California
Erewhon – A Retail Utopia PAGE 46
Loss Prevention with Foolproof Knowledge Retention 2019, ISSUE 3
CALIFORNIA GROCERS ASSOCIATION
PAGE 50
In-Depth Look:
All Politics Is Local page 30
CGA Strategic Conference 2019
IDENTIFY AND FILL THE GAPS IN YOUR BUSINESS Palm Springs, CA | September 29 – October 1
The California Grocers Association Strategic Conference is one of the most productive business events of the year, featuring an agenda packed full of insightful educational sessions, numerous networking opportunities and our signature one-on-one retailer/supplier meetings. Immerse yourself in the business of grocery in California.
California’s diverse and hypercompetitive grocery business has reached a transitional moment. The industry’s well-established reputation for predictability has turned towards a future that is fast-paced, experimental and increasingly uncertain. Evolutionary changes across all the industry have created gaps between the industry’s legacy structures and the new requirements for success. These openings can be seen in the uneven adoption of technology, shifts in corporate leadership and employee culture and the collaboration gaps from producer to consumer. And where these gaps appear, competitors or new intermediaries are poised to take advantage. Grocers and their business partners are shifting their resources and deploying novel partnerships in order to differentiate themselves and achieve separation form their competitors. Come join us as we identify and fill these gaps while helping you to build stronger connections with your most important business partners.
WHO YOU’LL MEET The CGA Strategic Conference brings together an unrivaled group of retailers, suppliers and wholesalers operating throughout California’s diverse grocery community in an environment focused on the business of grocery. Attendees experience concierge-level service during our trademark in-person business meetings, hear thought-provoking presentations by leading-edge speakers and enjoy network building after-hour social events.
WHAT YOU’LL LEARN Sometimes past success can be the greatest inhibitor of future excellence. It can produce strategic gaps as changes occur in shopper behaviors and workforce dynamics. With renewed attention, best-in-class companies are adopting a new mindset to bridge these gaps and more closely connect with their customers online and in-store. Over the course of three days, you’ll hear from some of the freshest thinking on how to mind the gaps in your business strategies.
WHY YOU SHOULD SPONSOR The things we invest our time in require a return on our effort. The best way to maximize your conference experience is to become a sponsor. Sponsoring at the 2019 CGA Strategic Conference guarantees pre-scheduled meetings with your most-desired retail buyers.
CONCIERGE-LEVEL MEETING SERVICES Contact Beth Wright at bwright@cagrocers.com or call (916) 448-3545 today. Sponsorship opportunities are limited.
ENTERPRISE RISK PROTECTION EXECUTIVE SUMMIT The Enterprise Risk Protection Executive Summit provides a special track just for loss prevention, safety, risk management professionals within the Strategic Conference that features six hours of targeted, break-through educational content, hundreds
REGISTER TODAY! Online registration is now open. Join the single largest gathering of California grocery industry executives for three days of knowledge building, face-to-face meetings and
of pre-scheduled, one-on-one business meetings
networking events.
between retailers and vendors, and outstanding
VISIT: CGASTRATEGICCONFERENCE.COM
networking opportunities.
See who’s participating! CAL I FO RNIA GRO CER | 1
The ONLY Federal Credit Union in the United States chartered to serve grocery industry employees and their families
www.trugrocer.com
CONTENTS | ISSUE 3
FEATURES
30 In-Depth Look: All Politics Is Local In the American political system, we are taught a rigid hierarchy of federal, then state, and trailing last is local government. While each has its fundamental and specific purpose, is it fair to place local government at the “bottom” of the list?
40 Homelessness and Mental Illness: A Challenge to Retailers No one has an exact handle on the number of homeless, only that their number has increased significantly across the country since the 1970s. For retailers, this means walking a fine line between sympathy for those in distress and protecting assets, staff and customers.
36 HOW POWERFUL LAWMAKERS ARE KILLING CALIFORNIA BILLS WITHOUT A PEEP
COLUMNS President’s Message Your CGA Headquarters. . . . . . . . . . . . . . . . 6 Chair’s Message Words Matter. . . . . . . . . . . . . . . . . . . . . . . . . 9 Viewpoint Unknown Unknowns. . . . . . . . . . . . . . . . . . . . 11 Government Relations I Gave at the Office. . . . . . . . . . . . . . . . . . . 20 Capitol Insider One Small World, One Real Difference.. . . . . . . . . . . . . . . . . . 22
46 Erewhon – A Retail Utopia Los Angeles-based Erewhon Markets has created something of a retail utopia for customers searching for the purest, most-ethically produced and sustainable food and wellness products – many of which can’t be found anywhere else.
Washington Report Payments Marketplace Reform: Opportunities on the Horizon?.. . . . . . . . . 24 Inside the Beltway Fees, Fees and More Fees.. . . . . . . . . . . . . . 26 Guest Column Grocery Industry Steps Up for MDA.. . . . . 54 Mommy Blogger The Absentee Shopper.. . . . . . . . . . . . . . . . 56
DEPARTMENTS
50 Loss Prevention with Foolproof Knowledge Retention
CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 14 Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 18 Index to Advertisers. . . . . . . . . . . . . . . . . . 55
While their roles are quickly evolving, your associates’ impact on you company’s bottom line can’t be ignored. Associates today need to know more than ever. CAL I FO RNIA GRO CER | 3
CGA | BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
CHAIRMAN APPOINTMENTS Independent Operators Committee Chair DIRECTORS
CALIFORNIA GROCERS ASSOCIATION
Chair Kendra Doyel Ralphs Grocery Company
Second Vice Chair Hee-Sook Nelson Gelson’s Markets
Secretary Dennis Darling Super A Foods
First Vice Chair Phil Miller C&S Wholesale Grocers
Treasurer Renee Amen Super A Foods
Immediate Past Chair Bob Parriott Twain Harte Market
Kevin Arceneaux Mondelēz International Inc.
Dave Jones Kellogg Company
Lynn Melillo Bristol Farms
Mark Arrington Post Consumer Brands
Saj Khan Nugget Markets
Mario Mediati The Clorox Company
Denny Belcastro Kimberly-Clark Corporation
Greg King California Fresh Market
Doug Minor Numero Uno Market
Jeanne-ette Boshoff MillerCoors
Nancy Krystal Jelly Belly Candy Co.
Tim Murphy Costco Wholesale
Bob Bukovec Tyson Foods, Inc.
Michel LeClerc North State Grocery Inc.
Skip Nugent Best Buy Markets IGA
Pamela Burke Grocery Outlet, Inc.
Hillen Lee Procter & Gamble
Mike Ridenour The Kraft Heinz Company
Brent Cotten The Hershey Company
Hal Levitt The Save Mart Companies
Casey Rodacker Mar-Val Food Stores
Willie Crocker Bimbo Bakeries USA
John Mastropaolo Chobani, Inc.
Jaclyn Rosenberg Nielsen
Steve Dietz United Natural Foods, Inc.
Jonathan Mayes Albertsons Companies, Inc.
Richard Wardwell Superior Grocers
Jake Fermanian Super King Markets
Joe McDonnell Campbell Soup Company
Jeff Severns PepsiCo Inc.
Damon Franzia Classic Wines Of California
Mark McLean CROSSMARK
Greg Sheldon Anheuser-Busch InBev
David Higginbotham Stater Bros. Markets
Casey McQuaid E & J Gallo Winery
President/CEO Ronald Fong
Senior Director Government Relations Aaron Moreno
Elliott Stone Mollie Stone’s Market
Senior Vice President Marketing & Business Development Doug Scholz Vice President Communications Dave Heylen Vice President Government Relations Kelly Ash Senior Director Events & Sponsorship Beth Wright
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Director CGA Educational Foundation Brianne Page Director Digital Communications Nate Rose Director Administration & Human Resources Jennifer Gold Controller Gary Brewer
California Grocer is the official publication of the California Grocers Association. 1005 12th Street, Suite 200 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com For association members, subscription is included in membership dues. Subscription rate for non-members is $100. © 2019 California Grocers Association
Jeff Sigmen Reyes Coca-Cola Bottling LLC Scott Silverman KeHE Distributors Lee Smith Smart & Final Stores Rick Stewart Susanville Supermarket IGA Joe Toscano Nestlé Purina PetCare Rob Twyman Whole Foods Market Jim Van Gorkom NuCal Foods Michael Walton Unilever Karl Wissmann C & K Market, Inc. Kevin Young Young’s Payless Market IGA
Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Maria Tillman mtillman@cagrocers.com
SPECIAL ONE DAY SEMINAR FOR
store leaders s i n n e d snow
ed Featur er: Speak
In today’s challenging grocery market, creating and executing a service excellence strategy that connects you with your customers and differentiates your store from your competition is an important part of any leader’s role, from owner to store-level management.
Northern California Monday, August 5, 2019 9:00 am – 4:30 pm Jelly Belly Candy Factory Fairfield, CA
Southern California Sponsored by Certified Federal Credit Union
Tuesday, October 22, 2019 9:00 am – 4:30 pm Coca-Cola Corporate Office Los Angeles, CA Cost: CGA Members: $50/person Non-Members: $200/person Registration includes lunch and full day educational program.
Utilizing the lessons learned and taught during his 20 years with Walt Disney World, we’ve invited Dennis Snow, a global leader in customer service, to ignite the imaginative fire of your store leadership team and provide the keys to creating a culture of service excellence and a world-class customer experience.
Participants will learn: • The role of team members in delivering great service • To see the customer experience through the lens of the customer • Approaches to help employees move from a task mindset to an experience mindset • Recruiting and hiring practices that reinforce your service culture • Effective communication strategies that keep service excellence top of mind • A coaching process for addressing service issues The seminar is recommended for store directors, assistant directors and department managers.
Presented by California Grocers Association • Independent Operators Committee • CGA Educational Foundation REGISTER TODAY! Sign up at cagrocers.com/events or call CGA at (916) 448-3545
PRESIDENT’S MESSAGE
Your CGA Headquarters
RO N F O N G PR E S IDE N T AN D CEO CALIFOR N IA GR OCE R S AS S O CIATIO N
CGA’s new home was 121 years in the making thanks to the tremendous support of its membership. In April, CGA hosted a gala event celebrating a monumental milestone in the Association’s 121-year history – the opening of its first member-owned headquarters. More than 100 local dignitaries, state legislators, Association members, friends and family attended the Open House, held the evening of our annual Grocers Day at the Capitol. An event recap in words and pictures is on Page 15. Needless to say, the CGA Board and staff are extremely proud and excited to occupy this beautifully restored historic building that now is part of the tremendous revitalization occurring in downtown Sacramento. But, there’s a larger story here.
In my remarks that evening, I referred to our investment as the “member-owned” CGA headquarters, and for good reason. Without our members ongoing support – led by a fiscally responsible Board of Directors – this beautiful renovation would have only been an association president’s dream. Your Board of Directors is to be commended for having the foresight and fiscal responsibility to ensure a sound investment that will benefit the Association for years to come. Owning a building in Sacramento’s revitalized urban center presents an opportunity to mitigate the risk of ever-increasing rent costs and to reap the proceeds of continued growth in the future.
CGA’s newly-created Aisle 3 Concepts, LLC serves as the building’s property manager and maintains CGA’s offices on the second and lower level along with the ground floor which houses several retail outlets, including a bustling FedEx Office Print & Ship Center. I hope you have the opportunity to stop by and let us take you around “your” CGA headquarters. Our goal was to blend modern office design with the building’s rich historic past. During the renovation process we uncovered original ceiling beams, some 40 feet long, and were able to expose original brick walls. We also wanted to return the building’s Spanish colonial revival exterior and lobby to its original design. It truly was a labor of love. ■
“Your Board of Directors is to be commended for having the foresight and fiscal responsibility.” 6 | CAL I FOR N I A G R OC E R
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CHAIR’S MESSAGE
Words Matter
K EN DR A DOY EL R ALPHS GR OCERY CO./FOOD4LE S S/ FO O DSCO
As industry leaders, our words can have a profound impact on the next generation of grocery executives. As leaders of our companies, industry and communities, we must all recognize that the words we use and how we deliver them can have a greater impact than just the direct meaning of those words. The American poet Maya Angelou reminds us that people will forget what you said, or even what you did, but they will not forget how you made them feel. That has never been more true than in today’s climate of quick and constant communication. We are seeing incredible changes and many industry veterans will tell you that the way we all go to business is very different today than when they started, or even as recent as a few years ago.
Take a chance on a young leader and ensure their voice is at your table when making decisions for shoppers. The inclusion will only strengthen your business and drive greater results.
Our industry is experiencing incredible change and innovation. There has never been a more exciting time to be a part of the foodie culture that continues to grow and evolve. For all of our companies and communities to survive, we must cultivate and nurture the next generation of leaders to continue to take us beyond business models we can’t even imagine today.
To be clear…the grocery industry is here to stay. We will continue to grow, thrive and innovate, and be a true touch point for countless communities across California. Make no mistake that while new store models and technologies will continue to emerge, we as an industry will grow and change with them to ensure we don’t go the way of dinosaurs.
Telling your story, the opportunity that exists, and the incredible potential for young professionals to work in grocery is critical to ensuring future success for all of us. Your words can truly inspire the next generation as well as all those lives that depend on us for their livelihood, health and wellbeing.
As leaders, pause to reflect on how you can inspire the next generation that will take our industry to the next level while remaining true to our values and roots. Your words might just inspire and motivate the next great leader. ■
“Telling your story, the opportunity that exists, and the incredible potential for young professionals to work in grocery is critical to ensuring future success for all of us.”
CAL I FO RNIA GRO CER | 9
CA LAW The sale of tobacco products including e-cigs is prohibited to persons under 21.
PREVENT A LIFETIME OF ADDICTION ©2019 CALIFORNIA DEPARTMENT OF PUBLIC HEALTH
VIEWPOINT
Unknown Unknowns
K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M
With the continued growth of online specialty stores, traditional retailers must offer more compelling reasons to draw shoppers out of their homes. The former Secretary of Defense Donald Rumsfeld once famously said that “there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.” It is the latter category, Rumsfeld said, that’ll get you. I was thinking about this rumination the other day when I considered some of the specific ways in which certain businesses are working hard to prevent people from having to go to the store…or at least, the stores that they traditionally have patronized. I’m not talking here about Amazon’s Subscribe & Save program, which has successfully mined the automatic replenishment vein to the tune of an estimated $8 billion in annual sales (that used to go traditional bricks-andmortar stores). No, that would be too easy. And I’m not talking about Replenium, a subscribe-and-save-like service that was created by some Amazon veterans and
can (and will) be used by retailers and manufacturers that don’t want to concede the replenishment business to Amazon (Which they shouldn’t. $8 billion is a lot of money to come out of traditional retail and go to Amazon.). I am talking about companies and trends that I have encountered beyond Amazon and that I think have an enormous potential – in some cases, already fulfilled – for not just impacting traditional store sales, but inspiring other people and companies to do the same. I have seven in mind. Fleat. This is a company that I recently came in contact with that essentially takes the concept of the old-fashioned ice cream truck and giving it fresh life with technology and an expanded product range. Fleat has developed software that allows its retail customers (it could be a supermarket, c-store or restaurant, though I suppose there also could be non-food-oriented applications) to their customer data to figure out what people in
specific geographic areas have bought, or might be interesting in buying based on previous shopping trips. Then, they outfit a truck with those products and send it to that area, sending its customers an email or text, or alerting them via an app, that the truck is incoming and what it is. Fleat pitches this as being the ability to send a highly targeted and relevant small store into people’s neighborhoods and even driveways…which expands and cements retailers’ relationship with those shoppers, while at the same time giving them a reason not to go to the store. Filld. I used to think that if there was one bricks-and-mortar format that was safe from disruption, it was the gas station – as long as there are cars that use gasoline, their owners would have to them their tanks filled up at the local gas station. But then I met the folks from Filld, which essentially is a subscription service for fuel. It was started as a way to service company car fleets, but has added a consumer component – in areas where it is offered, you can arrange the Filld truck to come to your home or office and fill up your tank. (It is energy agnostic – Filld can do regular, premium, or diesel, but also can charge up electric cars.)
Continued on page 12 ▶ CAL I FO RNIA GRO CER | 11
VIEWPOINT ◀ Continued from page 11
people to go to its stores to get coffee for home brewing. It was, in my opinion, a boneheaded decision by a company that doesn’t make a lot of them. For me, it was goodbye Starbucks and hello City Girl.) Stitched, Fixed. My wife and two of my kids are regular users of Stitch Fix, which has a service that regularly send each of them boxes of clothes chosen based on a survey they filled out and previous shopping patterns. iStock
“I considered some of the specific ways in which certain businesses are working hard to prevent people from having to go to the store…” You pay a convenience fee, plus the cost of gas, but this strikes me as a great way for retailers to provide a tangible service to their customers…or lose their customers to someone who offers Filld as an option. And people won’t have to go the store.
Pretty soon, because our appliances will reorder products that they need and use (from a local store or from Amazon or maybe directly from the manufacturer), and for these things at least, we won’t need to go to the store.
Quip. I’ve become more than a devotee of the Quip toothbrush system; I’m pretty much an evangelist. The value proposition is pretty simple – the Quip toothbrush is advertised as having a more gentle, yet effective vibrating mechanism, and it has built into it a tiny computer that makes it go for two minutes, pausing every 30 seconds to let you know how long you’ve gone and allowing you to switch to another sector in your mouth.
Close Shave. If you have any doubt about this, just think about what companies like Harry’s and Dollar Shave Club have done to the traditional razor-and-blades business. Legacy companies like Gillette continue to struggle with how to compete with these interlopers, which have gone beyond their pure-play internet businesses and are starting to gain a presence in bricks-andmortar stores. But make no mistake…once you’re into their ecosystems, if you don’t want to, you never have to go to the store for items in this category ever again.
If you sign up for the program, you get a fresh brush head plus a new battery every three months…and I have to believe that I’ve taken better care of my teeth since I got it. Plus, I’ll never have to buy a toothbrush in a store ever again. The Internet of Things. This refers to the ability to embed internet connectivity into appliances…for example, building a washing machine that will reorder detergent when it begins to run low, or a coffee pot that will reorder filters, or a map that will reorder light bulbs, or…you get the picture.
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Coffee. I never buy coffee for at-home brewing in a store. I get mine from City Girl Coffee, which is a Minnesota company that is run by women and sources its coffee from plantations that are women-owned and women-run. I love this. My wife and daughter love this. And the coffee is terrific…plus it shows up once a month, which means that for coffee, I never have to go to the store. (One note: Starbucks used to have a subscription program to which I belonged but canceled it saying that it wanted
If they like everything in the box, they keep it and get a discount. They can also send any or all of the items back, and their decisions are noted and factored into future styling choices. I’d guess my wife and daughter like about 50 percent of the stuff they send, but my son probably likes 90 percent of the merchandise…and both my son and daughter have mused that between Stitch Fix and Zappos, they may never have to go to a clothing or shoe store ever again. Get the pattern? Need I say more? I’m not arguing here that bricks-and-mortar retailers are going away. Far from it. But I am suggesting that if a store is going to get people to go out to shop for some kinds of food or fuel or laundry detergent or toothbrushes or razors or coffee or clothing, those stores are going to have to be special. Different. Compelling. Experiential. Relevant (which speaks to the head). Resonant (which speaks to the heart). Some of this is a known known. Some a known unknown. But some of the challenges coming down the road cannot be seen or even, maybe, anticipated…and fit into the category of an unknown unknown. Those are the ones that’ll get you. ■
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Proud Proud Heritage, Heritage, Compelling Compelling Future Future
CGA NEWS
(L to R) Scott Silverman, KeHE Distributors; Tracy Lape, Pete and Gerry's Organics, LLC; Joe Perez, rePLANET, LLC
CGA and CGA Educational Foundation board members participated in the ceremonial ribbon cutting.
CGA HOSTS GALA OPEN HOUSE CGA President Ron Fong with Sen. Steve Bradford.
The California Grocers Association unveiled its new memberowned headquarters during a gala Open House on April 9 that drew more than 100 elected officials, Association members, and other invited guests. In 2015, CGA purchased the 20,544 square foot three level building, located at the corner of 12th and J Street in downtown Sacramento, for $3 million and began renovations in 2018.
(L to R) Kelly Ash, CGA; Assemblymember Steven Choi; Larry Carr, Albertsons.
The second floor houses the Association, with additional tenant space, meeting rooms and storage in the lower level. The ground floor features retail outlets. CGA created a for-profit company, Aisle 3 Concepts, to manage the building. Mr. and Mrs. Glen Wells, Wells Construction, Inc.
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CGA NEWS
(L to R) Jonathan Mayes, Albertsons; Carol Fong; Richie Morgan, North State Grocery Co.; Assemblymember Jim Cooper; Ruth and Dennis Darling, Foods Etc.
“We are very proud to occupy this beautiful, member-owned building, It was a terrific investment for the Association,” Ron Fong, CGA President and CEO, told attendees. “We are excited to be a part of downtown Sacramento’s revitalization efforts.” Fong also recognized the building architect/designer firm, Williams + Paddon, and general contractor, Wells Construction. “On behalf of the CGA Board of Directors, we are so proud that this day has come and that we have invested our ‘corner of the world’ in resurging downtown Sacramento,” said CGA Chair Kendra Doyel, Ralphs Grocery Co., during the gala Grand Opening. “I’d like to personally thank the Board for its vision and determination in making this happen.”
CAL I FO RNIA GRO CER | 15
CGA NEWS
NEW MEMBERS CGA welcomes the following members:
Erewhon Market 7660 Beverly Blvd Ste A Los Angeles, CA 90036-2758 Contact : Tony Antoci, Chief Executive Officer Phone: (323) 937-0777 Website: www.erewhonmarket.com
Optimum Seismic 5508 S Santa Fe Ave Vernon, CA 90058-3524 Contact: Ali Sahibi, Chief Operations Officer E-mail: asahabi@optimumseismic.com Phone: (323) 605-0000 Website: www.optimumseismic.com
RMG – Organic Waste & Recycling Solutions 4686 Mercury St San Diego, CA 92111 Contact: Michael Philipps, Regional Account Manager E-mail: michael@rmgrecycling.com Phone: (858) 677-0884 Website: www.rmgrecycling.com
Securitas Security Services USA Inc. 1500 W Carson St Ste 109 Long Beach, CA 90810-1401 Contact: Matt Aleman, Business Development Manager E-mail: matt.aleman@securitasinc.com Phone: (310) 986-2344 Website: www.securitasinc.com
SMC ZeroWaste PO Box 79200 Corona, CA 92877-0173 Contact: Sal Coco, President E-mail: sal@smczerowaste.com Phone: (951) 788-6042 Website: www.smczerowaste.com
Alkaline 88 LLC 14646 N Kierland Blvd Ste 255 Scottsdale, AZ 85254-2767 Contact: Greg Ritter, Regional Sales Manager – West E-mail: gritter@alkaline88.com Phone: (480) 656-2423 Website: www.thealkalinewaterco.com
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To us, local means
California
We’re proud to offer more of what Californians are looking for – from locally grown produce to California-raised USDA choice meat. Long before local was cool, our family of stores made it a priority to buy direct from local growers. In fact, some of our current relationships with farmers started over 60 years ago. We’re working hard to be California’s favorite grocer. In our neighborhoods, we are focused on developing offerings unique to the California lifestyle, we’re dedicated to contributing to the community, and we’re honored to call nearly 70,000 Californians our employees. To us… Local means fresher
|
Local means better |
Local means California
!
OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES
GREEN BANDWAGON Washington D.C. has its “Green New Deal” but the clothing industry may be the first to jump on the green trend. Mainstream fashion brands are coming out with sustainable and “ethical” clothing collections at a dizzying pace. The problem is that everyone’s definition of sustainable is different and the industry may face some backlash from consumers.
iStock
ROCKING ROBOTICS If you’re looking for the latest in automated high-tech warehousing, head to Erith in the United Kingdom to see Ocado’s latest and largest online fulfillment center with 750,000 storage locations and managed by about 3,500 robots. The site, which is expected to hit revenues of about $1.3 billion, will devote about one-third of its capacity to Morrison’s, the U.K.’s fourth largest retailer. Using robotics, the site can pick a 50-item order in about seven minutes compared with an hour doing it in-store, according to officials, noting that the site handles about 300,000 orders weekly.
iStock
The Nuclear Myth
Euromonitor finds that the traditional definition of the twoparent, two-child nuclear family is imploding. The new norm includes single parents, unmarried couples raising children, fewer people per household, fewer children due to falling fertility rates and higher divorce rates – all of which is expected to have a significant impact on many sectors including retail. All this doesn’t mean fewer selling opportunities. Simply that companies have to shift their marketing and strategies.
iStock
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iStock
THE
NEW
MAINSTREAM Gig workers, who accounted for $1.4 trillion income at the end of 2018, are now in the mainstream of the global economy, according to research by PYMNTS. This segment includes every one from Uber drivers to designers, who often juggle multiple jobs. Those with specialized skills account for nearly one-third of gig workers and are looking for greater flexibility in how they’re paid. Nearly half of these workers were compensated via PayPal.
That’s the advice from Harvard University lecturer Jesse Keenan, who studies urban development and climate adaptation. With wildfires in the West, floods and storms in the East, Keenan has pinpointed Duluth, Minn., as the place to avoid climate catastrophes. No place is immune to climate change, according to experts, but this frigid city is seeing less severe winters and because it is inland, the area is protected from the expected rise in sea level.
Head to
High Time
iStock iStock
Barney’s, the iconic New York clothier, is bowing to a shift in lifestyle of its customers by installing an upscale cannabis lifestyle and wellness shop in its Los Angeles store.
Private Lives
iStock
Some observers call it social media self-destruct. Bowing to public and legislative pressures, Facebook is focusing greater effort on private communications such as encrypted messaging and tools that enable people to automatically delete content they’ve posted after a certain period of time.
iStock
GOVERNMENT SCAPEGOAT
Sweating it out
Looking for a new type of promotion? Check out the barnyard. A three-yearold Nubian goat named Lincoln has been elected pet mayor of Fair Haven, Vt., by a narrow margin. Lincoln beat out 16 other animals for the job, including an assortment of dogs, cats and gerbils. An evacuation accident during the swearing in ceremony did not hurt his approval ratings but the sheriff had to clean it up.
At times, expansion means breaking out of your comfort zone. That’s what Dollar Shave Club, the online men’s grooming company is doing with the introduction of deodorants and antiperspirants called Groundskeeper. As Michael Dubin, CEO and Co-founder notes: “What connects the whole line is taking care of your dark, sweaty stinky places that don’t get a lot of love and attention throughout the day.” iStock
CAL I FO RNIA GRO CER | 19
GOVERNMENT RELATIONS
I Gave at the Office
A A RO N M O R EN O S EN IOR DIR ECTOR CGA GOV ER N MEN T R ELATION S
How often have you been asked, “Spare a moment to help the environment?” For those who work in and around the State Capitol, it’s a semi-regular refrain uttered by well-meaning volunteers looking to raise money and awareness for groups whose mission it is to help the environment. My answer when I used to encounter these fine folks as a legislative staffer (and I suspect the response given by many current legislative staffers) was always, pointing at the Capitol: “I’ve already done a lot to help the environment working in there,” or, “I gave at the office already.” These encounters always ended with a knowing nod, and the volunteer thanking me for the help, with the understanding that we’re all doing our part for the greater good. I share this to illustrate the position the grocery industry sometimes finds itself when dealing with legislation that would require grocers to do even
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more for the environment – simply substitute grocers for me and the Legislature for the volunteer. Allow me to explain. In the most recent legislative sessions, as well as the current one, lawmakers have considered and passed a number of measures seeking to reduce the amount of waste entering the state’s landfills, or even eliminate certain products from the waste stream altogether. These bills affect some industries more than others, with the level and type of engagement being a strong indicator of the potential impacts of these policies. Some automatically oppose any environmental legislation. Others look for ways to craft legislation in such a way that it will either exempt or minimally affect their industry. And some may choose to actively help to do their part because they understand that some policies can be beneficial for both business and the environment. I believe the grocery industry has consistently been in the latter group, opting to collaborate for the greater good either by working
with legislators on smart environmental policy or by implementing environmentally friendly programs. For example, it was the grocery industry that worked with the Legislature to eliminate the use of single-use carry-out plastic bags resulting in a significant decline in the number of these bags found in waterways, beaches and landfills. It’s important to remember that no other retailers operate under such a ban, and a self-imposed one at that. Also of note (and often overlooked) is the fact that grocery stores have served as the backbone of the state’s Beverage Container Recycling Program since the 1980s. California’s CRV recycling infrastructure is built around supermarket parking lots that, by law, serve as hubs for convenience zones that allow for people to get their nickels and dimes back when returning bottles and cans to parking lot recycling centers. Again, it is the grocery industry that helps facilitate the diversion of materials from the state’s waste stream. It’s not just at the state level where grocers have stepped up when asked to make changes to their operations in service of the environment. There are more than 120 local ordinances that mandate either eliminating certain food packaging material types or restricting the types of materials used for food packaging.
GOVERNMENT RELATIONS
“In many cases, the grocery industry has been an active and willing partner in crafting policies that make sense from both a business and environmental perspective when other industries haven’t.”
In many cases, the grocery industry has been an active and willing partner in crafting policies that make sense from both a business and environmental perspective when other industries haven’t. And putting aside the changes made by grocers around the state because of government actions, many food industry companies – both retailers and suppliers – have enacted more environmental policies because it’s the right thing to do for their customers and their bottom lines.
packaging at the factory, the grocery retail sector has been a leader in the sustainability space.
Whether it’s backhauling organic waste to create energy and reduce what’s sent to landfills, or committing to using more recycled material in beverage containers and
So as the Legislature looks for ways to reduce waste, CGA will continue to stress how much our industry has already worked towards this common goal. It’s not that the
industry isn’t willing to do more when asked the metaphorical “donations to the cause” question, it’s just that in many ways (as I often tell the friendly volunteer) “we already gave at the office.” ■
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CAPITOL INSIDER
One Small Word, One Real Difference LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F K HAN, S OAR ES AN D CON WAY, L L P
A proposed rule change could dramatically impact how bills pass through committees. Brown
At the beginning of the 2019–20 Legislative Session, Speaker Anthony Rendon proposed a rule change which was later adopted by the Rules Committee. Assembly Rule 56.1 was changed to state a bill may be heard, rather than a bill shall be heard. On the surface, changing a “shall” to “may” seems insignificant but in practice, it has made a real difference. Previously if a Chair did not like a bill, they would offer amendments to the author either significantly altering the legislation or stripping it of most of its contents. The author could either accept the changes or attempt to get the votes without the Chair’s support.
Either result usually ended with an unhappy party and sometimes a messy public display. Allowing a Chairperson to simply tell an author a bill will not be heard empowers the committee and avoids the gamesmanship. After all, there are bills introduced by both parties that do not deserve a hearing. Since the topic of change has captured everyone’s attention, I have a few ideas I would like to throw into the hopper. California’s legislative session is a two-year session, yet most bills are introduced with the mindset of completing in a single year. Bills are forced into committee before they are ready and moved along as a “work in
progress.” Some of these bills continue unfinished all the way until the end of session. In the name of public transparency, the voters passed the “72-hour rule” to prohibit last-minute gut and amends and other changes. Arguably, this rule would not even be needed if bills were given more time. The legislative calendar sets arbitrary deadlines which create utter chaos as those deadlines approach, resulting in some committees with agendas that include more than 40 bills and last more than eight hours. In these circumstances, committee consultants are not able to analyze a bill, as one would understand the verb.
“California’s legislative session is a two-year session, yet most bills are introduced with the mindset of completing in a single year.” iStock 22 | CAL I FOR N I A G R OC E R
CAPITOL INSIDER
Instead, they provide a legislative history and summary. Every now and then points and counterpoints are offered but usually only by lifting statements provided by interested stakeholders. Public participation is also significantly curtailed because of “2 and 2” rules, where testimony is limited to two witnesses for two minutes, to save time.
amount of time to develop effective language, resolve stakeholder issues and be more thoughtful in the developing policy.
Further, because of the time crunch of legislative deadlines, any discussion in committee is surface level, rather than a debate over policy, with everyone already knowing certain bills will be passed out of committee in an unfinished form.
Adjusting the calendar and extending the process could also help avoid stacking committee hearings, forcing legislators to be in multiple places at once, often times missing the discussion altogether on a number of bills.
In the alternative, legislation introduced in the session’s first year should be encouraged to be a two-year bill and utilize the full
In the case where a bill needs to happen in a single year, the vote threshold could be raised to a two-thirds vote. This vote
For this to occur, the legislative calendar needs to be adjusted to allow committees more flexibility as to when bills can be heard, or eliminate all deadlines except the final deadline for the end of the two-year session.
threshold is used for legislation that would impose a tax, and “urgency” bills passed on an expedited timeline. It makes sense to use this on a bill needing to be passed in a single year to elevate it as a legislative priority and highlight the issue’s importance. As I complete this article, a Resolution has been introduced to change Rule 56.1 back to the way it was. So, maybe the idea of additional changes to better manage the chaos is all for naught. I hope the conversation continues on how our process, which is one of the best in the land, can be modified to make it even better going forward. ■
Thank you to this year’s honorees of the Chair’s Circle. Criteria: Is a member of the Association in good standing, exceeded a minimum annual participation of $60,000 and participate in a minimum of five individual sponsorship opportunities with the California Grocers Association and/or CGA Educational Foundation. Anheuser-Busch InBev Bimbo Bakeries USA C&S Wholesale Grocers Coca-Cola North America/Reyes Coca-Cola Bottling, LLC Kellogg Company Kimberly-Clark Corporation MillerCoors Tyson Foods, Inc. United Natural Foods, Inc.
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WASHINGTON REPORT
Pay m e n t s M a r k e t p l a c e R e f o r m : Opportunities on the Horizon? 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
With debit and credit card transactions becoming more and more popular, swipe fees continue to be a major line-item for grocers. Earlier this spring, grocers from across the country came to Washington, D.C. for the annual supermarket industry fly-in to advocate for commonsense policies that will have positive impacts on the industry. Top priorities on the agenda during this year’s fly-in included fixing the retail glitch tax typo and advancing solutions that make the payments marketplace more competitive, transparent, and secure for consumers, merchants, issuing banks and the economy. The retailer community achieved landmark reforms to debit swipe fees in 2010 through the passage of the Durbin amendment included in the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Debit reforms lowered the cost of acceptance for debit cards and introduced competition into the debit routing market that was quickly becoming a duopoly. NGA has worked alongside other industry association partners to defeat proposals to delay and repeal debit reforms in 2011 and again in 2017. Unfortunately, credit cards have yet to see that kind of reform, and grocers continue to pay the highest swipe fees in the world. 24 | CAL I FOR N I A G R OC E R
According to The Nilson Report, U.S. retailers pay almost $100 billion to process card transactions every year. These swipe fees have ballooned into retailers’ secondlargest operating costs, behind only labor, and ahead of rent and utilities. With debit and credit card transactions becoming more and more popular (transaction percentages have doubled in the last 15 years, according to NGA survey data), swipe fees continue to be a major line-item for grocers. Additionally, as new payment options and innovations enter the retail space, we must ensure that the best security technologies and tools are available. And, there’s a good reason, too. According to a recent study, 42 percent of U.S. cardholders (debit, credit and prepaid) have experienced card fraud in the past five years, compared with a much lower 27 percent of cardholders globally. NGA believes improvements to security protocols should result from an open and collaborative process among all industry stakeholders, where merchants have an equal voice at the table. Any data and payments standards should require all industries to
play by the same rules, including financial institutions, payment processors, and technology providers. The independent supermarket industry supports the need for robust federal security standards that hold all actors in the marketplace accountable to ensure our customers can shop with confidence. The 116th Congress has brought an opportunity to advance our efforts to reform the payments system and level the playing field for merchants. NGA is a founding member of the Secure Payment Partnership (SPP), a group that is comprised of merchants and payment processors seeking to improve the payment ecosystem in America by making it easier for merchants to authenticate transactions and innovate and invest in cutting edge secure payment technology. NGA, alongside other SPP members, have held numerous meetings with lawmakers to discuss payment security and solutions to improve the payments infrastructure, including creating a standard-setting body that ensures retailers and other stakeholders have a voice in the standard setting and implementation process. ■
SUPPLIER PERSPECTIVES
PET SPECIALTY
NESTLE´ PURINA
The Time is Now to Brush Up Your Pet Treat Section Shoppers Look to Treats to Improve Their Pet’s Health As more and more pet owners are becoming actively engaged and informed about their fourlegged friend’s health, targeted or functional food and treats are growing in popularity. Consumers are looking for nutrition that’s not only enjoyable, but also healthy and enables their pet to live his best life. In fact, when it comes to pet treats – a category that has always held great potential for retailers as a basket builder – 25 percent of the category is currently made up of functional treats. It’s these better-foryou treats that are growing faster than the rest of the treat category (at nearly 5 percent growth vs. 3.6 percent). Pet treats that specifically address dental health make up 12 percent of the total pet treat category. Since February marked National Pet Dental Health Month, it’s important that consumers and retailers alike understand the importance of good oral care for pets, as well as the opportunity dental treats present to build sales in the treat aisle. ORAL HEALTH CONCERNS FOR PETS Periodontal disease is the most common dental disease found in both adult dogs and cats. It develops as a result of bacteria and plaque that make their way under the gum line. Signs of periodontal disease include bad breath, redness along the gum line, tartar accumulation and oral pain. As the disease
progresses, it becomes painful, and if left unchecked, will result in the loss of the tooth. The good news is that with consistent home dental care and regular vet visits, periodontal disease can be prevented. AT HOME DENTAL CARE SOLUTIONS As functional pet treats increase in popularity and demand, a number of new products, specifically those formulated to help maintain good oral hygiene, are hitting the marketplace. Purina launched the successful DentaLife® brand of dog and cat treats early in 2016. DentaLife treats are made with wholesome ingredients and
feature a crunchy exterior and chewy, porous inside that pets love. The treats, which are approved by the Veterinary Oral Health Council, help clean hard-to- reach places and are scientifically proven to reduce tartar buildup on a dog’s teeth. Under the same DentaLife® brand, Purina introduced the Advanced Clean Dental Chew for dogs. The new treats are made with a dense, chewy texture designed to keep your dog chewing longer. Together with its patented twisted triple-ridge shape, DentaLife® Advanced Clean is able to reduce tartar buildup and deliver a powerful deep clean. Purina DentaLife® also released ActivFreshTM in January 2019, which is a revolutionary
scientific break-through in combatting bad breath. This new proprietary recipe fights bad breath at the source versus the traditional method of masking it. THE DENTAL OPPORTUNITY AT RETAIL Pet retailers can take advantage of this trend by brushing up their treat sections to focus on these functional snacks. Retailers should consider a monthly merchandising program that uses new merch units and secondary placements, plus highlight new items in the oral health segment. In doing so, they can realize incremental sales and profits.
Purina trademarks are owned by Société des Produits Nestlé S.A. Printed in USA.
INSIDE THE BELTWAY
Fees, Fees and More Fees
J EN N I F ER H ATC H ER S E N IOR V ICE PR E S IDE N T, GOVERNMENT AN D PUBLIC AFFAIR S FOOD MARKETING INSTITUTE
Unpredictable credit card fees have existed for decades, now have been added to the pharmacy dialogue. Whether you can run a profitable food retail business these days is less about how much you sell and more about how many fees you are charged – often well after the customer leaves and usually without your knowledge. This issue of unfair and unpredictable fees has been part of the credit card equation for decades and has now been added to the pharmacy dialogue as well in the form of DIR fees – direct and indirect remuneration fees. Now you may be asking what are DIR fees and how do they impact supermarket pharmacies and their patients? Remuneration simply means payment. Food Marketing Institute members have been frustrated by DIR fees, which pharmacy benefit managers (PBMs) are using at an alarming and increasing rate to claw back funds from pharmacies long after transactions have been completed. Under the current system, PBMs – the middlemen hired to administer prescription drug benefits – often claw back fees from pharmacies retroactively, weeks or even months after prescriptions are filled.
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These DIR fees are unpredictable, unfair and seemingly unconnected to a pharmacy’s performance and other standards. According to the federal government, pharmacy DIR fees have grown by more than 45,000 percent between 2010 and 2017. And, in an industry that operates on razor-thin profit margins (under 2 percent), supermarket pharmacies have virtually no ability to absorb these unexpected costs. Therefore, they are forced to either pass those costs on to consumers in the form of higher prices or worse, discontinue offering pharmacy services altogether at certain locations. Importantly, the fees also disadvantage patients, who are assessed a higher cost-share against their deductible rather than the retroactive, lower adjusted price. The result pushes patients more quickly into the so-called “donut hole” – a point during a beneficiary’s annual prescription drug coverage where the patient is responsible for a considerably larger portion of their prescription drug costs. It is important to recognize that the Trump administration has made a concerted effort to address pharmacy DIR fees and PBM
clawbacks via the regulatory process. In May 2018, the Trump administration released American Patients First, a comprehensive blueprint to reduce prescription drug prices and out-ofpocket costs at the pharmacy counter. The plan advocates for increased transparency throughout the pharmaceutical supply chain, including reforms that would upend the PBM business model, making it harder for PBMs to take money away from pharmacies after the customer is gone via DIR fees. To that end, late last year, the Department of Health & Human Services’ (HHS) Centers for Medicare and Medicaid Services (CMS) released a proposed rule containing a number of positive policy reforms to pharmacy DIR fees. That rule, which FMI strongly supports as an essential first step (albeit not a silver bullet), has been sent to the White House Office of Management and Budget for review. In an effort to express our support and also reinforce the points made in FMI’s comments filed in response to the proposal, FMI and several of our members recently met with a team of folks who are working on the rulemaking from several government agencies, including OMB, the White House Office of Information and Regulatory Affairs (OIRA), HHS and CMS.
INSIDE THE BELTWAY
We were also joined by an advocate from the Small Business Administration, who is helping the many small business members that stand to benefit from pharmacy DIR fee reform. While HHS leadership has hinted that the final rule could be forthcoming soon, OMB received the rule on April 3 and has up to 90 days to complete its review.
“This issue of unfair and unpredictable fees has been part of the credit card equation for decades and has now been added to the pharmacy dialogue.” There is more that can be done beyond the rulemaking. We encourage you to ask your member of Congress or Senator to: • Cosponsor the Improving Transparency and Accuracy in Medicare Part D Drug Spending Act (H.R. 803/S. 988). Bipartisan bills which had broad support in the 115th Congress and have been re-introduced in both the House and Senate, the legislation would ensure that pharmacies receive reimbursement at the rate posted at the time prescriptions are filled by prohibiting PBMs from retroactively reducing payments on accurate reimbursement claims submitted by pharmacies. This would help ensure pharmacies can continue to serve beneficiaries and combat the growing financial uncertainties pharmacy businesses are facing. The House bill was introduced in February by Reps. Peter Welch (D-VT) and Morgan Griffith (R-VA), while the Senate companion bill was released in early April by Sens. Shelley Moore Capito (R-WV) and Jon Tester (D-MO).
• Cosponsor the Phair Pricing Act (H.R. 1034/S. 640). This bill would require all pharmacy price concessions in Medicare Part D, excluding positive contingent amounts, to be applied at the point of sale. The bill also requires all Part D sponsors to utilize CMS-established quality measures that are standardized and pharmacy-specific. Similar to provisions contained in the proposed rule, the legislation was introduced by Reps. Doug Collins (R-GA) and Rep. Vicente Gonzalez (D-TX), along with 14 additional cosponsors.
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• Cosponsor the Prescription Drug STAR Act (H.R. 2113). Passed unanimously by the House Ways and Means Committee on April 9, this bill addresses key issues related to transparency and public reporting of information to improve accountability. Most importantly, it would require the HHS Secretary to publicly disclose rebates, discounts and price concessions achieved by PBMs. • Cosponsor the Prescription Pricing for the People Act of 2019 (H.R. 2376). Introduced on April 29 by the Chairman and Ranking Member of the House Judiciary Committee – Reps. Jerrold Nadler (D-NY) and Doug Collins (RGA), respectively – this bill would try to shed light on how PBMs are affecting prescription costs and patient choice and bring needed transparency to this space. ■
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...The LPSRM Committee facilitates professional education and has created a framework where retailers can solve problems collaboratively... MIKE BOWERS VICE PRESIDENT, ASSET PROTECTION NORTHGATE GONZALEZ MARKETS 40 STORES – ANAHEIM, CA
Want to learn more about CGA’s Loss Prevention Safety Risk Management Committee? Contact Sunny Porter to learn more and start the conversation with your fellow industry peers at sporter@cagrocers.com or call (916) 448-3545.
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California
Cities: Laboratories of Democracy, Flexing their Collective Muscle – or Both?
By Cassandra Pye and Tim James There are 482 incorporated cities in California. Populations range from 193 residents in the city of Amador to over 4 million in Los Angeles, and these municipalities are as diverse as the inhabitants of the state itself – rural, coastal, inland, urban – and many are in transition. In just about any public policy debate city officials are often quoted as saying ‘one-size does not fit all’ when it comes to solutions. They’re not all alike, but they also have a lot in common. In the American political system, we are taught a rigid hierarchy of federal, then state, and trailing last is local government. While each has its fundamental and specific purpose, is it fair to place local government at the “bottom” of the list? As the business of government and implementation of policy decisions has become more complicated, it could be argued that cities are both the first line and have the final say in how government is implemented. Local governments send firefighters to emergencies, street crews to patch the pothole, and plan where to place a house or business. Few examples exist of state and federal government taking the same hands-on approach to the daily job of governance. With decades
of experiences, both good and bad, local governments are asserting their ability to implement, but also mold, policy decisions like never before. Does this expansion of responsibility result in better results, or is it losing focus and diverting precious time and money? Cities have expanded their constitutional authority over the years, granting local officials the ability to tax and regulate businesses in matters like age-restricted products, environment and waste, employee mandates, planning and zoning and of course taxes and fees. For the grocery industry, over the last decade or so and in some locales, it has been described as a full-on assault. Why are local officials becoming more aggressive at leveraging their strength in their jurisdictions just as their state counterparts in the State Legislature have? Matt Rodriguez is a public affairs consultant who specializes in local political and public affairs. He suggests local governments are becoming more assertive but believes, at the end of the day, it all comes back to money. Continued on page 32 ▶ CAL I FO RNIA GRO CER | 31
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“California has always had very aggressive local governments, especially in the more progressive cities,” he explains. “The Berkeleys, the San Franciscos and the small cities that follow them have always been more aggressive, but I do think its spreading more to other cities now, and they’re veering into different levels of public policy – including health care and taxation. “Some of it is due to the problems they’ve gotten themselves into – particularly on pensions,” he adds. “Many of these localities have not managed their budgets well, which leads into all sorts of taxation like soda taxes and oil severance taxes. They’re trying to
get a firm financial footing. We’re in a good economic period, but God knows what will happen when the next recession hits.” Is this a new trend? Not really, Rodriguez contends. “I think there’s a couple of things at play,” he says. “Budget gaps are clearly the issue. There’s been a push and pull, if you will, from a taxation point-of-view, since 1978 and the passage of Prop 13 (which limited property tax increases). As a result, business groups have gone to the ballot to push back at that constant taxation that’s been happening since then – i.e., the Split Roll and Prop 218 (which requires a 2/3 vote of the Legislature and at the local level before taxes can be levied).
“Cities are now trying to blow that paradigm up,” he says. “San Francisco, for example, has decided they’re going to blow up 218. I mention it because the more liberal cities are trying to find their way around the tax limits. So, this is not new but just more aggressive.” Carolyn Coleman, Executive Director for the League of California Cities, says she’d prefer to use another word: practical. “We tend to be more practical at the local level because we don’t have the luxury of a suspense file,” Coleman says. “We don’t have the luxury of being able to run a deficit in our budgets. We don’t have the luxury of being able to debate a bill for five years. We can’t just put it on a continuation. We have to make decisions every day, and we have to balance our budgets every year.” “Cities are where the rubber meets the road,” she continues. “Cities are where all the ideas, and concepts and policy choices coming out of the federal and state governments – they all meet and intersect at the local level. It’s where local leaders, with the input of their communities and with what they know about their communities – and they’re all unique, diverse and different – are charged with the responsibility to make all of that come together in a coherent way that will add up to quality of life for families. There’s no other level of government that has the responsibility for doing that.”
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History of California Cities Western City, the League’s monthly magazine, recalls that city governments were the only form of government in the state when the U.S. annexed California in 1948. Since then, the state-local relationship has been cloudy, complex, and even contentious. It took two statewide constitutional conventions, one in 1878 and another in 1962, to establish roles. However, multiple constitutional amendments addressing issues surrounding the financial relationship between the two levels of government have been adopted since 1970. In 2004, California voters overwhelmingly approved Proposition 1A, designed to end the state’s practice of using local revenues to balance its budget and to disallow the Legislature from mandating local programs without allocating the funds to pay for them.
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“I don’t think it’s with the intent of having an aggressive role,” acknowledges Juan Garza, Mayor Pro Tem for the City of Bellflower. “I think it’s more of an organic reaction to a variety of things. The results end up looking like activism. I believe the expediency of how we get information today is a factor – we’re more quickly informed of issues, causes, reactions and results. “That, paired with an electorate that at times doesn’t differentiate the line between federal, state or local elected, forces us to have to act,” he adds. “We’re the first point of contact with the electorate. We’re accessible, and I think more often than not they will come to us to ask – why aren’t you fixing this?” Coleman believes her members have no real choice but to engage.
Flexing Local Muscle in the Capitol On the afternoon we sat for her interview, League of California Cities Executive Director Carolyn Coleman was still watching the proverbial dust settle following the defeat earlier that day of Senate Bill 50 (Scott Weiner). The bill would have mandated that cities allow an increase in the number of homes built near transit hubs and allowed multi-family homes in areas zoned for single-family ones by over-riding local zoning rules. S.B. 50, probably the most high profile and talked-about bill of the 2019 legislative session and one supported by a cadre of powerful interests in the Capitol – labor, environmentalists, business groups, developers, among others – was defeated at the hands of suburban homeowner organizations and local governments. Coleman acknowledged the seriousness of the housing shortage in the state and mentioned the League’s continued desire to partner with the administration and Legislature on solutions, but said her members took issue with state lawmakers’ potential incursion into local affairs. She didn’t cite the outcome as a victory, but there was in the air a sense of satisfaction that her members’ collective efforts had an impact. “There has been over the last past couple decades, at least at the federal level, a retreat, a disinvestment in core quality-of-life issues that play at the local level,” she states. “That might be in terms of a public safety partnership with the federal government in terms of the Cops Program of the Department of Justice. It might be in terms of a continued disinvestment in how the federal government sees its role in terms of affordable housing. We’ve seen it in areas of transportation, for example. “And so, as a level of government disinvests in those core activities, then that puts more pressure on the local level of government to figure out, to sort out, to be innovative, to think differently about how to get the same things done.” Many times, these are federal issues raised by our constituents, but it forces cities to be more acutely aware of things, Garza adds. “We’re feeling the heat and the requests for action – this often forces us to act,” he says. ‘We could be viewed as activists, but we’re just responsive. By and large, most of the electeds I know say, ‘we’re here, we’re accessible.’ We can’t say ‘I’m not responsible.’”
Rodriguez says it’s nothing new for politicians to want to find issues that will resonate. “If you’re on the right side of an issue, it can be your ticket to the next level,” he suggests. “Candidates want to stay on the side of the issues where the special interests are – pensions, and health care in particular – they are the candidates who get support. Everybody wants to go viral – do something sexy. There is always a natural push and pull between taxpayer rights and the interested groups that continually want to raise money. This is not a new phenomenon.” What frustrates Rodriguez is when people move outside the rules of the game. He doesn’t mind cities being laboratories of democracy. However, he says, it obfuscates what’s going on and at the end of the day it’s about interest groups and money.
Jan Arbuckle and her Grass Valley City Council colleagues work 460 miles from the City of Bellflower and serve a remarkably different voter demographic, however, her sentiments reflect Mayor Garza’s.
“We’ve known that pensions are a problem for a long time and ignored them,” he says. “Look at some of the issues cities are facing – cost of living, trash, typhoid outbreaks. I suppose it depends on what you see as a city’s role. Laboratory of democracy sounds fine. I think it should be called a workshop.”
“I think a city is where the closest contact exists,” she says. “I’m not sure why we’re seeing action now, but I think our youth are becoming more involved and engaged. They’re on social media. They have time and passion and stamina. They’re saying this is a world I want to live in and raise a family in. They’re realizing they want to make a difference. As long as we don’t lose that, I think you’ll see more of this.”
“Listen, we provide services to businesses and households, and one can’t assume we have a stable source of funding,” offers Mayor Garza. “The reality is that fiscal matters are a dynamic field – they’re not stagnant. We have revenue sources that ebb and flow. So – for example, we relied upon a utility users’ tax in prior years that was established to conform to the technology we had at the time – static and fixed.
“There are close to 500 public officials in my region,” says Garza. “We all have different aspirations and different goals. Some people want to make a name for themselves – run for higher office, find visibility. It doesn’t matter. We all have an acute reaction to being aware of and ready with answers ready to go. Some of us – because of social media, CNN – want to do the right thing and being able to take of our electorate. We are being held accountable.”
“It’s been transformed; now it’s mobile, and if it’s not taxable we lose that revenue,” he adds. “If you become accustomed to that revenue, but the evolution of that technology causes you to lose it – you have to become nimble and find ways to recoup that loss. There’s a need to be nimble. I don’t know if we’ve had that ability in the past, but as electeds get younger, there’s a little more nimbleness.”
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On top of that, Garza admits, cities have a significant obligation for pensions. In his case, he’s inherited this obligation. How does he fulfill the commitments my predecessors made? He believes there is an instinct to create new taxes. It’s a dynamic situation, he says, adding that it calls for dynamic leadership. “We still have to make the tough decisions,” says Arbuckle, who this year is also President of the League of California Cities. “Now we’re seeing many people who have never run for office. It takes a good 18-months for new councilmembers – before you understand the process and how things work.” The bottom line, says Rodriguez, is strong management. “ Cities should be run well,” he says. “When you have homelessness, labor and budget issues – your job is to dig in and run your city well. Is trash pick-up going well, are your police and fire departments operating well? Do you feel that they are particularly well run?
going to cut? Are you not going to have your swimming pools open every day this summer? Are you going to start picking up trash one day a week, or every two weeks?’ It’s real. It’s very real.” Mayor Garza is a member of something called the California Debt and Advisory Commission. It’s an arm of state government which ensures that investment and debt are managed well across the state. Local treasurers, financial officers, school board members, and others are members of the Ad Hoc committee run out of the State Treasurer’s Office. He says the group is developing a curriculum to help local leaders make wise financial decisions – leaders who often don’t necessarily have a background in finance.
borrowing more than you can pay off – cities need those same lessons,” he asserts. “You have the best economy we’ve had in multiple generations, and there are cities that can’t make ends meet – due to health care costs, bond debt and pensions. These are a result of deals done by current leaders or their predecessors, but I think some of is s till fundamental mismanagement which is hard to argue with.” Garza calls cities “laboratories of innovation” and the place where innovation and pilot projects and creativity begin. “That’s been the case for decades. We’re so exposed to our electorate and their ideas. I have people in my community who are doctors, engineers, retirees, wall artists, financial experts. We have all these influences and these people you run into all the time.”
“We have to look at a city and say is this well run? What are we trying to do here? I’m not clear that the quality of life is as good as it could be. The question should be laboratory of management. Manage your finances, manage your physical plants, civic services, etc. Focus on these things first.” City officials have to make tough choices, Coleman believes, based on the will of the electorate. Moreover, planning for those outcomes – decisions on taxes, fees and other funding sources – is a tricky business. “I heard a story yesterday, this is real,” she shares. “A city manager said to me that they’re going out for a sales tax measure and Election Day is technically on Tuesday, June 4. However, because of the way we vote now in the state – over the course of a month – he’ll have to prepare for best-worst case scenarios. He says, ‘So I sit there, and I have two budgets prepared because I have to wait to see what happens.’” “And he said, ‘It doesn’t sound like much money, but it’s about unfunded pension liability. So, I’m like, if that doesn’t pass in the zero-sum world, it means what are you 34 | CAL I FOR N I A G R OC E R
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“All politics is local.” – Honorable Tip O’Neill, Speaker, U.S. House of Representatives (1977 – 1987) “Someone could be on the council who is a farmer, a consultant or a nonprofit leader,” Garza points out. “Mismanagement of local funds could be intentional or unintentional. Either way, we’re trying to help local officials strengthen those skills.” Rodriguez applauds this line of thinking. “The same way every American should have a crash course in financial management – managing your money, saving for a rainy day, contributing to your 401(k), not
Someone has to own the responsibility for local government management and mismanagement, Rodriguez insists, particularly in light of an inevitable economic downturn. He points to several localities where voters are shying away from tax increases, even for schools. “Voters are getting frustrated in some places and losing their patience,” he adds. “Handle your finances now. Don’t make decisions that will hamstring you down the road.” ■
COMMUNITY IMPACT REPORT
CALIFORNIA
2018
Thanks to generous contributions, we create brighter futures for our neighborhoods.
We support causes that impact our customers’ lives.
10 Million Raised
$
22 Million
Breakfasts enabled to kids in need through Hunger Is.®
11 Thousand
3,232
496 Organizations Veterans receiving health care and access
67 Thousand
Children participating in educational activities
2,131
People with disabilities received access to care and treatment
Mission Statement Our Foundation supports causes that impact our customers’ lives. Our stores provide the opportunity to mobilize funding and create awareness in our neighborhoods through our employees’ passion, partnerships with our vendors and the generous contributions by our customers. We take pride in ensuring that the vast majority of the funds we raise stays in local communities and reflects what is important to our customers and employees.
Learn more at safewayfoundation.org
Data gathered from Foundation records and grantee reporting.
Cancer patients received access to alternative medicine
HOW POWERFUL L AWMAKERS ARE KILLING CALIFORNIA BILLS WITHOUT A PEEP
Editor’s Note: This article originally appeared in the April 30, 2019 edition of CALmatters and authored by Laurel Rosenhall. It is reprinted by permission of CALmatters.
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BY L AUREL ROSENHALL, POLITICAL REPORTER CALMATTERS Gun control, school spending, curbs on greenhouse gases: With Democrats holding more power at the Capitol than they’ve had since the 19th century, California’s legislative pipeline is full this year with big, blue-state ideas. In theory, no Democrat’s bill should be left behind. But that’s not what’s happening, and the reason is roiling both sides of the aisle in Sacramento. The complaint? Democrats who lead legislative committees are using a powerful tool to kill bills before they even get a vote. The tool? Simply doing nothing. Under a rule the California Assembly put in place at the start of the current session, committee chairs can decide whether to bring a bill assigned to their committee up for consideration. As key deadlines came and went this month for bills to move out of committee, chairs used the new power to quash bills by just not scheduling them for a public hearing. No hearing, no debate, no vote. Democrats – who hold all the chairmanships because of their party’s mega-majority in the Legislature – flexed their muscle not only to bury GOP legislation, but also to silently sideline bills by fellow Democrats that might be embarrassing to publicly vote down. Among the victims: Democratic legislation to alter the formula for funding public schools to devote more money to lowachieving students (a complex plan that stresses racial inequities); a bill to develop a strategy to phase out sales of gas-powered cars in favor of cleaner vehicles (guaranteed to create conflicts for Democrats whose constituents work in the oil industry); and a
potentially divisive proposal requiring that gun owners lock up their weapons when they leave home. “I was very frustrated,” said Assemblywoman Laura Friedman, a Democrat from Glendale whose bill on gun storage was shelved without a hearing. “The committee is there to discuss areas of policy. If the chair has concerns about the policy, it’s my opinion that having it discussed in committee is the right approach.” It’s the latest sign that Democrats’ growing majority in Sacramento doesn’t necessarily mean more unity. Democrats now hold about three-quarters of the Legislature’s seats – a margin that gives the party the potential for great power, but also makes it vulnerable to fracture under the weight of its ideological, geographic and socio-economic diversity. Refusing to set a hearing for a bill isn’t the only way Dems are quietly killing Democratic legislation. Several progressive bills stalled this month because their authors knew they would fail in committee and so opted not to bring them up for a vote. They included measures to expand rent control, broaden data privacy protections and ban super-sized servings of soda. But lawmakers have long had the face-saving authority to pull their own bill if they could tell it wasn’t going to pass. The change this year is in the Assembly, where members are grappling with the committee chairs’ new authority to not hear a bill. (The state Senate did not enact a similar rule change this year. Its custom has been to let chairs decide whether to set hearings.)
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“Democrats now hold about three-quarters of the Legislature’s seats – a margin that gives the party the potential for great power, but also makes it vulnerable to fracture under the weight of its ideological, geographic and socioeconomic diversity.” The lower house adopted new rules when the legislative session began, explicitly giving committee chairs the power to choose whether to hear legislation. Previously, committees generally heard all bills if the author wanted them heard, and it was unusual for a chair not to extend that courtesy. The Assembly’s move to clarify that chairs can decide whether to set a hearing is in keeping with Speaker Anthony Rendon’s long-stated philosophy that committee chairs should have more power. Assembly Republicans quickly jumped on the change as something that could doom their bills, and voted against the rule.
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“Chairmen under these new rules would have the power to essentially kill a bill by denying it a hearing,” GOP Assemblyman Jay Obernolte said in December as the Assembly voted on the new rules. “And they would be able to do this…without a vote of the members of that committee and without any testimony from the public. That is a violation not only of the longstanding practice of this chamber, but also of the principles of democracy itself.” Democratic Assemblyman Reggie JonesSawyer, who chairs the public safety committee that held Friedman’s gun storage bill, said that by not hearing it he’s giving supporters more time to resolve problems and bring it back next year. He wouldn’t say why he objected to the gun storage policy, though his committee’s analysis says it could conflict with local ordinances. “I want to see if we can come together and make the bill much better so it’s not a contentious bill and we can get it through,” Jones-Sawyer said. “I’m trying to make sure the committee as a whole doesn’t kill the bill.” Democratic Assemblywoman Shirley Weber said that in her more than six years in the Legislature – during which she’s carried plenty of controversial legislation – this month was the first time a committee chair has refused to hear one of her bills. Her legislation to change the formula for funding public schools so that more money
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would be devoted to student groups that post the lowest test scores was one of several measures related to the funding formula that were not heard in the education committee. “Generally even if the chair opposes a bill they will set the bill for a hearing, and then people can vote it up or down,” Weber said. The new way, she said, amounts to “a oneperson decision.” It’s striking a nerve across the political spectrum, from a Sierra Club lobbyist who’s angry that a clean-cars bill wasn’t heard, to a conservative Republican who’s fuming because her campus free-speech bill – making it harder for colleges to restrict who can speak at campus events – wasn’t brought up for a vote. “When you don’t allow that bill to be heard then you don’t even have the discussion,” said GOP Assemblywoman Melissa Melendez. “The opportunity for a healthy debate is taken away.” ■ CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.
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BY LEN LEWIS • In April, the Dallas district attorney announced he would no longer prosecute ”low level” crimes involving items of less than $750, contending that when people steal out of need, they should not be prosecuted. • In San Francisco, Calif., a mentally ill, homeless man attacked a man walking through Washington Square Park with his young son. • An assistant manager at a major retail chain was fired after attempting to remove a mentally ill woman from his store who was threatening a shopper and her young daughter. • In Lodi, Calif., a mentally ill veteran was killed when he advanced on two police officers with a knife. The shooting was ruled “justifiable,” but the city still paid his family. • In Portland, Ore., police arrested a homeless, schizophrenic man for stealing a $1.62 bottle of iced tea and taking a nap in a downtown building. He spent 52 days in isolation at a local jail. • Hotels in San Francisco are facing the problem of feces and needles on the street, the homeless sleeping on sidewalks, and those with mental illnesses being aggressive toward visitors.
The word “crisis” is increasingly bandied about these days as it pertains to things like opioids, legal and illegal immigration, and all manner of natural disasters. However, the crisis, as noted in above examples, yet rarely discussed, is that of the homeless and mentally ill who not only present a danger to themselves but also to municipalities across California, retailers and customers. Continued on page 42 ▶
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“So many retail stores and their partners are being impacted by an increasing homeless population, a significant number of which are mentally ill,” said Michael Summers, a former police sergeant and crisis intervention team training manager. Summers knows that population well, having spent four years supervising one of Northern California’s first law enforcement-driven mental health outreach teams. His consulting firm, Disability Response, instructs retailers and staff on how to handle and diffuse potentially dangerous situations. In April, Summers presented this topic to the CGA Loss Prevention, Safety, Risk Management Committee during its semi-annual meeting. “Normally, retail loss prevention staff have little or no training in this area,” Summers said. “But many retailers now recognize this serious issue needs to be brought to everyone’s attention. We all agree that our community should be caring, thoughtful, and help those in need. Yet, retailers are feeling the negative financial impact of homelessness and lack of available mental health care.”
No one has an exact handle on the number of homeless, only that their number has increased significantly across the country since the 1970s. Additionally, recent research by the Treatment Advocacy Center, an Arlington, Va.-based nonprofit organization, indicates that approximately one-third of the homeless have serious, untreated mental illnesses, including schizophrenia, bipolar disorders or major depression. According to The Los Angeles Times, about 3,000 homeless are in Los Angeles County jails at any given time, more than half of them eligible for diversion to housing with support services. For retailers, this means walking a fine line between sympathy for those in distress and protecting assets, staff and customers. Local governments, who are also frustrated by the problem, are not necessarily sympathetic to the impact on businesses. Observers believe that the decision by the Dallas district attorney’s office is really saying that someone can go into a grocery store and steal as much as they want without penalty.
“It’s a philosophical idea that’s sweeping the country, especially in California with so many state and voter propositions decriminalizing bad behavior,” said Summers. One such piece of legislation was AB 109 originally passed in 2011 which, among other provisions, followed a U.S. Supreme Court order to reduce prison population in California by as much as one-third. “The state wants to empty prisons, not build more of them, so they ship what they claim to be low-level offenders back to county jails to serve out the remainder of their original prison sentences,” Summers said. “The result is packed county jails that are reluctant to accept petty criminals such as shoplifters.” He said that even something like car theft is not necessarily a punishable offense. “If there’s been no pursuit or threat to life, the police technically have to write a ticket and let the offender go,” he said. “It’s no longer a felony in California. They call it a wobbler.” Similarly, the pendulum has swung for in-store thefts.
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“Many retailers now recognize this serious issue needs to be brought to everyone’s attention. We all agree that our community should be caring, thoughtful, and help those in need. Yet, retailers are feeling the negative financial impact of homelessness and lack of available mental health care.”
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Supplier members have the opportunity to further participate in the Association by joining CGA’s Supplier leadership committee called the Supplier Executive Council (SEC). This elevated designation of CGA membership provides increased access to California retailers through networking events including CGA’s annual end of the year board meeting, executive led store tours, and other exclusive SEC only events. To learn more about becoming a SEC member, contact Sunny Porter via email sporter@cagrocers.com or call (916) 448-3545.
past store tour hosts: Brad Askeland, VP North Division Gary Reese, VP South Division North State Grocery
David Higginbotham, Regional Vice President, Retail Stater Bros. Market
Tim Murphy, GMM/VP Foods & Sundries Costco Wholesale
Kevin Konkel, COO Chuck Williamson, District Manager Raley’s
Rick Van Niewburg
Greg Basso
Denny Belcastro
Robert Hilliard
Altria Corp. Services
Cogent Solutions & Supplies
Kimberly-Clark North America
Retail Data Systems
Greg Sheldon
Cherish Changala
Randy Fernandez
Jeff Sigmen
Anheuser-Busch InBev
Command Packaging
Kysor Warren EPTA Refrigeration
Reyes Coca-Cola Bottling
Nick Matteis
Brennen Cull
Cliff Fenter
Renee Wasserman
CA GROWN
CoreMark Insurance Services
Mettler Packaging LLC
Rogers Joseph O’Donnell
Tirso Iglesias
Mark McLean
Jeanne-ette Boshoff
Cory Colwell
Cacique Inc.
CROSSMARK
MillerCoors
Roplast Industries, Inc.
Victoria Horton
Stephenie Shah
Keven Arceneaux
Matt Neible
Calif. Beer & Bev. Distributors
Diageo
Mondelez International, Inc.
Rose Acres Farms
Amy Fuentes
Craig Harlan
Marci Reynolds
John Oakes
California Food Expo
Earth Friendly Products
Moss Adams LLP
SBL Co. Management Consulting
Cindy Plummer
Heather Dougherty
Joe Toscano
Sal Coco
Calif. Table Grape Commission
Emerson Grind2Energy
Nestlé Purina PetCare
SMC ZeroWaste
Joe McDonnell
David Dodge
Jaclyn Rosenberg
Mark Ly
Campbell Soup Company
Flowers Baking of California
Nielsen
Sugar Bowl Bakery
Mark Cassanego
Amy McAnarney
Jim Van Gorkom
Phyllis Adkins
Carr McClellan P.C.
Hallmark Cards
NuCal Foods
TruGrocer Federal Credit Union
Donna Simpson
Brad Caudill
Matt Messens
Pat Huston
Certified Federal Credit Union
Harris Ranch Beef Company
Orchids Paper Products
TRUNO
John Mastropaolo
Brent Cotten
Stephanie Flores
Robert Bukovec
Chobani
The Hershey Company
Pacific Compensation Insurance
Tyson Foods, Inc.
Damon Franzia
Bob Kelly
Jeff Severns
Jeff Schmiege
Classic Wines of California
Hidden Villa Ranch
PepsiCo Inc.
Unilever
Bob Richardson
Tamarie Rayner
Mark Arrington
Jennifer Ward
The Clorox Company
Impact Absorbents, Inc.
Post Consumer Brands
Worldpay US, Inc.
Marcus Benedetti
Frank Liberatore
Hillen Lee
Clover Sonoma
Jackson Lewis P.C.
Procter & Gamble
Vic Chiono
Dave Jones
Sean Simonian
Coca-Cola - Minute Maid
Kellogg Company
Producers Dairy Foods, Inc.
For more information on CGA SEC membership, visit: www.cagrocers.com/members/supplier-executive-council/
◀ Continued from page 42
“This is a serious loss prevention issue for retailers since staff will be the first responders. They will be the ones to call the police, but they need to have the skills to deal with people who are in their stores and parking lots, he added. ” “If some homeless guy walks into a grocery store and walks out nobody wants to touch him because of liability,” Summer said. “If they do get caught, the police just write them a ticket and most likely the local district attorney will not file charges. It’s kind of open season on retailers.” Exacerbating the problem and impacting retailers is the rise in homeless encampments and chronically homeless people, a significant number of which have mental health and addiction issues, Summers noted. Aside from the fact that it doesn’t look good for retailers to have homeless, mentally ill people wandering around inside stores, there are safety issues at play for both staff and customers. “Many of those with mental illness suffer from some form of schizophrenia,” he said. “If store staff interact with them without specific training on how to de-escalate a situation, things can get out of hand in a heartbeat and turn into a violent situation.” In their mind they are fighting for their life, Summers believes, not to just get away.
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According to Summers, the family retained a civil rights attorney from Sacramento specializing in homeless and mental health issues. The issue became whether the police were aware of the person’s condition and whether they were properly trained to deal with the mentally ill.
“Ask yourself how hard you would fight if you thought your life was in danger?” Summers asked. This is where training and liability issues kick in for store personnel as well as the police.
“In the end the district attorney ruled the shooting justifiable, but the city paid out when they believed the officers did not have updated mental health training,” Summers noted.
“In law enforcement, when we are involved in what we call a critical incident, the death or serious injury to someone at the hands of law enforcement, most often the individual or family retains legal counsel,” Summers said.
This is a serious loss prevention issue for retailers since staff will be the first responders. They will be the ones to call the police, but they need to have the skills to deal with people who are in their stores and parking lots, he added.
The first places the attorney goes for background information of the responders involved are the personnel and training files. The attorney will be looking at the extent of the employee’s job training in dealing with someone who may be in crisis. He offered one example of an officerinvolved shooting of an Air Force veteran with PTSD in Lodi, Calif., four years ago. “His family usually controlled him,” Summer explained, but one time he gets out alone and was armed with a knife. “Two officers confronted him and initially did a good job keeping him at bay. Unfortunately, he advanced on one of them and was killed.”
“When you have someone in crisis there are ways and tones to talk to that person,” Summers said. “It’s called tactical communication. It’s simply the ability to talk to someone slowly, calmly, keeping your voice down, and not yelling or screaming at them.” When someone has a serious mental illness or is in crisis, they are unable to process information as quickly as we would like,” Summers explains. “So, when you overwhelm them with multiple people giving commands or touching them, you’re just throwing gasoline on a fire.” The former law enforcement officer added that company employees also have to ask themselves if they are approaching
someone in or around their store just because they look homeless, or are they making contact because the person is exhibiting behavior unsafe for customers or staff. Store personnel should also never approach someone who is acting out by themselves. Employees must keep their distance and be non-threatening. “Many of these people don’t think anything’s wrong with them,” Summers said. “You want to speak in low tones. You might calmly suggest stepping outside so ‘other people can’t hear your conversation.’ You can start guiding them outside, but don’t put your hands on them.”
Some observers believe the first thing to do is call the police and not approach them or follow them around the store. Summers disagrees. “No one likes to engage people who are talking to themselves,” he said. “But if you have some training and realize this is a person with an illness, you can then introduce yourself and ask if there’s something you can do to help, opening a line of communications. If they become more agitated or you are not getting any cooperation, then call the police.” However, retailers themselves have to initiate boundaries. “People can’t be allowed to do whatever they want – that only enables some in the homeless population,” Summers
warns. “I firmly believe people with untreated mental health and addiction issues need intervention.” However, Summer said, California law states that people can’t be forced to do anything. “Your loss prevention staff is not going to get rid of the homeless, but they can work with them,” said Summers. “Tell them you won’t call the police as long as they move their things out of sight of customers, don’t panhandle, and keep the area clean. They don’t know you can’t call the police. This is just one way to manage the situation and build rapport. It’s all about being creative to mitigate the problem.” ■
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A RETAIL UTOPIA
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Photo by Carlos R. Hernandez
BY LEN LEWIS In his 1872 novel, Erewhon – an anagram of sorts for nowhere – the English author Samuel Butler describes a fictional Utopian country that satirized the strictness of Victorian society. Nearly 150 years later, Los Angeles-based Erewhon Markets is following in the footsteps of its namesake as something of a retail Utopia – without the satire – for customers searching for the purest, most ethically produced and sustainable food and wellness products – many of which can’t be found anywhere else. “When I took over the business in 2011, it was more of a health food store,” said CEO Tony Antoci. “The store started in Boston in the mid-1960s and was brought to Los Angeles in the late 1960s. They were believers in a strict macrobiotic diet – something that’s had mixed success over the years.”
Photo by Carlos R. Hernandez
However, the stores do maintain a selection of macrobiotic staples, including 30 varieties of miso, the best in seaweed, soy sauce and umeboshi plums, dulse flakes, wakame, beans, rice and grains and several macrobiotic teas. Antoci, who has spearheaded Erewhon’s growth for the past eight years, has a deep background in foodservice, experience that has served the chain well in areas like prepared foods, which account for approximately 35 percent of sales. His previous company, Superior Amhausner Foods, was a foodservice distributor whose 30 trucks mainly served white tablecloth restaurants in the Los Angeles area. The company was sold to Sysco in 2009. Continued on page 48 ▶
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“I retired at the age of 40, but was bored in six months,” he recalls. “I wanted to get back into the food business but not in wholesale or in restaurants. I saw too many of those fail. That’s when the opportunity came up to get into retail.” In the subsequent eight years, Erewhon flourished and now is in the process of opening its fifth store in Pacific Palisades, joining the original location in Los Angeles, Santa Monica, Venice and Calabasas. Expansion is speeding up and Antoci expects to open one store a year for the next five years. Another store is slated for March 2020 in Silverlake, with another location scheduled to open at the end of 2020, or early 2021 in Studio City. Each store is approximately 12,000 square feet and when asked to describe the chain’s business model, Antoci dislikes referring to Erewhon stores as supermarkets.
manufactured in the company’s own commissary and accounts for another 15 percent of sales. “This makes about 50 percent of the business Erewhonexclusive, so you can’t compare our products to anyone else’s,” he said, adding that all food-based products are made at the chain’s 20,000 square-foot commissary kitchen in downtown Los Angeles that operates around the clock. The company also has a pilot program with Alfred Coffee, a 12-store high-end coffee shop in Los Angeles.
Photo by Carlos R. Hernandez
“The pilot involves providing them with our salads, cookies and some other unique items,” he said. However, he was quick to emphasize that this is simply a test and that it’s unlikely that the wholesale business will continue.
“At the end of the day, our business is driven by healthy, organic and sustainable foods, which accounts for most of the products we carry.” “At the end of the day, our business is driven by healthy, organic and sustainable foods, which accounts for most of the products we carry,” he said, noting that private label is
In addition, the company is in the process of creating a CPG line of products with the Erewhon name that will be launched in about a year. “Initially, it’s only going to be sold in our stores, but the goal is to sell them to other retailers,” he said, estimating the line could consist of 25 different items or varieties.
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Meanwhile, the company has plenty on its plate since each store has its own broadline kitchen that prepares products with ingredients from its commissary including marinades, soups and baked goods, as well as organic proteins and many other products. Each store has a chef, and the prep areas average 75 employees. “Finding good people is an ongoing issue, we have 1,000 employees right now with the opening of the Palisades store,” he said. “So there’s always lots of training going on.” Staffing is underscored by a team of recruiters that are always looking for people with foodservice skills. Most are from the local communities because the company likes to hire from within whenever possible, Antoci said.
Photo by Carlos R. Hernandez
“We’re very intensive on the employee count since everything is made from scratch. Nothing comes out of a box. We don’t scoop out anything by the pound, and all the hot cases are full service,” he said, adding that daily foodservice sales are running $35,000 – $40,000. “The average price for a meal is $17. This is a serving for one person. We’re certainly not on the low end. Any higher-end restaurant today is about $25, so we’re just below that,” he said. Menu items are changed regularly and menus can vary between stores, but when a recipe is created the product is the same in all stores to have consistent quality. “Even though it’s a chef-driven menu, we have a curated selection of top sellers that all stores need to have,” he added. Meanwhile, the company is also very clear about the products that will never be used in Erewhon. This laundry list includes refined flour and sugar, high fructose corn syrup, non-organic soybean, rapeseed and canola oils and nothing with artificial colors or flavors.
“We’re very particular about products used in the stores,” Antoci said. “We only use 100 percent organic extra virgin olive oil, and our consumption is unbelievable.” The stores’ tonic and juice bars also make Erewhon a unique destination for customers with “tonic masters” mixing up custom-designed healthy and healing creations, including the popular Hot Tonic Jing City, or Green Goddess ice cream that’s not really ice cream. The stores have some seating and outdoor patios for dining, but Antoci is steering clear of the traditional full-service restaurant model. “I’ve seen too many fail,” he said. “At some point we will look at the potential of a smaller store concept that might be a quickservice restaurant.” Antoci acknowledges that competition in the healthy and organic field has grown by leaps and bounds over the past several years. “Everyone’s joining the parade,” he said. “But, I’d like to think we are far more unique and offer a lot of things others can’t.” ■
Moreover, all the frying is done with rice bran oil and the salad dressings are only made with saffron oil. Photo by Carlos R. Hernandez
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STRENGTHEN LOSS PREVENTION WITH
FOOLPROOF KNOWLEDGE RETENTION BY CAROL LEAMAN, CEO, AXONIFY Mobile apps. In-store cooking classes. Pre-made meal kits. Click and collect delivery services. The grocery business has never been more exciting – or challenging. However, there’s one part of the business that continues to drive forward in the face of disruption. It’s the part that has become increasingly important to your success: your frontline associates. While their roles are quickly evolving, their impact on a company’s bottom line can’t be ignored. Associates are expected to know more than ever. They are the face of your customer experience. They are product experts, brand storytellers, and are expected to remember processes to mitigate loss – administrative, return fraud, shoplifting, and much more. Therefore, to truly innovate in your business, your frontline employees must have the knowledge required to do their jobs to the best of their abilities.
The Role of Frontline Associates Frontline employees are especially important when it comes to asset protection and loss prevention. Large-scale changes to store processes and customer experiences, such as self-checkout and online ordering, are introducing new opportunities – but new risks accompany these opportunities to your business. Add this to the list of traditional operational challenges and retailers are feeling the pain. According to the National Retail Federation, 41 percent of retailers surveyed have reported increases in overall inventory shrink. Nearly 83 percent of retailers have reported a rise in organized retail crime. Moreover, retail workers experienced a combined injury and illness rate higher than the construction industry in 2016. Continued on page 53 ▶
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www.Safes.FireKing.com
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“To strengthen your true first line of defense, loss prevention must partner with operations, human resource, and training to improve associate learning and support.” iStock
Improved processes and technology are essential to any safety or loss prevention program, but their effectiveness relies on your frontline associates. They must have the knowledge to identify potential risks and the confidence to take appropriate action in the moment. Unfortunately, a significant number of associates aren’t ready to deal with the challenges of the changing retail environment.
Gaps in Traditional Loss Prevention Training As you know, every associate gets trained on loss prevention. So why can’t they help you solve your shrink problems? It may depend on how they’re being trained. Loss prevention training usually takes place during the first few days after hiring an associate, probably in a classroom or online. However, the new associate is also being fire-hosed with content on a variety of other topics at the same time. All the while, they are nervous about starting their new (and possibly first) job and worried about basic employment issues, such as when they get their schedule and how they are paid. As a result, loss prevention training gets lost in the noise, and associates struggle to retain what they learned by the time their actual job starts. Plus, they only receive additional training when something significant occurs, and that may not be for months, or even years after they’re hired. Add traditional associate experience challenges, like low engagement and high turnover, and you’re stuck in a very problematic, expensive situation.
To strengthen your true first line of defense, loss prevention must partner with operations, human resource, and training to improve associate learning and support. First, write policies in simple, straightforward language and put them in a location that is always accessible to associates. In addition to the rules, provide associates with proven practices and tips for identifying and resolving loss prevention issues. Regular loss prevention training should focus on application, not just facts and figures. Challenge associates to apply their knowledge through the use of questions and realistic scenarios. Moreover, train managers to provide coaching on loss prevention topics as part of their everyday roles within the store.
A Modern Learning Approach Every associate comes to your company with a unique background. Some have worked in grocery before and already understand the basics of loss prevention and other critical topics. For others, this is their first retail job, and they need more support. Explore new training technologies that can personalize the learning experience for every store employee and make learning part of the associate’s everyday work experience. Rather than pull associates off the floor for generic, one-size-fits-all training, in a few minutes a day, you can deliver and reinforce only the training they need based on their proven capabilities. This is called “microlearning,” and progressive grocers, such as Northgate González Markets, Festival Foods, and
Southeastern Grocers, are already taking advantage of this new approach to transform their associate training. For example, at Northgate González Markets, associates receive three to five-minute bursts of microlearning at the start of every shift. They access their training through a mobile device, which is usually positioned near the store timeclock or in a breakroom. Workplace data and artificial intelligence are used to continually adapt the training to each associate every time they log in. Each session focuses on only the topics the associate needs at that time and may include subjects such as loss prevention, safety, product knowledge, promotions, or customer service. Training can be delivered using a range of materials, including short videos, job aids, or scenario-based questions. Associates are rewarded for completing their daily training with the opportunity to bid on small prizes or compete to reach the top of the store leaderboard. Then, after just a few minutes, the associate is ready to hit the floor and apply their knowledge – without causing any operational disruption. The grocery experience is changing quickly – for customers, as well as associates. To provide a customer experience that will differentiate a business in a competitive marketplace, new and veteran associates alike must be ready to execute at all times. By applying modern technology and a data-driven approach to training, employers will not only help their associates keep up with the pace of change, but companies can be confident employees will take action immediately when risks arise during the course of operation. ■ CAL I FO RNIA GRO CER | 53
GUEST COLUMN
Gro cery Industry Steps Up for MDA
C H R I S T Y DUN C A N-A N D ERS O N E XECUTIV E DIR ECTOR , ALBER T S ON S COMPAN IE S FOUNDATIO N
Your support helps bring smiles to kids and adults living with neuromuscular diseases. Over the past year or so I’ve been highlighting the good and charitable work the grocery industry undertakes for our neighbors in California, especially for our most vulnerable populations. Food relief is an obvious match for our industry, but we do so much more. For example: the industry’s legendary support of the Muscular Dystrophy Association (MDA). In the past eight years, more than $10 million has been raised by California grocers alone. “The grocery industry has always been an important part of MDA’s cause,” says Lynn O’Connor Vos, MDA President and CEO. “We’ve been incredibly fortunate to work with longtime partners in the grocery industry to find ways to engage communities, support their businesses and make an impact for kids and adults who live with neuromuscular diseases every day.”
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MDA is committed to transforming the lives of people affected by muscular dystrophy, ALS and related neuromuscular diseases. They do this through innovations in science and in care, funding neuromuscular disease research, providing multidisciplinary care at more than 150 Care Centers across the United States, and providing support and family services through its national Resource Center and nationwide offices. One MDA service the grocery industry supports across California and beyond is MDA Summer Camp – or as the kids say, “the best week of the year.” Kids just get to be kids at MDA Summer Camp, where barrier-free environments make anything possible – from swimming, zip-lining and horseback riding to dancing under a disco ball and gaining life skills. Each summer, thousands of kids attend life-changing camps throughout California. And best of all, because of funding from the grocery industry and other sources, these camp experiences cost families nothing. I've attended camp in the past, and if you haven’t, I highly recommend you do. One year, I spent the day helping kids get ready for a big dance by making paper ties for them to wear. Each tie was designed to share
the camper’s personality, and I helped make ties with everything from Lego designs to one that was completely covered in googly eyes. Acosta, the “engine that drives greater sales and market share for consumer goods manufacturers and retailers in the U.S.,” is a big partner of MDA. Its journey started when an Acosta associate discovered that his son had muscular dystrophy. Acosta developed the MDA Aisles of Smiles program that enables its consumer brand portfolio, retailers and shoppers to support the cause. Since 1985, Acosta has raised more than $82 million for MDA through this program and special events. One person I admire who pushes Acosta’s program further than anyone thought possible is Tony Melo, Senior Vice President. Tony has been at Acosta for 16 years and has been working over the past 14 years to support kids going to camp. When asked why he does it, he says, “I am very proud of the work Acosta has done in support of camp for these amazing and beautiful children and their families who are living with muscular disorders. I have visited the camp on many occasions, and seeing the smiles and hearing the laughter of the children reinforces and reminds me why it’s so important to support MDA camps.
GUEST COLUMN
“To give the kids their best week of the year and parents a chance to decompress from caregiving is something that I am so proud to be a part of.”
He continues, “Camp allows them to experience things that they normally can’t enjoy, including swimming, horseback riding and building long-lasting friendships with kids facing similar challenges. To give the kids their best week of the year and parents a chance to decompress from caregiving is something that I am so proud to be a part of.” Says O’Connor Vos, “While some industries could see nonprofit involvement as a one-off event, the grocery industry, their brands and their manufactures continue to amaze us in their ongoing partnership
with MDA because they see the value in what we do. Together, we can realize MDA’s ultimate goal: to find treatments and cures for muscular dystrophy, ALS and related neuromuscular diseases impacting so many families across the U.S.” I know the kids at MDA Summer Camp are grateful for all that the grocery industry does, and I am, too. I still have the googly eye tie that the camper gave to me when the dance was over as a souvenir, and I keep it as a reminder of how important these programs are to kids. ■
A DVERTISER IND EX PAGE
COMPANY
PHONE
WEBSITE
17, 35
Albertsons
925-467-3000
13
C&S Wholesale
916-373-4396
10
California Dept. of Public Health
800-258-9090
BC
Certified Federal Credit Union
909-261-4065
dsimpson@certifiedfed.com
certifiedfed.com
IBC
ECOS by Earth Friendly Products
800-335-3267
craig@ecos.com
ecos.com
52
FireKing Security Group
812.557.6575
mitch.kaczmarek@fireking.com
fireking.com
45
M.D. Manouel Insurance Agency, Inc.
559-446-0588
kfernandez@Mdmig.com
mdmig.com
25
Nestle Purina PetCare
314-982-1000
joe.toscano@nestle.purina.com
purina.com
16
Pactiv
800-476-4300
pactiv.com
8
Ralphs Grocery Company
310-884-9000
ralphs.com
39
Regional First Aid
877-872-2600
s.cisneros@regionalfirstaid.com
regionalfirstaid.com
7
RMS, Inc.
818-817-6712
mdodson@retailms.net
retailms.net
21
SMC ZeroWaste
951-788-6042
terry@smczerowaste.com
smczerowaste.com
28
UNFI Inc.
323-264-5200
customercare@supervalu.com
UNFI.com
2
TRUGrocer Federal Credit Union
208-385-5273
cdemaray@trugrocer.com
trugrocer.com
15
Wells Construction, Inc.
916-788-4480
wells@wellsconstruction.com
wellsconstruction.com
15
williams + paddon
916-786-8178
albertsons.com pmiller@cswg.com
cswg.com tobaccofreeca.com
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MOMMY BLOGGER
The Absentee Shopper K I M B ER LY M I L L ER WR ITER , ACTR ES S
Learning to like online grocery shopping hasn’t been easy. When I received a formal invitation in the mail (that required an RSVP!) to the opening of a luxury food shop in my neighborhood I thought, “Wow, that’s kind of crazy.” But they knew what they were doing. All of a sudden, friends were asking if I was going to the grocery store party. Later, invites from friends to meet up for a lunch date at the in-shop cafe and a stroll through the aisles started showing up in my messages. The Facebook group for local moms was abuzz with the spoils of shopping trips. But I still haven’t been there.
iStock 56 | CAL I FOR N I A G R OC E R
I still haven’t stepped inside a grocery store in months. And I’ll tell you why: Measles. The only thing that’s generating more buzz among moms in my area than this new specialty shop is the measles cases cropping up all over the country. A documented case showed up in our county recently, and my normal neurosis level has escalated to full-on paranoia. Our pediatrician didn’t just suggest that we keep things close to home before our newborn got her first round of vaccinations
at two-months old, she recommended we be strategic where we take her for her entire first year of life. Since I’m the primary shopper in our family and it’s illegal to leave small children alone at home while you do what you want, I spend most of my time at home these days. We still need food, which sometimes means waiting until my husband is home and going shopping alone while he watches with the kids. More often than not, though, it means buying our groceries online. In all honesty, I’m not a huge fan of online food shopping, and sure it makes life easier to do my shopping on my phone while watching Paw Patrol with my three-year-old, but I like choosing my apples and knowing I got the best expiration date for my dairy. I love finding new products, and I secretly enjoy giving in to the temptation of the bakery section, even though I swore I wouldn’t. These days I’m regularly relying on the Internet to feed my family, either via a store-specific app or a website that finds people to do my shopping for me. While I was afraid buying online would come with a significant markup, I’ve actually brought my food budget down by about $100 per month because I mostly stick to what I have on my shopping list and only what’s on my shopping list. While I enjoy having a few extra bucks in my pocket each month, I miss the outside world…and the bakery section. ■
MAKE EVERY DAY EARTH DAY
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LOCALLY MADE IN
Family owned and operated since 1967, Earth Friendly Products®, maker of ECOS ®, is proud to have achieved the trifecta of sustainable manufacturing: we are carbon-neutral, water-neutral and Platinum Zero Waste certified. Inside the walls of our Cypress, California facility, we are building a better, brighter future, bottle by bottle.
USING THOUGHTFULLY SOURCED GLOBAL INGREDIENTS
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California Grocer Online Read California Grocer on your mobile device, or share with an associate.
www.cagrocers.com
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