Bashas' can learn from Wal-Mart - East Valley Tribune: Business

Bashas' can learn from Wal-Mart

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Posted: Friday, July 17, 2009 2:24 pm | Updated: 2:29 am, Sat Oct 8, 2011.

Austin Hill: Bashas' has filed for bankruptcy. They are planning to close 10 stores and eliminate approximately 1,000 jobs in Arizona. Wal-Mart is expanding. They are opening several new stores, and will likely create approximately 1,000 new jobs in Arizona. How can this be?

Bashas' has filed for bankruptcy. They are planning to close 10 stores and eliminate approximately 1,000 jobs in Arizona.

Wal-Mart is expanding. They are opening several new stores, and will likely create approximately 1,000 new jobs in Arizona.

How can this be?

Bashas' plans to close more stores

Wal-Mart to add stores, 1,300 Arizona jobs

 

Before you get angry and begin drawing any inferences from this comparison, let me clarify some things. First, the two retail chains are very different. The Bashas' enterprise is a small, privately held, locally based, "family run" company that has focused almost all of its efforts on food retailing. Wal-Mart is publicly traded, international in scope, and retails darn near everything.

Bashas' is, by most any measure, the perfect example of a "socially responsible" corporation. They employ people in their "home state," and have a great reputation as a place to work. They sell food products from local "hometown" growers. In their current crisis, they are (to their credit) not attempting to blame all their problems on "the recession." And they absolutely "invest" in the community. Very few for-profit enterprises in Arizona are as charitable and philanthropic as Bashas.'

Wal-Mart is one of the world's largest employers. They are known to have incredibly high standards for their employees, a stringent screening process for prospective employees, and their staffing turnover is relatively low. Their stock price, their corporate revenues and their charitable giving have all remained quite good in the midst of the current recession. Yet despite all the success they produce, they're still frequently demonized as being allegedly "greedy" and "ruthless" with the ways in which they undercut other retailers on pricing and "destroy" their competitors.

Two very different companies, occupying two very different places in the world. But they both sell groceries. And this matters.

Why would the "socially responsible" grocery retailer be in financial trouble, while the "greedy" and "ruthless" retailer is thriving? This dilemma points to a couple of very important truths.

For one, it's simply not sufficient for a business enterprise to be "socially responsible." Being "socially responsible" is great, but it's not enough to breed business success, and on an international level, Starbucks has already demonstrated this.

Starbucks was a company that, at one time and among other things, provided health benefits to all their employees (even the part-time staff), used almost exclusively recycled paper products, and took great care to only sell coffee that was grown by people earning a "fair wage." And last year, the company that started the global coffee craze back in the early 1990s had to admit that they had lost focus with their product offerings and that their coffee had become too expensive for the market. And for the first time in the company's history, they had to close down stores and lay off staff.

In a sense, what happened with Starbucks internationally is now happening with Bashas' locally. The "good guys" of Arizona's grocery retailing industry have fallen on hard times, even as a retailer regarded as a "not-so-good-guy" is thriving.

And this points to another important truth: if Wal-Mart is "greedy" and "ruthless" in their business practices, so are most all of us in our consumer choices and habits.

I actually don't think that Wal-Mart is greedy or ruthless. They are most certainly ambitious, aggressive and competitive, but that doesn't necessarily entail "greed" or "ruthlessness."

But Wal-Mart is highly self-interested. As a company, they act in their own self-interest, which is to say that they seek to maximize their profits while keeping their costs low.

And Wal-Mart operates with the same kind of self-interest that nearly every individual and household operates with: we all want the best product or service, and as much of it as possible, while paying as little as possible for it (Wal-Mart's sales success demonstrates this). There's nothing wrong with operating out of self-interest. It is natural, it is human, and it is what drives the free market economy.

Let us all hope that the "self-interests" of Bashas' can be realized and that the company can restructure and make a full recovery. And let's also hope that we all learn some basic economic lessons from Bashas' hardship. Social responsibility and competitive business acumen are both important, but one without the other is a formula for trouble.

Austin Hill of Gilbert comments on political and social issues every Sunday. He hosts talk radio around the country and frequently is a guest host for Arizona's Newstalk KTAR (92.3 FM). Contact him at info@Austinhill.net.

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