Adventures in Retailing Part X:
AJ's Fine Foods

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
April 9, 2007

Adventures in Retailing began with grocery stores and it seems about time to revisit them. That first commentary dealt with two delightful yet mundane stores, Stew Leonard's and PriceRite. In this episode, we visit Tucson and AJs Fine Foods, a store that is anything but mundane.

Tucson's appeal is its utter strangest and it is grows bigger it also grows less strange. I've been to Tucson about a dozen times over the past fifteen years and have camped out in hotels all over the city. In recent years, I have taken to hanging out in the northern foothills. On my early treks to the foothills, there wasn't much there except for a few "resorts," cacti as far as the eye could see, and a smattering of houses with terrific views. The area has not yet been developed to capacity, but it is getting there. The rich folk have moved in and retailing, with some missteps along the way, has followed close behind.

Despite all the joys of living in New York's Capital District, this area has obviously been redlined by the likes of Whole Foods and Trader Joe's as being insufficiently upscale. (Fortunately, we are also insufficiently downscale to attract the pawnshops and legalized loan sharks that line the thoroughfares of the older parts of Tucson.) The single attempt at bringing an independent upscale grocer into the area was a short-lived and resounding failure. Of course, when I visit more affluent environs that have such amenities I get to hear hedge fund managers grouse about $100 bags of groceries they have to pick up for their wives on the way home from work. Tucson has yet to attract many hedge fund managers, but the $100 bag of groceries has arrived.

AJ's Fine Foods is the upscale offering of the Bashas' regional chain of grocery stores. There are several AJ's in the Phoenix area, but only one in Tucson. The Tucson AJ's is primary anchor for Tucson's newest and most upscale shopping center, La Encantada, which must be Spanish for scads of disposable income.

La Encantada's most notable feature is that it is not enclosed. Apparently, enclosed malls no longer work in Tucson despite a combination of altitude and latitude that makes it possible to be sunburned to a crisp from ten minutes of solar exposure during the town's extended summer. Fortunately, I visited Tucson last December during its version of the dead of winter—snow scattered through the foothills and daily highs struggling to reach 50 Fahrenheit. Northern Tucson rated its own mall during the initial wave of settlement, but that venture ultimately failed and was repurposed as a non-enclosed cheapo strip mall. Indeed, many of the malls up here in the great north, where enclosure used to be a welcome feature in a mall, have moved to hybrid designs where many of the stores can be directly accessed.

The unifying theme of La Encantada is food and its preparation, which is not surprising considering that Tucson is a foodie Mecca. The other anchors are Crate and Barrel and Williams-Sonoma/Pottery Barn. Instead of a food court, La Encantada has a restaurant court that consists of three enormous "gourmet" restaurants situated around an internal traffic circle with valet parking.

I discovered AJ's Fine Foods by accident. The Internet had tipped me off to La Encantada and so it joined Waffle House as a must-visit place the next time that I was in town (see Daily Speculations for a real-time account of my visit to Waffle House.) La Encantada was hopping and the only convenient non-handicapped parking spaces were those reserved for AJ's patrons. (In case you are wondering, I have not gotten lazy in my old age; I'm just running out of time.) In light of a bad experience with hotel room service earlier that day, I could use some provisions of my own. I grabbed a parking space and became an AJ's patron. (Note to the unwary: In this age of universal surveillance cameras, it is a very, very bad idea to abuse restricted parking.)

Immediately upon entering AJ's it was obvious that one could sum the place up in a single word: wood. It's dark, it's fancy, and it's everywhere—floors, shelving, everywhere. The next thing that I noticed was that it was designed to be a giant singles bar where lattés and sushi had replaced martinis. (The wine section was extensive as well, but I did not detect onsite imbibing.) It was yuppie heaven about twenty years too late.

I wandered around AJ's, ultimately purchasing some more satisfying pods for the Tassimo machine in my hotel room and some biscuits of the British variety. The prices were high, but not absurdly so. The selection of items had lots of breadth, but little depth. The coffee and biscuit sections contained smatterings of various brands, with only a few products in each. It was the exact opposite of Trader Joe's, which carries a limited number of brands, but a fairly full line of products from those brands. They carried some Green Mountain coffee, but no K-Cups. Get with the program, Tucson.

In order to establish a meaningful baseline for AJ's, I visited a nearby Safeway store. Safeway and I go back a long time, so I know what one used to look like. This Safeway, however, was also under the influence of Druids. It was not all wood all the time, but had a gourmet section that was clearly patterned after AJ's (or vice versa). Ain't competition grand.

Nitpicking aside, AJ's sets the standards for grocery stores, superficially surpassing anything I have encountered when visiting my privileged cousins in Fairfield County, CT, Westchester County, NY, and Arlington County, VA. I get the feeling that if the bull market continues; however, the East will close the grocery gap with the Southwest.