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Azan adds grocery line at Bashco. Diversifies into fuel with RUBiS dealership

Published:Wednesday | October 15, 2014 | 12:00 AM
Gassan Azan inside his store at Orange Street Kingston. File

Avia Collinder, Business Reporter

Businessman Gassan Azan is about to open his 11th Bascho store, but with a twist.

The new operation, located on Burke Road in Spanish Town, will be the first to include approximately 600 top-selling grocery items, a model to be executed across the haberdashery chain nationwide over the coming year.

The addition of the new store and diversification of its product lines to include groceries are expected to improve revenue from Bashco by 15 per cent over the first 12 months, Azan said, noting that "food sells everyday".

"We are moving away from the mesh window wholesale model to the fully air-conditioned retail store," he said in an interview with Wednesday Business from Baschco's Orange Street, Kingston, headquarters.

The new Spanish Town Bascho will open in the first week of November, joining other stores in Kingston, two in Montego Bay, and others in Ocho Rios, Savanna-la-Mar, Mandeville, May Pen, Linstead, and Santa Cruz.

Construction of the 16,000-square-foot building, spanning two floors, at Burke Road, was done by owner Mark Azan, who has leased the property to Gassan for 10 years. The two men are cousins.

Gassan Azan said the development model for Burke Road is similar to that pursued for his Mandeville MegaMart supermarket, which was financed through a special lease arrangement structured by Scotia Investments Jamaica Limited through its capital markets unit. Some $1.2 billion in equity financing was raised from investors to construct the supermarket, according to MegaMart's specification.

Under the arrangement, MegaMart leases the property, which opened in February 2013, for 20 years, with the option to renew the lease every five years, thereafter.

In-house sources confirmed that staff recruitment for Bashco Spanish Town is now over, with painting and equipping at the location under way.

Gassan said that investment of $150 million in the Spanish Town operation is expected to be recovered in 2.5 years, "depending on the state of the economy".

The new store marks a return by Bashco to Spanish Town, the first of which was closed because of security concerns.

"Now we are in our own secure facility," said Azan.

Azan said that there were no immediate plans to similarly tweak the model for MegaMart, which includes four stores, saying: "What sells on Main Street is not what sells in MegaMart."

He adds, however, that MegaMart has rolled out new incentives for shoppers, which include fuel discounts at his new dealership, the Rubis Waterloo gas station.

Sales for Megamart are flat, he said "which means in real terms they are down". The gas and other incentives are a new drawing card after the "very bad" back-to-school period and the add-on effect of chik-V, which drew complaints about long lines from shoppers as about 50 per cent of staff have been affected.

"September had the kind of fall off not seen since the start of the year and it has me concerned. It was like 12 per cent down," said Azan. "It could be the effect of the IMF agreement now taking effect; cost of living increases and wage freezes" could now be taking effect, he said.

The gas dealership is a new line of business for Azan, who opened for business at 33 Upper Waterloo Road in Kingston

Shoppers at Megmart Waterloo or MegaMart Portmore, who spend $5,000 or more before tax, will get discounts of $3 to $5 per litre at the gas station.

The RUBiS Waterloo lease is for one year with option to renew thereafter. Start-up costs for the fuel station was $10 million, Azan said, with principal investment coming from RUBiS Jamaica, which upgraded the facility. Target sales for the gas station, he said, was 1.5 million litres per month.

Azan said he is hoping to enter into a similar partnership to add fuel pumps to MegaMart in Montego Bay and Mandeville which have adequate parking space and the potential for "co-branding value".

"Because Portmore and Waterloo had such small parking lots we were unable to put in pumps," he said, adding that the second set of fuel pumps bay maybe added before the next 24 months.

The first MegaMart store was opened in Portmore, St Catherine, in September 1999, the second in Kingston in December 2003, followed by Montego Bay in December 2007, and Mandeville in February 2013.

Azan said that group employment, now at 2,100 will rise to about 2,400 by next January, including new staff at Spanish Town Bashco and MegaMart Waterloo.