New Jersey Grocer Issue 3, 2017

C on t e n tiou s bu d get se a son End s in Sh u t d ow n PAG E 6

G E N E R AL ELECTIONS G E T U N DER WAY PAG E 8

Minimum Wage: Our Biggest Threat

NJFC | BOARD OF DIRECTORS

officers

DIRECTORS

new jersey food council

Chair Richard J. Saker Saker ShopRites

Associate Vice Chair Joseph H. McCarthy Bimbo Bakeries USA

Secretary Joe Sofia Wegmans Foods Markets

Vice Chair Michael Murphy QuickChek Corporation

Treasurer Michael Rothwell Pennington Quality Market

President & CEO Linda M. Doherty New Jersey Food Council

Dan Croce Acme Markets

Peter Rojek Fairway Market

Howard Kent Krasdale Foods

Colleen Meares Stop & Shop Supermarkets

Debbie Pregiato Advantage Solutions

Phil Scaduto Food Circus

James J. McCaffrey III McCaffrey’s Markets

Jason Ravitz Ravitz Family Markets

Ken Weingartner C&S Wholesale Grocers

Andrew Kent Glass Gardens

Michael Biase Mission Foods

Frank Mastrangelo Supervalu, Eastern Region

Kelly Johnston Campbell Soup Company

Luis Tejada Goya Foods

John Wachter Murphy’s Markets

Rebecca Peifer Unilever

Eva Kohn CBA Industries

Joseph F. Pagano Inserra Supermarkets

Jody Avallone Nestle USA

William Sumas Village Supermarkets

Michael Sullivan Coca-Cola Refreshments USA

Judy Spires Kings Foods Markets

David Maniaci Nicholas Markets

Richard Wood Wawa

Rafael Cuellar Cuellar Family ShopRites

Lisa Angeles Kraft Heinz Company

Leonard J. Sitar ShopRite of Carteret

Christina Minardi Whole Foods Market

President & CEO Linda M. Doherty

New Jersey Grocer Editor is the official publication of the Gary La Spisa II New Jersey Food Council. glaspisa@njfoodcouncil.com

Asst. V.P. for Govt. Affairs Mary Ellen Peppard Director of Public Affairs Gary La Spisa, II Executive Assistant Office Manager Sandy Malecki Meeting Planner Barbara Yuson Financial Manager Christine Higgins

30 West Lafayette St. Trenton, NJ 08608 (609) 392-8899 (609) 396-6571 Fax www.njfoodcouncil.com

For advertising information contact: Bill Kaprelian bkaprelian@cagrocers.com

For association members, subscription is included in membership dues. © 2017 New Jersey Food Council

Ta b l e o f C o n t e nt s President’s Message Minimum Wage: Our Biggest Threat. . . . 5

Viewpoint Tomorrowland.. . . . . . . . . . . . . . . . . . . . . . . . 14

Government Relations • Contentious Budget Season Ends in Three Day Government Shutdown . . . . . . 6 • General Elections Get Under Way. . . . . 8

Outside the Box. . . . . . . . . . . . . . . . . . . . . . . 16

NJFC News.. . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Washington Report Let the Games Begin . . . . . . . . . . . . . . . . . . 18 Feature Workplace Harassment. . . . . . . . . . . . . . . . 20

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2017 NJFC Sponsors New Jersey Food Council wishes to recognize the following companies for their generous support.

PLATINUM SPONSORS

BRONZE SPONSORS

Acme Markets

Acosta Sales & Marketing

Bimbo Bakeries

Advantage Solutions

Coca-Cola Refreshments USA

Chase

Pepsi Beverages Company

Connell Foley

Wakefern Food Corporation

Crossmark

Wegmans Food Markets

Goya Foods Kraft Heinz Company

GOLD SPONSORS

Lidestri Foods, Inc.

Allegiance Retail Services

Mazars USA

Cargill Salt, Inc./

Mission Foods

Cargill Turkey & Cooked Meats Inserra Supermarkets Saker ShopRites Stop & Shop Supermarkets Village Supermarkets Whole Foods Market

SILVER SPONSORS CBA Industries C&S Wholesale Grocers Kings Food Markets QuickChek Corporation Supervalu Wawa

Mondelez International RoNetco Supermarkets TD Bank Zallie Supermarkets

BRASS SPONSORS McCaffrey’s Markets Murphy’s Markets Nicholas Markets Pennington Quality Market Ravitz Family Markets ShopRite of Hunterdon County ShopRite of Rochelle Park Somerset Stores

PRESIDENT’S MESSAGE

Minimum Wage: Our Biggest Threat

L I N DA DO H ER T Y PR E S IDE N T N EW JER S EY FOOD COUN CIL

The greatest challenge our industry faces right now in new jersey is the threat of a $15 an hour increase in the minimum wage.

Whatever one’s personal feelings are about New Jersey Governor Chris Christie, he has been a gatekeeper holding back an unreasonable, anti-business agenda at the State House that has dogged New Jersey for almost eight years.

As NJ looks to elect a new Governor in November, there are two very different leading candidates with conflicting platforms. NJ Lt. Governor Kim Guadagno, a republican, is running to reduce property taxes , the highest in the nation, that would save the average homeowner around $1,000 per year.

Ambassador Phil Murphy is the democratic candidate and a former Goldman Sachs top executive. In a recent meeting Ambassador Murphy had with the NJFC Board of Directors and our Government Affairs Committee, he was clear that a centerpiece issue in his platform is to raise the minimum wage.

Our members used this meeting with Ambassador Murphy to articulate concerns with such a stiff increase including impact to senior citizens who will pay more for groceries, loss of jobs,

cuts in working hours and lack of retail investment in NJ. In a recent Study just released by the University of Washington, it indeed found that Seattle food service workers were losing hours, costing jobs and increasing prices. In fact, this real world experiment mirrors a recent study by leading economist John Dunham of Dunham and Associates who concluded that the NJ grocery industry would experience similar challenges to the workforce, higher prices for consumers, and greater impact on senior citizens with fixed incomes.

AN ECONOMIST'S VIEW John Dunham writes: A group of researchers at the University of Washington (UW) recently released a working paper outlining how the current $13 per hour minimum wage for restaurant workers in Seattle has led to exactly the opposite effect that proponents predicted.

According to the team at UW, whose research was funded by the City of Seattle, a 37 percent increase in Seattle’s mandatory minimum wage for restaurant employees resulted in a decrease of working

hours for these employees by about 9 percent – an overall loss in income of $125 per month.

This is significant because the minimum wage increase, which was promoted as a way to help lower-wage workers, actually cost those same workers about $1,500 per year in lost wages, on average.

This is nothing new to economists like me who have studied the economic impact behind minimum wage hikes. These wellintentioned increases lead to a reduction in jobs and an increase in prices. In fact, when we examined a potential minimum wage increase on the food retail industry in New Jersey, we found very similar results to the researchers in Seattle.

Our analysis suggested that a 79 percent increase in New Jersey’s minimum wage (to $15 per hour) would reduce employment in the grocery industry by 7.8 percent, or roughly 17 million fewer work hours. This now seems to be a very modest forecast when one looks at the Seattle numbers.

What the Seattle study does not examine however, is how minimum wages increases really harm everyone in a community.

Continued on page 7▶

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GOVERNMENT RELATIONS

Contentious budget season Ends in three day government shutdow n M A RY EL L EN PEPPA R D N JFC AS S IS TAN T V ICE PR E S IDENT OF GOV ER N MEN T R ELATION S

A battle over the general fund results in a threeday shutdown of non-essential services.

After a contentious few months of debate and negotiation over school funding and several other controversial issues, the Legislature and Governor were unable to reach agreement on the Fiscal 2018 State Budget prior to the June 30 deadline, and the State shut down non-essential services for three days.

The major point of contention was the Governor’s proposal to transfer $300 million from Horizon Blue Cross Blue Shield reserves to the general fund to pay for addiction treatment services. The Speaker and Senate President had been saying for months they do not support this proposal, however, Governor Christie tied his Horizon plan to funding for Democratic priorities.

Ultimately, the Governor, Assembly Speaker, and Senate President reached a compromise that granted the State more control over Horizon and capped the insurer’s reserves. Some would argue that

an embarrassing photo of the Governor and his family at Island Beach State Park, which was closed to the public during the shutdown, helped bring the ordeal to a quick end.

The Governor signed this bill and the State Budget in the early morning hours of July 4, line item vetoing some changes, but leaving intact most of the Legislature’s budget items.

The Legislature is expected to operate on a limited legislative schedule during the summer and fall months. All 120 seats in the Legislature are up for grabs in the November election.

The last few months was a flurry of legislative activity impacting the food retail and distribution industry. One of the most onerous bills would create a state-level food date labeling program.

Our industry is in the process of developing a single voluntary national

“The last few months was a flurry of legislative activity impacting the food retail and distribution industry.”

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standard for date labeling, which would be greatly undermined by an onerous and confusing state patchwork of laws.

When the bill was unexpectedly posted for a Senate floor vote, NJFC spearheaded a comprehensive advocacy campaign that included extensive member outreach and engagement of our national partners at the Grocery Manufacturers Association and the Food Marketing Institute.

The Senate offices received over 2,500 emails in less than two days, and due to the significant opposition generated through these efforts, the bill was held.

We will be meeting with the bill sponsor this summer to provide an update on the national program under development.

Another burdensome bill would significantly expand New Jersey’s paid family leave program. This bill expands the number of weeks of leave that may be taken from six to 12, and increases intermittent leave from 42 to 84 days.

The bill also increases the weekly benefits from two-thirds of a worker’s average weekly wage to 90 percent, subject to a cap of 78 percent of the statewide average wage. The bill prohibits discharging or retaliating against employees, and allows employees to bring a private right of action for retaliation.

GOVERNMENT RELATIONS

“as currently written, the menu labeling rule creates regulatory uncertainty and exposes our members to substantial fines and lawsuits.”

Despite strong opposition from NJFC and other business associations, the Legislature passed the bill the last week in June, and it now sits on the Governor’s desk awaiting his decision.

If the Governor vetoes this bill, it is likely the legislation will be taken up again by the legislature in the new session.

On the national level, we have had several successes the past few months. The FDA has delayed their onerous menu labeling rule, pushing the date back to May 7, 2018.

Additionally, they have reopened the comment period on the rule to solicit additional feedback. NJFC had been working with our national partners to procure a delay of this onerous rule that was initially intended for chain

restaurants, but was extended to capture many grocery and convenience stores.

As currently written, the menu labeling rule creates regulatory uncertainty and exposes our members to substantial fines and lawsuits. We are very pleased that we had another opportunity to provide FDA with input, and submitted comments urging FDA to take into account the significant differences between food retailers and chain restaurants, and provide clarity, flexibility and liability protection in their new rule.

We also had a significant victory on debit swipe fee reform. For several months we had been pushing back against a provision in the Financial Choice Act which would repeal the debit swipe fee reforms passed in 2010, also known as the Durbin

P R ESIDENT’S M ES S AGE Higher wages always come from the pockets of consumers who are forced to pay more for the products that they purchase.

We found that the price tag of a $15 minimum wage to consumers buying groceries in New Jersey would be nearly $294 million per year – just for groceries.

Even more troubling is that senior citizens, many on fixed incomes, would bear 40 percent of these increased costs to the tune of nearly $125 million.

As a matter of economics and not political rhetoric, increases in the mandatory

Amendment. Debit swipe fee reforms lowered interchange swipe fees by nearly 50 percent and introduced competition and choice into the debit swipe fee market, resulting in lower costs for both retailers and consumers.

With our national partners at the National Grocers Association, Food Marketing Institute and National Association of Convenience Stores, we lobbied hard against this onerous provision and the House removed it from the bill.

Over the summer, NJFC will continue to meet with policymakers to advocate on many issues we expect the Legislature and Governor to consider after the elections, including minimum wage, paid sick leave, paid family leave, tax increases, disposable bag fees, and liquor licensing reform.

(C ONT INU E D F R O M PAG E 5 )

minimum wage do not have the positive benefits that supporters tout. These increases harm the most vulnerable workers by decreasing the hours available for them to work, reducing their annual income, and harming every consumer who ultimately ends up paying more for meals, groceries, and even toilet paper without seeing any benefits.

As an economist who has studied this issue locally and nationally, policy and decision makers need to seriously look at the real implications of a staggering increase and how it will affect the pocketbook of the consumer, including senior citizens, as well as employees.

Simply put, the drastic increase in minimum wages being proposed across the country only result in higher prices for consumers, lower sales for businesses and less job opportunities for workers.

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GOVERNMENT RELATIONS

GENERAL ELECTIONS GET UNDER WAY

G A RY L A S PI S A I I N JFC DIR ECTOR OF PUBLIC AFFAIRS

The Primary election came and went on june 6 without any surprises.

Not a single incumbent or favorite failed to secure their party’s nomination for the fall at the legislative or gubernatorial level.

look for heavy investment and a lot of star power to get behind the former Goldman Sachs executive early.

Now, as Lt. Governor Kim Guadagno, former Ambassador Phil Murphy and more than 240 candidates for the state legislature prepare for the General Election in November, it’s important to start discussing the key races to watch.

In the State Legislature, only a handful of districts are really expected to be competitive.

First, the gubernatorial election should garner significant national attention. The New Jersey and Virginia Gubernatorial elections are the only statewide races in the country this year and both national parties hope to use victories in one or both states to springboard their fundraising and momentum into 2018’s Congressional Mid-Terms.

While most outside observers consider this race to be a likely Democratic win, the Lieutenant Governor hopes to prove them wrong and believes she has the plan to make this into a tight race. If she is able to raise money and begin to close the gap, national Republican organizations will invest heavily to help.

Phil Murphy represents a very progressive wing of the Democratic Party, as well as the party’s best hope for a win this fall, so 8 | NE W J E R S E Y G R OC E R

In District 2, which has had split party representation for the last several terms, the popular Republican Assemblyman Chris Brown is running to replace the retiring Democratic Senator Jim Whelan.

Initially, it was announced that Democratic Assemblyman Vince Mazzeo would also seek the Senate seat but later he decided to run for reelection instead and Colin Bell filed to run for the Senate seat.

It is expected that Assemblyman Brown will win the Senate seat and Assemblyman Mazzeo will survive reelection as well, but the campaign will be very expensive and the remaining assembly seat appears to be up for grabs.

In District 7, the retirement of Republican Senator Diane Allen is widely expected to allow Democratic Assemblyman Troy Singleton to cruise to victory over Republican Rob Priscoe. Former

legislative aide Carol Murphy is expected to win the soon-to-be-vacant assembly seat.

The most anticipated, and expensive, race in 2017 is expected to be District 11.

State Senator, and staunch food industry ally, Jennifer Beck is facing a significant challenge from Monmouth County Democratic Chairman Vin Gopal.

Readers may recall that in 2015 former Assemblywomen, and past running mates of Senator Beck, Caroline Cassagrande and Mary Pat Angelini were defeated

by Assemblyman Eric Houghtaling and Assemblywoman Jo Ann Downey in one of the most expensive campaigns in state history.

Many of the same groups which contributed to the victories by Houghtaling and Downey have already lined up in support of candidate Vin Gopal. This election will be watched closely by FCCfGG and the Food Council members.

Another district which appears to be gaining attention is District 14, where Hamilton Township Republican Ileana Schirmer is attempting to unseat State Senator Linda Greenstein. The election is not currently expected to be close, but that certainly has the potential to change before November.

“as leaders in our industry, we must also be leaders in the political arena. you can become a part of this effort to make a change by making an individual contribution to the food council committee for good government.”

Many political observers are also focused on District 16, which features incumbent Republican Senator Kip Bateman and Democratic Assemblyman Andrew Zwicker.

after it was discovered that he published a very inappropriate book.

The intrigue is primarily focused on the seat of the retiring Assemblyman Jack Ciattarelli, who vacated his seat to seek the Republican nomination for governor instead. Former Assemblywoman Donna Simon, who lost to Assemblyman Zwicker in 2015 by fewer than 80 votes, is leading a ticket with Somerset County Freeholder Mark Caliguire, while Assemblyman Zwicker has recruited local businessman Roy Freiman to run with him on the Democratic ticket.

The Food Council Committee for Good Government will be meeting in August to review the voting records of all incumbents, the results of candidate surveys and the feedback from new candidate interviews in the competitive districts.

While it is widely expected that Senator Bateman will survive reelection, the assembly seats are expected to be competitive.

Bergen Republicans had hoped to make District 38 competitive again this year and recruited Kelly Langschultz to challenge Democratic Senator Bob Gordon, however one of the Republican nominees for Assembly recently dropped out of the race and endorsed the Democratic ticket, including Phil Murphy for Governor.

This is reminiscent of 2015, when Bergen Republicans lost one of their assembly challengers and he was forced to drop out

As of our publication date, the meeting had not yet been held to nominate a replacement for this year’s ballot.

At that time, the FCCfGG Board of Governors will decide on a list of endorsements, which will be shared with members, and a strategy for how best to help those endorsed candidates.

It is the goal of the Food Council Committee for Good Government to educate our candidates for governor as well as current legislators and candidates about the policy issues that matter to us.

To accomplish that, the overall mission is to work to eventually elect or re-elect representatives who share our views and are willing to work with us to achieve our public policy goals.

As leaders in our industry, we must also be leaders in the political arena.

You can become a part of this effort to make a change by making an individual contribution to the Food Council Committee for Good Government at http://fccfgg.com/index.php/donate.

In this important election year, it is absolutely crucial that our industry make our voice heard on the issues that impact our business to avoid being run over by a progressive legislative agenda and we can only do that with strong financial support from our members.

Our challenge to you is to not sit idly by while others decide the direction of our industry, our country and our lives.

The New Jersey Food Council’s political action arm, the Food Council Committee for Good Government [FCCfGG], is diligently working to determine allies – new and old – who understand our industry and our issues, regardless of party affiliation.

All major party candidates for Governor and Legislature will be invited to sit alongside our members at the Annual Good Government Breakfast on the morning of October 4 at Forsgate Country Club in Monroe. Look for your invitation later this summer.

Encourage members of your team to join their peers and have their voices be heard: be an active part of the political process that influences their daily lives.

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44TH ANNUAL

The Food Council Committee For Good Government

Join us to break bread with State Legislators and business leaders for the presentation of the 2017 Good Government and Outstanding Legislator of the Year awards.

Wednesday, October 4, 2017 • 8:30 a.m.

Forsgate Country Club 375 Forsgate Drive, Monroe Township, NJ

NJFC NEWS

NJFC NEWS N J FC T R A D E REL AT I O NS C O NFE R E N CE H IGH LIGH T S ALL -S TAR C OOK- OF F Chef Miguel Morales and sous chef Michelle Cantalupo of Foodtown/Food Circus Supermarkets have worked in kitchens for just about as long as they can remember.

Their shared wealth of knowledge, combined with the guts to innovate with each dish, gave them the edge to win the New Jersey Food Council’s second-annual Best Chef Cook-Off Challenge.

The prestigious challenge preceded the Food Council’s 2017 Trade Relations Conference, a popular industry event for food retailers and suppliers held June 6-7 at Harrah’s Resort in Atlantic City.

More than 200 industry leaders watched the culinary heavyweights display their talents, network and learn more about the future of the business.

second consecutive year. But they didn’t rely on old tricks to secure the victory.

The chefs wowed judges with a fried Chilean sea bass dressed in a spicy tomato and chile sauce. Further elevating the dish were a Spanish zucchini stuffed with quinoa, a herb named epizote, tomatoes and queso fresco topped with mozzarella cheese.

Tra de Rela tions Committee Cha ir ma n Michael B i as e o f Mission Foods w ith w inning Chefs Michelle C ant al upo and Miguel Mora les of FoodCircus FoodTow n.

Finally, for dessert, Morales and Cantalupo prepared a chocolate tamale stuffed with coconut sweet rice, covered in toasted almonds and pineapple, strawberry and chocolate sauces.

the organization awarded Stan Barrasso the 2017 Max Stone Award, a distinguished honor given to those with an accomplished career in trade relations.

Barrasso, a food broker for Acosta Sales & Marketing, has spent decades in the business.

“We chose this dish for its uniqueness,” Cantalupo said. “It is a rare thing to find an actual chocolate cake cooked as a tamale, instead of a regular tamale with chocolate sauces.”

Th e win n in g d e sse rt, a c h oc ola te tomale .

Competing against the top supermarket chefs in New Jersey, Morales and Cantalupo won the cook-off for the

Chefs from QuickChek Corp., Village Supermarkets and Inserra ShopRite also put up a noble fight in the cookoff. Given the tough competition, FoodCircus Foodtown, which operates stores in Monmouth and Ocean counties, was ecstatic to have won the prestigious challenge.

“We believe in great quality and outstanding service,” said Cantalupo, who grew up cooking in her family’s restaurant.

Ji m m y O s t lin g o f B i m b o B ak e rie s p re se n ts S tan B ar as s o o f Ac o s t a S a l e s an d M ark e tin g with th e M ax St o n e Tr a d e R e la t io n s Award .

That’s also true of the New Jersey Food Council. During the conference,

John Durkin a nd John Derderi an o f Allegia nce Reta il Services w it h Mi ke C as ey o f Ca sey Communica tions a nd D ean H o l mqui s t of Allegia nce Reta il Services.

“Stan Barrasso is an outstanding role model in the food trade industry,” New Jersey Food Council President Linda Doherty said. “His style and ability to forge partnerships between the supplier and food retail community is admired and appreciated.”

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NJFC NEWS

N J FC C O - H OS T S SUC C ESSF UL FARM TO FORK E VE NT AT S TATE H OU S E On Monday, June 12, 2017, NJFC cohosted the 5th Annual Farm to Fork Day at the Statehouse. This event provided us with a forum to interact with over 200 members of the Legislature and State

House staff. This opportunity gave NJFC visibility in the State’s Capitol in order to continue to advance the agenda of the food industry.

We appreciate the generosity of the following members who donated products including Acme Markets, Bimbo Bakeries USA, Coca-Cola Refreshments, Goya Foods, Saker ShopRites, and Wegmans to deliver another successful event.

NJ Resta ura nt Associa tion P res i dent Mar i l o u H a lvorsen, Ed Wengryn of th e NJ Far m Burea u a nd NJFC P resident & C E O L i nda Doherty.

A s s em b l y m a n Ar t h u r B a rc lay ( D- Camd e n ) , N JFC As s is t a n t V i c e P re sid e n t for G o ver nme n t Aff a ir s M a r y Elle n Pe p p ard , N JFC D i re c t o r o f P u b lic A ffairs Gary La Spi s a, As s e m b l y w o m a n S h av on d a S u mte r ( D -P at er s o n ) a n d N J F C Pre sid e n t & CEO L i nda D o h e r t y.

F ar m to F ork Da y pa rticipa nts receiving a Joint Legisla tive Resolution from As s embl yman V in c e M azzeo.

N J FC E X E CU TI V ES I N C LUD ED AS TOP 100 POLICY INSIDE R S Recently, Insider NJ released its top 100 Policy Insiders list, featuring some of the key policy leaders throughout the state. NJFC President & CEO Linda Doherty and Assistant Vice President of Government Affairs Mary Ellen Peppard made the list at number 78.

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According to Insider NJ, "respectively the President and CEO and Assistant Vice President of Government Affairs for the NJ Food Council, the pair possess the state's biggest knowledge foundation about food and the food industry."

CAL I FO RNIA GRO CER | 13

VIEWPOINT

Tomorrowland

K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M

Technology can change how business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make.

I recently had the opportunity to attend a presentation at which Marc Tarpenning, one of the co-founders of Tesla, talked about the company’s early development process… and there were two things he said that really grabbed my attention and struck me as relevant to pretty much any business facing 21st century competitive realities.

First, there was his observation that in creating the Tesla there were far greater problems than developing the batteries that propel them.

“That was just science,” he said, arguing they always knew they could work that part of it out. Unlike co-founder Elon Musk’s other business, Tarpenning said, “this wasn’t rocket science.”

No, the bigger problem quite literally had to do with the nuts and bolts of the business.

They could design the batteries and design the car…but then they actually had to find someone who could do things like make a door, and a rear-view mirror, and all the other stuff that goes into a physical car.

That was a lot harder…until they discovered something about traditional car companies – they don’t make that stuff either. It ends up the only thing traditional car companies really make is the engine, and everything else is outsourced.

So, all Tesla had to do was network, network and network some more until they could find outside companies that could meet their standards, and were willing to work on the smallproduction scale Tesla had in mind. Which they did. iStock

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Listening to the ruminations of a Tesla cofounder, who, it could be argued, is ideally positioned to talk about business disruption, was one of the real benefits of attending the recent GMDC Retail Tomorrow Conference in Silicon Valley.

It was one of the most provoking such meetings that I can remember, and GMDC set a benchmark for what a technology conference should be.

I always thought I was a reasonably enlightened and imaginative guy, until I spent time on the Google campus and at the Plug And Play “accelerator” that provides infrastructure for startup companies and plays matchmaker between them and major companies that serve as their partners.

(Many years ago, we were told, one of the first companies to work with Plug And Play was a little entrepreneurial effort you might have heard of. It was called Google.)

I was simultaneously humbled and energized because there were so many business lessons.

Tracie Maffei, who runs the retail practice at Google, told us during our visit to the Google campus that there are certain basic realities that businesses have to understand and ignore at their own peril.

“Millennials represent the most diverse, educated, socially conscious and tech-savvy group in history…they’ve never used a fax, never used a rotary phone, never listened to a cassette tape,” she said.

VIEWPOINT

“Technology can change the way business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make.”

In other words, if you are operating a business in a digital world with a rotary phone mentality, you simply cannot succeed.

“Ninety-eight percent of the economy will be impacted by digitization,” she said. “And, 65 percent of children entering primary school today will have jobs that don’t even exist yet.”

But if those comments pointed to a future that requires imagination to envision, Maffei also talked about Google’s approach to business that is rooted in everyday realities.

For example, she asked if the businesspeople in the room (and outside the room, for that matter) are “setting goals that go beyond accepted industry standards.”

She talked about the notion of banishing the notion of “online” and “offline,” and focus on “all-line,” creating a new standard that is “seamless” and “end-to-end,” establishing “lifetime value” that is not just transactional.

And while technology obviously is a driver – and the notion of voice-activated, artificial intelligence-driven, screen-less and wearable computers would seem to propel us into a Star Trek-like future – Maffei actually suggested that retailers not start with technology as they establish priorities and strategies.

Rather, they should start by thinking about what problem they are trying to solve, and what pain points in the consumer experience they are endeavoring to eliminate.

Technology can change the way business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make.

One of the things that a visit to Silicon Valley offers is a chance to visit communities like Palo Alto – where net worth and IQ are in a constant race to see which one will be higher compared to the rest of the known

universe – and see some of the unique retail concepts that are being funded by tech guys with big bucks. Some of them are pretty out there, but still can offer lessons for more traditional retailers.

For example, there was B8ta (pronounced “Beta”), a fascinating retail store that caters to both consumers and business customers.

Essentially, the store leases out small spaces on Apple Store-like tables to technology businesses that want to test out their products’ viability. The products range from electric-powered skateboards to juicers and virtual reality viewers to hightech security systems.

B8ta has a highly trained staff that helps guide customers through the store, and rotates products regularly to make sure there is variety; it also has technology that is able to track how customers interact with products, so suppliers have the maximum amount of actionable data. B8ta has a full supply of products for customers in the backroom, and it only profits from the table lease payments; it takes no cut of the sales.

What B8ta made me think about, though, was how retailers may want to approach the whole notion of new products if they want to infuse their bricks-and-mortar stores with excitement and make them a destination.

Maybe there should be whole sections of new products with generous sampling available that are used not as a way to get money out of the manufacturer, but as distinguishing the retailer from both online competitors and the guy across the street.

We also visited a store called Relonch, which is designed to address the precipitous decline of the traditional camera business – 10 years ago, 127 million cameras were sold, a number that was down to 20 million last year.

Relonch takes the position that it is in the photograph business, not the camera business – so it essentially gives its customers a high quality camera which automatically sends photos taken back to the company, which then sends the customer a preview version of those pictures, and you pay $1 apiece only for the ones you want to keep.

This got me thinking…

What would happen if a food retailer went to a customer and said, “We want to give you a new refrigerator/freezer, and all you have to do is commit to buying $200 worth of refrigerated or frozen foods a month from us for X number of months.”

I have no idea how the economics of this would work, and I suspect that most retailers would find this unworkable. But I also wouldn’t be surprised if Amazon announced such a program next week.

Which I think was the point of a trip and the GMDC conference. Pretty much everything is possible.

Tarpenning said that it usually is easier to create a disruptive culture in a start-up company than it is in an established, legacybased company. I think that is true – but it is an explanation, not an excuse.

To compete in the 21st century, it strikes me as critical to understand that new competition can come from anywhere and everywhere, and that this new competition is likely to have a disruptive culture based on questioning traditional assumptions.

Competing with such entities won’t be easy. And it seems to me that one of the first things retailers have to do is look at themselves and pose one simple question: If we were starting this company tomorrow, how would we do it? ■

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OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES

Branching Out No one can sell just one category anymore. The solution for fast fashion retailer H&M is a new concept called Arket, which offers a curated assortment of apparel and home accessories, all of which is offered at slightly higher prices than H&M. Some Arket stores, opening in London, Brussels, Copenhagen and Munich, will also have cafes.

Meanwhile the company is planning to open stand alone H&M Home stores next year.

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When in Rome For any retailer who thinks they’ve had a hard time with zoning restrictions, consider McDonald’s which recently opened a restaurant just outside the Vatican’s St. Peter’s Square. The company had to suffer some fire and brimstone from Cardinals who objected to the Golden Arches 100 yards from the Pope’s residence. But as it turns out, the Vatican owns the building and will be collecting rent of about $33,000 per month. iStock

BACKROOM

BOUNTY

If you’re wondering what to do with that little bit of extra space or alcove in your store, Staples has come up with a unique solution.

The chain is now offering co-working spaces at their stores in Boston, branded as Workbar at Staples. It’s targeting millennials and small businesses with upgraded workstation at $130 per month for unlimited use. Maybe supermarkets can sell them lunch or dinner while they work?

Instead of using the backroom to store cartons, mops and carts, retailers could use the space to grow food. An experiment in urban farming or “aquaponics” is taking place in Brooklyn, New York where several companies are growing tilapia in old warehouses.

One company called Edenworks is even using the waste produced by the fish to fertilize racks of LED-lit vegetable crops.

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Spacing Out

OUTSIDE THE BOX

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If you’re tired of hearing about millennials, you now have Gen Z to worry about. Also called the iGeneration, post-millennials, plurals or the Homeland Generation, the group includes people born roughly between 1995 and 2015, meaning that the oldest members are graduating college or starting careers while the youngest haven’t yet entered kindergarten.

Research company PYMNTS.com said cash purchases are on track to hit $3.5 trillion by 2020. While consumers in the 35-44 age group are increasingly using card and mobile payments, younger millennials show a higher propensity for cash.

According to some observers, Gen Z consists of about 60 million people, making it larger than the baby boomers and millennials. While there is considerable debate over where these people fit in demographically, they all have one thing in common – none of them have lived in a world without the Internet or mobile phones.

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If you’re wondering what your employees are up to, a Stockholmbased tech startup called Epicenter has developed microchips the size of a grain of rice that can be implanted by syringe between the thumb and index finger. It sounds like something out of 1984 but the chips function as swipe cards to open doors, operate printers or even buy a smoothie with the wave of the hand. The idea is so popular at Epicenter that workers hold parties for those being implanted.

NOT REGISTERING Starbucks is testing a location at its headquarters in Seattle where employees can only order via the chain’s app. Customers can see their orders being made through a window where they can also pick it up. One has to wonder if it will really speed up the painfully slow process of getting a cup of coffee. While this is designed to speed up service, the chain is working on its Reserve stores, high-end coffee shops designed for lingering, and offering small lot coffee beans, and food from a local Italian bakery.

While everyone is partying, it does raise some security and privacy issues since it shows how often an employee comes to work, what they buy and where they go. iStock

NEW JERS EY GRO CER | 17

WASHINGTON REPORT

Let the Games Begin

PET ER L A R K I N PR E S IDE N T AN D CEO N AT ION AL GR OCER S AS S OCIATIO N

Grocers anxiously await action on Republicans’ ambitious policy agenda.

Following a somewhat turbulent first 100 days in office, President Donald Trump and Congressional Republicans are now gearing up for the next chapter with an ambitious policy agenda that includes repealing and replacing the Affordable Care Act and reforming America’s tax code.

While there is a lot on the “to do” list, independent supermarket operators are in a unique position to see action on issues that affect them most. From protecting debit swipe fee reforms to amending food labeling policies to rolling back countless regulations, there are never a shortage of issues impacting the supermarket industry.

The following is a summary of the issues on the forefront of many grocers’ minds which are being lobbied by the National Grocers Association.

Durbin Amendment/Debit Card Swipe Fee Reform The independent supermarket industry and entire retail community scored a major win after House Republican leadership announced on May 25 that the Financial CHOICE Act would no longer include a provision to repeal debit swipe fee reform,

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also known as the Durbin Amendment, which was passed as part of the Dodd-Frank legislation in 2010.

At the beginning of May, nearly 300 supermarket executives lobbied lawmakers on the issue at the same time as the House Financial Services Committee marked up and ultimately passed the legislation.

The bill was introduced by the chairman of the Committee, Congressman Jeb Hensarling (R-TX).

The decision to remove the language came after an overwhelming response from retailers, including more than 1,100 independent grocers, made the provision a poison pill that threatened to kill the entire bill. As a result, debit swipe fees will continue to be regulated and the routing provision allowing businesses to choose their routing network will remain in place.

Health Care Reform President Trump secured his first major legislative victory with the passage of the American Health Care Act on May 4 from the House of Representatives. The Senate has vowed to make major changes to the House bill, but as the measure currently stands, business owners will be faced with an uncertain regulatory environment given the parliamentary restrictions placed on the

passage of this bill. Included in the bill is a repeal of the small employer tax credit for employee health insurance expenses, a repeal of penalties for certain large employers who do not offer full-time employees and their dependents minimum essential health coverage, and a delay in the implementation of the excise tax on high cost employersponsored health coverage.

The Senate has indicated it plans to craft its own health care bill rather than considering the package sent to them from the House.

Thirteen Republican Senators have formed a working group and are beginning to develop proposals that have a chance at gaining the support of at least 50 members to pass the Senate.

Tax Reform The House GOP has put forth their tax reform priorities, as has the White House, and now with health care out of the way on the House side, the question becomes when – not if – tax reform will happen.

The House Republican plan raises many questions for the independent supermarket industry, such as, how will deductions be eliminated to pay for the proposed decrease in corporate tax rates, how will the proposed border adjustability tax impact food prices, will the LIFO accounting method be preserved, and will the House and the Senate be able to agree on a bill.

WASHINGTON REPORT

“Independent supermarket operators are in a unique position to see action on issues that affect them most.” iStock

With regards to the proposed Border Adjustable Tax (BAT), NGA has joined a coalition that launched February 1 to oppose the tax. Based on initial input from our members it is clear a BAT tax will substantially increase food prices, particularly on produce, ultimately increasing the cost of goods to consumers.

The Senate also has its own ideas on how tax reform should be handled, which could slow the ultimate passage of any reform bill. At this moment, NGA is closely monitoring the changing tax landscape in Washington and

engaging with Members of Congress on the issues most critical to NGA members.

FDA Menu Labeling Regulations NGA and independent grocers across America recently won a major victory when the implementation date for the Menu Labeling Regulations was delayed until May 5, 2018. Legislation has been reintroduced in both the House and Senate to fix problematic provisions of the rule and the FDA has reopened the regulation to public comments.

NGA and other coalition partners are working to impress upon Members of Congress the regulatory burden imposed on

grocers as the law is currently written and to raise awareness on the need to support legislation that would provide the needed flexibility to comply with a law originally written for chain restaurants.

Our team is also eager to begin working with Dr. Scott Gottlieb, who was confirmed as Commissioner of the FDA on May 9, to begin identifying burdensome regulations for independent grocers. ■

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NEW JERS EY GRO CER | 19

WORKPLACE

HARASSMENT: Low Profile, High Price Tag

By Cassandra Pye Fox TV News personality and author Bill O’Reilly lost his job in April 2017 after allegations by several of his female colleagues of sexual harassment – and subsequent private settlements – were made public.

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O’Reilly denied the reports and Fox stood by their award-winning host as the story heated up. The O’Reilly Factor was cable television’s most popular, and likely among the most profitable, news show. O’Reilly still maintains his innocence.

The late Roger Ailes, former Fox CEO, was also accused of sexual harassment and resigned from his post when a high-profile Fox anchor sued him last year. As this story goes to press, it is estimated that Fox will spend more than $45 million in costs related to harassment-related litigation – in addition to those costly severance payouts to O’Reilly and Ailes.

Three more claims were filed by employees against Fox News in late May, including one woman who alleges she was both sexually harassed and physically threatened by a former radio news anchor.

The O’Reilly story was gripping, dramatic and made for sensational headlines.

Harassment lawsuits in the grocery industry may not hold nearly the same intrigue, however, understanding new nuances in the law, and being mindful of the dramatic impact any related online campaign can add to the risk is important. A company’s reputation, once lost, can be challenging to recover.

The United States Equal Employment Opportunity Commission (EEOC) states that “It is unlawful to harass a person (an applicant or employee) because of that person’s sex.” According to the EEOC, harassment can include “sexual harassment” or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.

The legal definition of sexual harassment varies by state jurisdiction. While most agree the contemporary notion of sexual harassment was conceived in the early 1970s, it was the 1991 testimony of Anita Hill against then-U.S. Supreme Court nominee, Judge Clarence Thomas, that did a great deal to propel awareness.

The number of sexual harassment cases reported in the U.S. (and Canada) increased by 58 percent since the Hill testimony and continues to climb. At the same time, private companies and agencies also responded by launching training programs to deter sexual harassment.

against women, women filing against other women and men filing against men.

Mary Kasper, General Counsel and Secretary for Unified Grocers, Inc., recalls the Hill testimony and how it raised awareness among “rank-and-file” employees.

Unified’s general counsel says what makes the grocery industry so unique is that its workplace is more diverse.

“We all went through this phase, back then, where we overreacted, when we were overly careful about what we did and didn’t do,” she remembers. “We were careful not to compliment a man on his tie or hug a co-worker.”

“This is what a diverse workplace brings,” she says. “As women rise through the ranks, it’s not necessarily true that women who rise to senior positions are less likely to behave badly than men.”

“That makes it fun, but also makes for a more sensitized workplace,” she says. “So what has changed, are more hostile work environment claims and they’re far more nuanced. People are more sensitive about what they do and say but also people are more sensitive about what they perceive

“Nowadays the trainings are more interactive, demonstrate subtleties; you have to engage on what you would do.”

Kasper says recent news events may have rekindled sensitivities around the harassment issue. “There’s this weird irony again,” she adds. “People are talking about Anita Hill again.”

But the truth is employers have invested in raising awareness and providing sexual harassment trainings for going on three decades and, while several high-profile cases have dominated news cycles recently, Kasper suggests the number of sexual harassment claims for the food industry haven’t changed much.

“There are very few ‘quid pro quo’ cases – like those alleged in the O’Reilly case,” she says. “Gone are the days of only women filing claims against men.”

Kasper says the industry is seeing claims that aren’t the classic women-filing-harassmentclaims-against-men. Instead, men are filing

and what they hear.

“If you are my supervisor and you say something to me that’s inappropriate, now the law looks at how it was perceived by me,” she adds. “In the last five years or so there’s been a lot of conversation around intent vs. impact.”

And, says Kasper, a new class of harassment claim is on the rise: bullying.

“Bullying claims are on the rise and we’ve trained our people to recognize it when they see it,” says Kasper. “By bullying, we don’t mean ‘my boss is mean to me’ or ‘they didn’t let me sit at the lunch table.’ It’s much more than that. We have to be careful about excluding people from conversations and projects which could ultimately lead to their career development.”

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harassment claims, says Kasper. Most have mandatory legal arbitration to manage these cases internally, through disputeresolution processes. She also cites the rise and effectiveness of affinity groups, over the last five years or so, as being a critical part of operations – so there are greater opportunities to discuss issues in a safe place.

“Most employers believe it’s better to be safe than sorry,” asserts Elizabeth Stallard, Partner in the Employment Group at Downey Brand, LLP. “The Fox story was prominent but not typical; we’re just not seeing much in the way of ‘quid pro quo’ claims. There’s far less of that kind of behavior in the food industry because it wouldn’t be tolerated.”

So it’s important to commit to best practices, says Stallard. In addition to providing employee training programs, it’s important for employers to create a diverse environment where there’s an ability to approach Human Resources departments, to deal with claims quickly and to adopt and enforce a zero-retaliation policy (especially where sexual harassment has been claimed).

“Diversity is also important so that employees don’t feel isolated – that there’s no one in their department to go to,” she adds. Not healthy for a company to go through this.

Most harassment training can be completed online, says Stallard, and is required every two years if you’re a people manager.

They’ve been updated and adapted to the times.

“Harassment trainings have been online for a long time but they used to be simplistic and somewhat boring. They’re better now,” she suggests. “You’re no longer just checking the boxes. Nowadays the trainings are more interactive, demonstrate subtleties; you have to engage on what you would do.

The answers aren’t that obvious – you really have to put some thought into them.”

Three years ago the State of California added bullying to sexual harassment training in the law. And, like Kasper, Stallard has seen an increase in these types of claims.

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Recent harassment training modules have been modified to include the definition and impacts of bullying, according to Stallard, and she says retailers need to be mindful of making sure everyone in the workplace is on the same page.

“You have to accept that some people get along better than others,” she counsels.

“However, there are those little things that make people feel like you’re not taking them into account. It costs you nothing to be inclusive.”

“There are multiple generations in the workplace and the notion that ‘I was hazed and you’ll be hazed’ can’t be tolerated,” she says. “Millennials are looking for a different kind of work environment and have a different set of expectations for how they and everyone else should be treated.”

And, then always remember that someone is always watching.

Stallard says tone from the top is very important. You want your people to know you’re holding them to the same standard of behavior that you have.

“Consistency is important, too,” she says.

“You can’t be all places at all times, so making sure management is on the same page and knows who to call when issues arise is critical.”

Stallard also suggests paying attention to the new focus on transgender issues. Issues like unisex bathrooms, gender-related terms and pronouns are all a part of what she calls a new frontier for employers.

Employers should be sure to follow the guidance of counsel and need to be mindful and respectful of employees as well as customers,” she advises. “It’s important to maintain a culture that’s welcoming and get some training and advice.”

Kasper and Stallard used the word “subtle” over and over.

“It’s not Mad Men anymore,” asserts Stallard.

“People know what’s against the law and they know they’ll get in trouble. But they should be careful of the subtle stuff and mindful of the little things. There’s this sense, in some places, that rejecting ‘PC’ behavior is OK. It’s not.”

For example, she says, employers should be careful to not exclude people from opportunities to bond. Yes, some people naturally develop relationships with each other, or develop familiar relationships online.

While most would agree that no single factor contributed to O’Reilly’s fate, many point to a digital campaign which online activists affiliated with the Media Matters website launched against News Corp and its advertising partners as the proverbial straw.

A list of The O’Reilly Factor’s advertisers was shared online via Google Docs by Media Matters, a group called Sleeping Giants and others. The list of allegations was shared by these groups to their tens of thousands of followers on Twitter and tweets were targeted directly at the show’s advertisers.

Released on April 4, by April 18, more than 80 advertisers had issued public statements confirming they removed their ads from the show, costing the network millions. Fox News announced that it parted ways with their star anchor on April 19.

“Social media can fan the flames,” says Kasper.

Says Stallard: “I think that generally speaking social media is so instantaneous so things can mobilize very quickly.

It’s easier than ever before to get messages to people. Educate your staff, educate your supervisors. Retailers have to be consistent and protect their brand.” ■