Twelve Steps to Levitation

Here's a prediction from the Republic's editorial board.

The Basha family business will emerge from bankruptcy protection stronger than before.

Indeed, the Republic's Max Jarman quotes an "expert" who tell us how it could happen.

As it uses the time it has bought, Bashas' is going to have to remake itself into an efficient, low-cost retailing machine that can deliver the same low-priced goods as its larger competitors Walmart and Fry's, industry experts said.

All Bashas' has to do is become as efficient as Walmart...Golly, why didn't Eddie think of that?

After he accomplishes this miracle, Eddie can write a book called "Twelve Steps to Levitation," or maybe "How to Understand Women."

Let's face it--Bashas' isn't coming back.  If Bashas' could have become a "low-cost retailing machine" capable of competing with Walmart, he would have done so in the five years since Eddie compared Walmart to Nazi Germany in a statement that has to be one of the most insane quotes from an alegedly respectable member of the community.

"I call it the economic holocaust," Basha, chief executive of Bashas', the state's largest homegrown supermarket chain, said in an interview with The Arizona Republic. "It's no different than what the Nazis did in World War II. It's a blitzkrieg. They are doing economically what the Nazis did militaristically."

Basha paid no price for his incredible comparison.  The anti defamation league gave him a pass because he was "a champion for justice."

Eddie is getting the same treatment now.  The Corporate media zeitgeist is that Basha is yet another example of a hometown small business being wiped out by a down economy and the relentless Walmart.  Bashas' story is all the more poignant because of his history of charity and working for social justice.

Give me a break.

The Republic has an interesting Timeline of Bashas' experience in Arizona that included this little tidbit.

1996: Sixteen stores are acquired from bankrupt MegaFoods. Inc.

2001: Twenty-two stores are acquired from bankrupt Southwest Supermarkets.

It wasn't walmart that wiped out MegaFoods and Southwest Supermarkets...or ABCO, or the hundreds of local markets that went under since Bashas' came on the scene in 1932.  For decades, Bashas' had a better model and consumers voted their preference with their dollars.  Those who couldn't compete with Bashas' went under and Eddie was there to buy up the remains at bargain prices--good for him. 

Now the Nazis at Walmart have created a more efficient system and consumers have rejected the Basha model.  That's what's supposed to happen. 

But what about all that charity?  Is Walmart going to match that?  Probably not. 

To be sure, the Basha family has certainly been generous over the years.  But much of the charitable contributions being touted by the media have been from Bashas' customers through programs like the "Shop and Give" program.  Those customers are likely to continue giving through different venues--and are likely to have a little extra to give now that they get cheaper groceries at Walmart.

Let me be frank:  The Basha family has been quite generous with their money, but they are in danger of defaulting on $200 million in debt--$50 million of which is from local vendors.  Numbers like that will wipe out a lifetime of charitable giving.

Maybe Bashas' will survive.  Maybe they can turn into a lean, mean retail machine that will compete with Walmart and Frys.  Maybe they will manage to pay off their vendors, reduce their debt, make a profit--and even give some of it to charity. 

Or, maybe the shoe is simply on the other foot and Bashas' will be driven out of business by more efficient competitors--like Bashas' did to hundreds of its competitors over the last 70 years. 

Maybe Bashas will return to profitability and the Basha family can continue raising money for charity...or maybe a lifetime of corporate giving will be more than offset in one fell swoop with Basha leaving local lenders and vendors holding a $200 million bag of bad debt. 

I hope it's the former...but I'm not optimistic. 

Comments

[ron]

Meanwhile, the number of lost jobs grows on a daily basis and the state revenues go down on a daily basis.

[Travis]

The Basha family was only making real profits from the Food City stores. When the immigration laws tightened, they took a hit. When the economy went south, too, it was impossible to overcome the double-wammy to Food City stores.

[Name]

I am fascinated by retailers who can change their prices every week and still go bankrupt. Players in other industries that cannot respond to the market quickly also go under, although in the case of new housing even rapid pricing response won't help if there actually is no market. But food?

Perhaps the key is that Basha's leases most of its stores, and I bet those leases are for a fixed price rather than a percentage of sales.

And give me a break about corporate giving. It's not really "charity" when you get tons of free media and advertising through a well-publicized campaign to get people into your stores to donate $1 to be used to buy...food.

[Jay]

>> Basha paid no price for his incredible comparison. <<

What "Price" should he pay? Free speech. You enjoy it, so do the rest of us.

[John]

Jay, we do all enjoy free speech. We do not enjoy free speech with impunity - see what happened to the Dixie Chicks . . .

[Jerry]

Actually, the Dixie Chicks were rewarded for attacking Bush with a Grammy. Back to the main point, I don't understand why people hate Wal-Mart. When they come into an area, they don't ask for tax breaks or really much of anything.

[onehorsetown]

I do shopping errands for elderly folks who live in a retirement community. Sometimes the folks accompany me, but most of the time they just give me a list. These people generally ask me to shop as Basha's because the bakery items and butcher shop items are to their liking. It's a nightmare for me.
Some of their employees are just plain rude.
And don't bother to ask for help in picking up a 25 pound bag of salt pellets. I'm in that store 3 times a week and spend about $200 total. So they know me. But they are not friendly. Two weeks ago, Fry's opened up a "Fry's Marketplace". It is awesome. I will drive an additional five miles to this great store with friendly employees. Basha's is history.

[Aces]

Greg, I thought for sure you would make this into a union issue.

Jerry are you kidding. Wal-Mart almost always wants sales tax rebates or other incentives - and they get them.

[ron]

Walmart builds its stores on tribal land so its customers don't have to pay sales tax - see Prescott and Flagstaff.

[Hank]

Jerry, in addition to sales tax rebates, Wal-Mart likes to promote and support government programs that will put their competitors at a disadvantage - like increasing minimum wage (Wal-mart pays above minimum wage across the board, so minimum wage increases typically have little effect on them, but can devistate other competitors) and mandatory health care. Beating your competition with ingenuity and creativity is one thing, but using government intervention to beat your competition is another.

[Kyle C]

Nice post, I always appreciate a good history lesson.

This is a tough one, but its a classic case of an industry maturing and more competitive players driving out lesser businesses.

There won't be any bailout coming for these guys, nor should there be.