BASHAS' LOOKS AT WHOLESALE SIDE

CHANDLER, Ariz. -- Bashas' here said last week it is considering expanding its self-distributing warehouse into a wholesale operation that could service the needs of independent retailers in Arizona who lost their wholesale supplier when Fleming closed its Phoenix-based warehouse late last month.

"We are pursuing mutually beneficial possibilities that support the retail food infrastructure already in existence in Arizona," the company said in a statement to SN.

SN reported three weeks ago that Bashas' was getting into the wholesale business when Fleming announced the warehouse closing.

Phoenix-area operators told SN last week one local retailer has been supplying them with "anything we need" on an experimental basis. However, while one operator declined to pinpoint Bashas' as the retailer, another told SN he was part of the initial group of independents approached by the retailer "because I've known the Basha family for a long time."

The retailers also said Bashas' is considering developing a separate wholesale division.

According to Wayne C. Manning, president of the 136-store Bashas' chain, "While we are not a wholesaler and have limited capacity in our distribution center, there may be creative approaches to providing a localized solution to the supply issues currently faced by our fellow Arizona retailers."

However, he declined to discuss specific details of any "creative approaches" the chain is pursuing.

Fleming closed its distribution center here late last month as part of its efforts to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The Dallas-based wholesaler filed for Chapter 11 protection April 1.

Local retailers said Bashas' has been supplying a handful of independents in the Phoenix area for a couple of months. One independent operator said he is buying only dry groceries from the retailer, while another said Bashas' is able to fill all his needs.

Both local retailers gave their new supplier high marks for service. "They've been terrific, outstanding -- a pleasure to work with," said one, while the other said he's had good service levels from the start -- "much better than Fleming's service levels over the past year." He also said prices are generally the same as or lower than Fleming's prices.

However, while one operator said he currently is not carrying any private-label products, the other said he has replaced Fleming's Best Yet line with Bashas' private label.

While it is common for wholesale distributors to supply corporate retail stores, it is considerably less common for retailers to run a wholesale operation for other retailers. Penn Traffic Co., Syracuse, N.Y., is virtually the only retailer with a separate wholesale division; other retail companies with wholesale divisions, like Fresh Brands, Sheboygan, Wis., and Alex Lee Inc., Hickory, N.C., started as wholesalers and evolved into retail-wholesale distributors, industry observers pointed out.