottsdale, had a Taco Grill offering freshly made Mexican food.

The company's newest concepts were a health food supermarket called Ike's Farmer's Market and a miniaturized version of AJ's designed to fit in a condominium tower. Bashas' also was introducing retail health clinics in some of its existing Bashas' and Food City stores in partnership with MediMin Inc.

Principal Operating Units

AJ's Fine Foods; Bashas'; Bashas' Diné Markets; Food City.

Principal Competitors

Albertson's Inc.; The Kroger Co.; Safeway Inc.; Wal-Mart Stores, Inc.

Chronology

• Key Dates
• 1884 The first Basha family member arrives in the United States.
• 1910 The Basha family moves to Arizona.
• 1932 Ike and Eddie Basha, Sr., open their first store.
• 1968 The death of his father leaves Eddie Basha, Jr., in charge of the company.
• 1981 Bashas' opens the first Diné Markets at the request of the Navajo Nation.
• 1993 AJ's Fine Foods and Food City join the company's fold.
• 1996 The Food City business is bolstered with the acquisition of bankrupt MegaFoods Stores, Inc.
• 1998 Sales reach an estimated $1 billion.
• 2001 Bashas' buys 22 Southwest Supermarkets at a bankruptcy auction for conversion to the Food City format.
• 2005 Bashas' is named "Retailer of the Year"; sales are more than $2 billion.