California Grocer, Issue 1, 2021

California

Pop up grocer PAGE 20

Meet CalRecycle’s New Director PAGE 26

A More Turbulent Future PAGE 32 2021, ISSUE 1

CALIFORNIA GROCERS ASSOCIATION

We are committed to ending hunger in our communities and eliminating food waste in our company by 2025.

Follow our journey at

TheKrogerCo.com and #

PET SPECIALTY

SUPPLIER PERSPECTIVES

LET SCIENCE-BASED NUTRITION LEAD THE WAY TO PET FOOD GROWTH

By Joe Toscano, Vice President, Trade & Industry Development at Purina As more and more pet owners are becoming actively engaged and informed about the health of their four-legged friends, super premium pet foods with targeted nutrition are growing in popularity. Super premium is the largest price tier within the total dog/cat category, making up more than a third of total dollar sales and growing at 3.5%. Consumers are looking for nutrition that’s not only enjoyable, but also healthy and enables their pets to live their best lives.

Retailers carrying Purina ONE turn shoppers into loyal consumers who know they won’t have to look anywhere else to find what their pets need.

In fact, three-quarters of dog owners think it is important to buy food formulated for their dog’s size, breed, life stage or other need.

Four out of ten pet owners say they “would pay more for a food that was made specifically for their pet’s nutritional needs.”

• Clean Bowl Club Dogs and cats may be even more eager for mealtime, thanks to meat as the #1 ingredient and the tasty bites in Purina ONE.

At Purina, our innovation and product cycle is guided by research.

We have more than 500 scientists, veterinarians and nutritionists on staff, who work tirelessly to uncover breakthrough nutrition that helps dogs and cats live longer, healthier lives. Over the years, Purina ONE® has used that expertise to develop formulas that support a pet’s whole body health every day and throughout a pet’s lifetime, with formulas that address changing needs at each life stage. Purina ONE has formulas for puppy/ kitten, senior cat/dog, weight management and sensitive system, just to name a few.

Purina ONE natural dog food and cat food formulas use high-quality ingredients for nutrition that can lead to visible differences in a pet’s health, and consumers can see these differences for themselves when they join the more than 1.5 million others who have taken the 28-Day Challenge.

• Energy You Can See The purposeful nutrition in every bag of Purina ONE helps support healthy energy. Dogs and cats may want to play more and may be happier overall.

• Bright eyes and shiny coat By the end of the month, owners should see clear, alert eyes and a healthy skin and coat, supported by the omega-6 fatty acids, vitamins and minerals provided

by Purina ONE. In April, retailers and shoppers have a chance to take advantage of an accelerated offer. Purina ONE will have a $5 coupon on the bag and once redeemed, consumers can go online to sign up for the 28-Day Challenge and get an additional $5 coupon on their next bag of Purina ONE. We are recommending that retailers take advantage of the merchandising vehicles we will have available to help them convert shoppers into buyers during this time frame. Work with your local teams on getting ahead of the challenge and taking the opportunity to satisfy your shoppers and their pets alike.

Purina trademarks are owned by Société des Produits Nestlé S.A.

Purina ONE nutrition is veterinarian recommended and proudly crafted at Purina-owned facilities.

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1020 N. Lake Street Burbank, CA. 91502 818.817.6712

CGA | BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

CHAIR APPOINTMENTS

Chair Hee-Sook Nelson Gelson’s Markets

Second Vice Chair Dennis Darling Foods Etc.

Secretary Hal Levitt The Save Mart Companies

First Vice Chair Renee Amen Super A Foods, Inc.

Treasurer Lynn Melillo Bristol Farms

Immediate Past Chair Phil Miller C&S Wholesale Grocers

Denny Belcastro Kimberly-Clark Corporation

Steve Dietz United Natural Foods, Inc.

Michel LeClerc North State Grocery Co.

Independent Operators Committee Chair

Elliott Stone Mollie Stone’s Markets

DIRECTORS

Kylie Bishop LaBrie The Hershey Company

David Higginbotham Stater Bros. Markets

Doug Minor Numero Uno Market, Inc.

Jeanne-ette Boshoff Molson Coors Beverage Company

Bryan Jankans Mondelēz International Inc.

David Moore E. & J. Gallo Winery

Mary Kasper 99 Cents Only Stores

Joe Mueller Kellogg Company

Saj Khan Nugget Markets

Ken Mueller Raley’s

Tyler Kidd Mar-Val Food Stores, Inc.

Bethany Pautsch Tyson Foods, Inc.

Nancy Krystal Jelly Belly Candy Co.

Subriana Pierce Navigator Sales and Marketing

Lori Brown Post Consumer Brands Elaina Budge Costco Wholesale (Bay Area) Pamela Burke Grocery Outlet, Inc. Doug Christman Beverages & More Inc. Willie Crocker Bimbo Bakeries USA Jake Fermanian Super King Markets Damon Franzia Classic Wines of California Sergio Gonzalez Northgate Gonzalez Markets

CALIFORNIA GROCERS ASSOCIATION

President/CEO Ronald Fong Senior Vice President Marketing & Business Development Doug Scholz Vice President Government Relations Kelly Ash Director State Government Relations Leticia Garcia Director Local Government Relations Tim James

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Hillen Lee Procter & Gamble John Mastropaolo Chobani, Inc. Jonathan Mayes Albertsons, LLC Kelli McGannon The Kroger Company Mark McLean CROSSMARK

Senior Director Events & Sponsorship Beth Wright Director CGA Educational Foundation Brianne Page Senior Director Communications Nate Rose Director Administration & Human Resources Jennifer Gold Controller Gary Brewer

Chris Podesto Food 4 Less (Stockton)/ Rancho San Miguel Markets Mike Ridenour The Kraft Heinz Company Jaclyn Rosenberg Nielsen Jeff Schmiege Unilever

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. © 2021 California Grocers Association

Jeff Severns PepsiCo Beverages North America Greg Sheldon Anheuser-Busch InBev Scott Silverman KeHE Distributors, LLC Lee Smith Smart & Final Stores Diane Snyder Whole Foods Market – Southern Pacific Region Josh Southerland Reyes Coca-Cola Bottling LLC Rick Stewart Susanville Supermarket IGA Joe Toscano Nestlé Purina PetCare Richard Wardwell Superior Grocers Karl Wissmann C & K Market, Inc. Publisher Ronald Fong rfong@cagrocers.com Editor Nate Rose nrose@cagrocers.com For advertising information contact: Maria Tillman mtillman@cagrocers.com

CONTENTS | ISSUE 1

FEATURES COLUMNS President’s Message What Year is it Again?. . . . . . . . . . . . . . . . . . . . 7 Chair’s Message Embracing the Marathon. . . . . . . . . . . . . . . . . 8

20 The Direct-to-Consumer Deep Dive Jim Barksdale famously said the only way to make money in business is either bundling or unbundling. Explore how a new wave of upstart brands and merchants are unbundling and the challenges associated.

Viewpoint The Case Against Future-Proofing Your Business. . . . . . . . . . . . . . . . . . . . . . . . . . 10 Capitol Insider It Sure Is Great To Have 2020 Behind Us!. . . . . . . . . . . . . . . . . . . . . . . 13 Government Relations A Year Unlike Any Other. . . . . . . . . . . . . . . 15 Inside the Beltway Narrowing Our Priorities.. . . . . . . . . . . . . . 16 Washington Report Our Independent Grocer Wishlist for President Biden. . . . . . . . . . . . . . . . . . . . . . 18 Mommy Blogger The School of Life. . . . . . . . . . . . . . . . . . . . . . 44

26 Meet CalRecycle’s New Director CGA chats with CalRecycle’s new director, Rachel Wagoner, about her agency’s priorities for 2021.

DEPARTMENTS Outside the Box New Retail Perspectives. . . . . . . . . . . . . . . . . 38 Index to Advertisers. . . . . . . . . . . . . . . . . . . 41 CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

32 A More Turbulent Future One of the pandemic’s emergent qualities is how it sped forward a long-predicted digital transformation. Learn how the latest research points to a forever-altered retail industry.

CAL I FO RNIA GRO CER | 5

Commitment…

For over 100 years, we have been focused on helping your family business succeed. Today, we continue our legacy of providing premier service to our independent retailer partners.

Contact C&S today to learn how we can help grow your business!

1-800-872-5018 or visit www.cswg.com

PRESIDENT’S MESSAGE

What Year Is It Again?

RO N F O N G PR ES IDEN T AN D CEO CALIFOR N IA GR OCER S AS SO CIATIO N

The challenges from the pandemic keep coming in 2021.

When the page turned on 2020, I, like I assume many of you, felt the hope a new year can bring. Hope for greater unity. Hope for the opportunity to reconnect with friends and family in person. Hope for the chance to reconnect with the industry from the tee box, or maybe even a beach in Hawaii.

While the Covid-19 vaccine’s rollout has had its glitches, its existence represents a light at the end of the tunnel and makes all of these hopes possible in 2021. Still, we all seem to have a sense that the first few months of 2021 feel a lot like 2020.

And for good reason.

The Covid-19 pandemic continues to be the central animating force in our daily lives, businesses, and the political arena. California has toggled between the different coronavirus color tiers and stay-at-home rules. The country again faced political turmoil at the start of the year. Through it all, the grocery industry has been one of the few stable presences in the communities we serve.

As one of the few industries that has operated throughout the pandemic, the industry’s profile has been raised in both

positive and negative ways. Because of my role leading the Association, Gov. Gavin Newsom appointed me to both his economic taskforce and vaccine advisory committee. These roles have offered grocers the proverbial seat at the table.

Like it or not, this newfound spotlight means every Covid-19 issue has also become a “grocery issue.”

The latest version of this dynamic to impact California’s grocery community is mandated extra pay for grocery workers.

Across the state cities and counties are exploring the idea, and in some cases, passing extra pay ordinances. Outside of California, Seattle became the first outside of the state to pass a grocery extra pay mandate.

CGA also enlisted the support of a well-regarded public affairs firm to add strategic thinking and bandwidth to our team. In fact, it’s the same firm we partnered with during the overbuying that rocked the industry in March and April of 2020. Together, we have been successful at ensuring your voice is heard across national, state, and local media and across numerous media formats.

While unpleasant, the extra pay policy debate has showcased the benefit of the Association. CGA is the embodiment of the grocery industry’s collective interests, and therefore, able to present a unified voice that is greater than its sum parts.

Although 2021, like 2020, appears set to continue to challenge us all in new and innovative ways, with your fantastic support, your Association is up to the task. ■

In January, CGA filed a lawsuit against the City of Long Beach, which was the first local government to enact an emergency grocery extra pay mandate. The Association and its legal committee believe these mandates are unconstitutional, and we have vowed to provide a legal challenge to any jurisdiction considering extra pay.

CAL I FO RNIA GRO CER | 7

CHAIR’S MESSAGE

Embracing the Marathon

H EE-S O O K N EL S O N G ELS ON’ S MAR K E TS

Grit is the essential factor in finding success during the pandemic and into the future.

there to serve customers every day and show up to work. They have become the pipeline for food and necessities.

Some of my fellow columnists in this issue have astutely pointed out that 2021 has, so far, felt similar to 2020. Covid-19 continues to dominate our thinking and have an everyday impact on our lives.

compassion and support to our customers and one another. They have shown the four characteristics of grit:

To that end the pandemic seems to be comprised of its own unique time outside the normal turn of a clock or calendar page.

For this reason, operating throughout the pandemic has truly been a marathon, not a sprint.

• Conscientiousness, being careful and vigilant to keep our stores safe

Another aspect of grit is flexibility. The doggedness grit requires might seem like the antithesis of flexibility, however, adopting grit requires a growth mindset.

Covid-19 is a generation-defining obstacle, and so the roadmaps from the past will not do. Lessons must be learned, and we are all inventing the path as we go. Implementing programs that may have taken a year or longer basically happened overnight to serve our customers.

What’s the key to successfully navigating this historic time and maintaining success into the future? Grit.

From in-store social distancing to managing exhausted teams, passion and perseverance especially are essential.

These two characteristics must flow throughout the company, back office to the store floor. Every challenge from Covid-19 provides an opportunity to keep moving towards your desired outcome.

• Courage to come to work and take care of communities

• Perseverance, they show up to work in times of crisis • Resilience, they power through any challenges and help keep communities going This takes the entire team from warehouses, truck drivers, our staff in our offices and especially our front-line workers who are

“What’s the key to successfully navigating this historic time and maintaining success into the future? Grit.”

Our grocery stores have become the hub of our communities. Our teams have not only been providing an essential service but they have been the ones who have shown

iStock

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Finally, there is something most people miss when thinking about grit, and that is how it relates to the future.

CHAIR’S MESSAGE

“If we are purposeoriented people, then we must have a definite view of the future. And we must hold these ideas tightly while remaining flexible.”

Psychologist Angela Lee Duckworth, who has spent her career studying and measuring grit, explains grit is defined by “passion and perseverance for very long term goals, having stamina, sticking with your future, and living life like a marathon, not a sprint.”

Maintaining drive towards an unarticulated or even vague goal simply isn’t possible.

Doing so would defy human nature. If we are purpose-oriented people, then we must have a definite view of the future.

And we must hold these ideas tightly while remaining flexible.

When I think about the future, I start to think more about how the pandemic has accelerated the once distant changes many have long predicted. The e-commerce adoption curve has rapidly sped forward across every demographic. Shoppers are looking for retailers to inspire their at-home culinary explorations.

Our industry has navigated change quicker than we ever thought possible.

As these trends accelerate, making the future come to fruition sooner than expected, those with grit will be the winners during and after the pandemic. ■

Oprah Winfrey famously said, “Challenges are gifts that force us to search for a new center of gravity. Don’t fight them. Just find a new way to stand.” This is a quote that strikes at the heart of the matter.

In a time of social distance, get connected by advertising with CGA. Show your support for our hard-working industry today.

For more information, contact Maria Tillman at (916) 228-4436 mtillman@cagrocers.com

CAL I FO RNIA GRO CER | 9

VIEWPOINT

The Case Against Future-Proofing Your Business K EV I N CO U PE F OUN DE R , MOR N IN GN E WS BEAT.CO M

When we avoid grappling with change, we embrace complacency.

The other day I was having a conversation with someone in the industry, who wanted me to make a presentation to her company about how to “future-proof” the business.

It isn’t usually the best way to land a gig, but I told her that I couldn’t do that, because a) it really isn’t possible, and b) it isn’t a good idea.

I explained: When you water-proof the basement of your house, the goal is to keep all the precipitation out. The tighter the better.

Businesses shouldn’t be future-proofed, I argued, because the last thing you want to do is keep all the influences out.

If we’re going to stay with the house metaphor, in a business what you want to do is build it so the windows and doors are as big as possible so you can see everything going on around you…and then, you want to throw open the windows and doors so you can feel the sun and the breeze and yes, even the rain and harsh winds when they come. Because that way, you’re in touch with what is going on around you.

You don’t keep reality out – you embrace it, you use it to build your strategies and

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tactics, and you revel in the fact that you are better connected to your environment than any of your competition.

That’s particularly important these days, I think, because we’re coming off a year in which the impulse shared by most people and companies is to batter down the hatches and protect yourself from what’s going on around you with masks and gloves and visors and, if you’re a retailer, plexiglass and directed traffic flows and regulated occupancy.

We know that our people are stressed out – they’ve been on the front lines throughout the pandemic, and public health experts tell us that anxiety levels and even suicide are surging.

What this all adds up to is companies that are in survival mode – not any sort of expansionist or experimental mode. And I get that. For much of the pandemic, retailers didn’t have to do anything different – if they could bring merchandise in through the back door, all they had to do was open up the front doors and business would be brisk.

Maybe the best it ever had been.

I’d argue that this kind of complacency is dangerous. I’ve been saying almost from the beginning of the pandemic that this was a significant enough event, with market-altering repercussions, that it was critical that companies figure out how they would be fundamentally different coming out of the pandemic than they were going in. The world, after all, would be different… think about living in a new reality, not a new normal, mostly because I have no idea what normal even means anymore. And so retailers would have to be different, too.

Clearly all sorts of trends have been accelerated by the pandemic – think e-commerce – and an end to the pandemic’s more restrictive impositions is likely to cause some return to previous behaviors, I’m not sure retailers can expect old shopper behaviors to return.

Shoppers may want to return to the store to buy their fresh foods, but that’s because there is a tangible advantage to doing so.

But going to the store to buy cereal, cookies, laundry detergent and the like – things for which there is absolutely no advantage to going into the store? I’m dubious.

I think that many people have new learned behaviors, and there’s no reason to think they’ll toss away habits learned during the pandemic that actually made their lives easier and better.

VIEWPOINT

Which means that retailers need to start thinking seriously about how to structure their e-commerce offerings – whether they be focused on click-and-collect or delivery, and figure out how best to make those functions reflect their own brand identity. They need to adopt automatic replenishment systems that will allow them to compete with programs like Amazon’s Subscribe & Save, and that will provide them with a fresh foundation on which to build relationships with shoppers.

such short supply because of supply chain issues – I cannot find one retailer that reached out to its best shoppers to say, “We know that you’ve always been incredibly loyal to us over the years, and now we want to be loyal to you.

We’re getting in some paper towels (or wipes or toilet paper or pasta or sanitizer or whatever) tomorrow and if you’d like, we’d be happy to put some aside for you. You can pick it up, or we’ll

“Businesses shouldn’t be future-proofed, I argued, because the last thing you want to do is keep all the influences out.”

The one thing they cannot do is assume that the consumers who found them and stayed with them during the pandemic will continue to do so. There will be lots of competitors looking to steal them away, and even a resurgent restaurant industry that will be doing everything possible to reclaim lost loyalties and discretionary dollars.

There was an enormous opportunity during the pandemic that almost nobody took advantage of, and I think it illustrates how retailers need to think.

Every retailer that I know has data that allows them to easily identify who their best shoppers are. But during the worst weeks of the pandemic – when people would’ve donated a kidney for some wipes or paper towels or toilet paper or pasta or sanitizer or any of the things that ended up being in

iStock

deliver it. But we want you to know what when we say we value your business, it is more than just words.”

Such actions would’ve created lifetime customers.

But I cannot find anyone who did it.

Now, the moment has passed.

Except…as I write this, there are all sorts of Covid-19 variants that public health officials are worried about, and there are concerns that the worst moments of the pandemic could be in front of us if things go badly.

In which case, get out your data files. It will be like opening your doors and windows and connecting with a world that will determine your success or failure. ■

CAL I FO RNIA GRO CER | 11

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CAPITOL INSIDER

It sure is great to have 2020 behind us!

LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F KAHN, S OAR E S AN D CON WAY, LLP

2021’s legislative session is shaping up to also be defined by Covid-19-induced procedural chaos.

Brown

Unfortunately, the beginning of 2021 doesn’t look a whole lot different, especially as we start to focus on the new legislative session.

there will also probably be a higher-thanaverage number of bills converted to twoyear bills.

Policy and politics is a people business. It’s handshakes and kissing babies. It’s one-onone meetings. And, with all that taken away, we are learning to do business differently – just like many others.

The reason the Assembly is limiting bills is to prevent some of the acrimony we saw in 2020. When the Senate returned from the unplanned Covid-19 recess, most senators dropped several of their bills at the request of leadership. The Assembly didn’t do the same, which forced the hand of many Senate Committee Chairs to limit the number of bill hearings and deny hearings to assembly members. While this is standard practice in DC and many other legislatures, it doesn’t happen here and wasn’t taken well.

We were three months into the session when the pandemic shut everything down in 2020.

This means bills had already been introduced and we had started the budget and policy committee hearing process.

As a lobbyist, it is not easy to find authors for bills, even when you can walk from office to office and talk with staff directly. Doing the same virtually, especially with the complex issues we deal with in the grocery industry, is downright frustrating! With that being said, even under Covid-19 circumstances, we anticipate the number of bills introduced in 2021 will be similar to most other years, somewhere around 2,500.

There will be a higher-than-average number of spot bills introduced, primarily because the more complex issues take more time. Virtual communication adds to this complexity. With the Assembly planning to limit the number of bills sent to the Senate,

For at least the first set of policy committee hearings, testimony will be primarily provided via telephone or videoconference for main witnesses, and telephone only for those wishing to give “me too” testimony.

Since this is the same process used for the last half of the 2020 session, most of the kinks should be worked out.

two rooms on each side of the Legislature where hearings can take place, due to social distancing requirements. Add the need to schedule budget hearings, and we could quite possibly see hearings taking place over some weekends.

While this chaotic process doesn’t always lead one to believe that it’s well-structured, the deadlines are not easy to move and are usually adhered to. If we go the entire session under Covid-19 protocols, we could see yet another wild end of the session.

For two years in a row, we have seen the unexpected. In 2019, an anti-vaccine advocate threw a menstrual cup onto the Senate Floor. In 2020, the entire Republican caucus, except for one member, was exposed to Covid-19 and banned from being in the Capitol for the last week of session This year, I yearn for a good old fashion end-of-session, filled with boring political speeches, interhouse battles, long days and sleepless nights. Let’s hope the latter half of 2021 moves us back to our old normal. ■

However, even if everything goes smooth with the technology, this process will present the opportunity for people to load up the lines on controversial matters, causing extremely long hearings. This doesn’t bode well for the process since there are only

CAL I FO RNIA GRO CER | 13

GOVERNMENT RELATIONS

A year u nlike any other

K EL LY A S H V ICE PR ES IDEN T CGA GOV ER N MEN T R ELATION S

Resilience was the key to 2020 and is likely to continue to be vital in 2021.

The term resilient has been thrown around a lot lately, but in 2020 grocers were the epitome of the word.

CGA members weathered storm after storm through 2020 and continually regrouped and focused on how to do the best for their communities. It is an honor to be in this role and to be able to have a front row seat.

While grocers showed resilience by withstanding a pandemic and constantly changing health concerns, they also endured through many different pieces of legislation, regulatory guidance, executive orders, and local ordinances.

The pandemic-dominated year of 2020 started off with several executive orders on issues from temporary supplemental paid leave to workers’ compensation changes and plastic bags. Then the Legislature came back into session and completely changed their focus from a regular year of bills to all budget and Covid-19 specific legislation.

As if this wasn’t enough of a challenge, local governments worked on ordinances from delivery hours to their own supplemental paid leave and beyond.

March started with a statewide shutdown and introduced panic stockpiling on items like toilet paper and bottled water. Grocers had executive orders flying at them fast to handle trucking weight loads, social distancing requirements, capacity limitations, reusable items being banned from inside the stores, and more.

One main executive order that later turned into legislation was temporary supplemental paid leave. CGA worked with members and labor advocates, at the request of Gov. Gavin Newsom, to craft language for the first temporary supplemental paid leave in the state. While it was a time of give-andtake, CGA members engaged to ensure it was the most reasonable order it could be.

Looking back, this was a smart move because the Legislature based their bill on this very executive order.

When legislators came back to work after a Covid-19 related pause, we saw bills relating to workers’ compensation, supplemental paid leave, expanded family leave, further health and safety standards specific to Covid-19 protocols, and much more. One thing was sure, legislators were trying to find a way to impact the pandemic during a very contentious election year.

This was good and not so good. The desperation for legislators to make a positive impact for their constituents during Covid-19 led to many, and often duplicative, bills that weren’t well thought through or researched for their unintended consequences. CGA members stood up and ensured that policymakers knew when their bills were unreasonable or where the problems existed and how they could be fixed.

Nothing was a sure bet in 2020, and we are seeing that linger well into 2021.

However, the Association’s members have continued to do the best they can to work through these new bills, orders, and ordinances that have been placed on them and our team has continued to advocate for our members to attempt to help government understand the real-life impacts of their proposals and decisions.

CGA continues to stand up for our members and their communities by educating government officials, the media, and the public about the real implications of government decisions. Maintaining resiliency throughout this year will be key to impacting legislation, orders, regulations, and ordinances while officials are still reeling from the effects of this pandemic. ■

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INSIDE THE BELTWAY

Narrowing Our Priorities

J EN N I F ER H ATC H ER S E N IOR V ICE PR E S IDE N T, GOVERNMENT AND PUBLIC AFFAIR S, FOOD MAR KETING INSTITUTE

FMI is developing a new public policy plan for action in 2021.

A year ago, none of us envisioned that Covid-19 would be part of our everyday vocabulary, much less driving the public policy agenda.

One thing we have learned this year is the importance of remembering our priorities.

In an industry as diverse as ours, and with a profit margin as tight as ours, focusing on areas where we can make a difference is key.

It is perhaps not as exciting or as anticipated as perhaps some of the other 2021 lists, but below is our compilation of those top eight items worthy of our focus in the public policy world during this Covid-19 emergency. These issues provide a glance at the industry’s COVID-related priorities, but this list will remain dynamic as new themes emerge and new events occur.

Top Covid-19 related policy issues: Vaccine Distribution: FMI will continue

to advocate for supermarket pharmacies to play an expanded role and reinforce the need to prioritize food industry essential workers to preserve the supply chain.

Liability Relief: FMI pressed for action in

the last Congress for limited liability relief for those who have followed government guidance to be included in the final

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legislation. With the change in control of the U.S. Senate, the opportunity for a federal legislative solution on this issue is unlikely, but we will remain engaged with Senate and House leadership on both sides of the aisle. There has been robust activity in a number of states that has resulted in strong protections in those areas. FMI’s state liability relief tracker is linked on FMI’s state affairs website.

Economic Recovery: FMI remains

committed to working with Congress on potential stimulus packages to ensure the legislation provides more good policy than burden to our associates, communities and stores.

Supply Chain: FMI will continue to work iStock

“One thing we have learned this year is the importance of remembering our priorities.”

COVID package. Ultimately, limited liability relief was paired with money for state and local governments and both provisions were removed from the final

with agencies and Congress to provide recommendations for actions to put in place now to smooth potential supply chain disruptions should another health emergency or similar national emergency impact occur in the future.

Workplace Safety and Staffing:

President Biden called on OSHA to determine whether an “Emergency Temporary Standard” is needed. An ETS would establish enforceable workplace safety requirements for employers, potentially far exceeding the scope of existing guidance.

FMI will push for a standard that reflects existing government guidance.

INSIDE THE BELTWAY

iStock

“These issues provide a glance at the industry’s COVID-related priorities, but this list will remain dynamic as new themes emerge and new events occur.”

Labor and Wage Policy: In the current Covid-19 relief bill, Democrats originally signaled they intended to include a $15/hour minimum wage provision that would also eliminate subminimum wages. President Biden recently said it may not be included in the final version. Sen. Joe Manchin (D-WV) had already voiced publicly his opposition to such a high wage rate as other Democrats have done privately. Previous legal thought is such a provision would violate Senate rules. We will continue to see efforts to implement labor and wage policies tied to the coronavirus pandemic. For example, there are currently at least nine states and 13 local governments considering mandating premium pay for grocery store workers and five jurisdictions already have passed mandates. FMI will continue to track these measures, provide support and resources to impacted state associations, as well as explore broader legal and communications resources on behalf of the industry.

Tax Policy: Congressional Democratic

leadership, including the Chairmen of the Senate Finance Committee and House Ways and Means Committee, have indicated they are also interested in rolling back significant portions of the Tax Cuts and Jobs Act to fund infrastructure and climate change proposals. FMI believes the corporate tax rate, pass-through deduction, and changes to the estate tax and LIFO will be on the table for the next two years, and we intend to engage in opposition to these changes.

Feeding Assistance Programs:

The Supplemental Nutrition Assistance Program (SNAP) and other federal feeding programs have been leveraged to respond to the rapidly growing need over the past year. FMI’s work to ensure SNAP and WIC continue to function well in-store and evolve to meet consumer needs will focus both on the regulatory and legislative front.

We hope you will join us to lobby Congress on these issues on April 21 at our annual Day in Washington – the Virtual Edition. ■

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WASHINGTON REPORT

Our Independent Grocer Wishlist for President Biden G R EG F ER R A R A PR E S IDE N T AN D CEO N AT ION AL GR OCER S AS S OCIATIO N

NGA is focused on advocating for a number of Covid-19-related policies that would help lift independent grocers and its essential workforce.

With a new Congress and presidential administration, 2021 presents new opportunities for NGA to advocate on behalf of independent grocers throughout the country, ensuring their priorities are heard on both sides of the political aisle.

In January, Joe Biden was sworn in as the 46th President of the United States, beginning his administration by signing several executive orders aimed at addressing the Covid-19 pandemic, including increasing vaccine rollout and implementing mask mandates on federal properties.

However, an aid package must go through Congress, with Senate Republicans key to agreement. Both Democrat and Republican bills include funding for a range of Covid-19related priorities, but the GOP proposal is narrower in scope and provides less in the way of unemployment insurance and direct stimulus payments.

Congress last passed a Covid-19 relief package in December, with several provisions positive for independent grocers, including the Paycheck Protection Program (PPP), simplified forgiveness options, extensions

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of the New Market Tax Credit and the Work Opportunity Tax Credit, and funding for vaccine development and distribution to frontline workers.

The package also included key nutrition victories, such as increased funding to help independent grocers enroll in the SNAP Online purchasing program, as well as an additional $75 million to bolster the Gus Schumacher Nutrition Incentive Program. These programs are essential for independent grocers and NGA will continue working with the Biden Administration and Congress to ensure they are strengthened in the coming months.

Unfortunately, the bill didn’t include liability protections for essential businesses, which is essential for grocers potentially facing frivolous lawsuits. NGA implored Congress to protect grocers – deemed as essential businesses during the pandemic – taking reasonable steps to comply with requirements issued by CDC and other health authorities.

In February, NGA joined the US Chamber by signing on to a letter urging Congress to include targeted and temporary liability

protections for essential businesses.

With over 580 signers, the letter points out that as the Biden Administration strives to reopen schools, protect our nation’s health and strengthen our economy, liability protections will help safeguard educational institutions, healthcare providers, businesses and non-profit organizations from unfair lawsuits.

NGA will continue advocating on behalf of independent grocers for liability protections.

NGA members have been on the frontlines serving communities since the beginning of the pandemic and should be protected from unfair lawsuits.

On the first day of President Biden’s inauguration, NGA sent a letter outlining key priority issues for the independent supermarket industry, including liability protections, tax relief for frontline workers, and less regulation and taxes. NGA members operate on slim 1 to 2 percent profit margins in a competitive industry and often serve disadvantaged areas. Any increase in costs could force them to hire fewer workers or close their business.

In the letter, NGA also highlighted how independent grocers are going above and beyond during the pandemic to reward their essential employees for their hard work and dedication.

WASHINGTON REPORT

A recent NGA/FMS Solutions study shows more than 85 percent of independent grocers are paying associates above their current hourly rates and salaries, including an additional $2 per hour hero (hazard) pay, gift card bonuses, lump sum bonuses, and other benefits. However, NGA believes frontline workers deserve temporary income and payroll tax relief.

notice-and-comment rulemaking process so that regulated industries can provide input on any new workplace safety proposals before they are finalized.

After nearly a year on the frontlines of the crisis, independent grocers have been at the tip of the spear in adopting and implementing safe public health practices in a food retail environment. NGA believes OSHA and the public would be better served

“NGA highlighted how independent grocers are going above and beyond during the pandemic to reward their essential employees for their hard work and dedication.” iStock

Additionally, an executive order signed

by President Biden on day two of his presidency is leading OSHA to quickly revamp workplace safety regulations to better address the spread of Covid-19.

OSHA has until mid-March to consider an Emergency Temporary Standard which would impose new enforceable workplace safety regulations on employers and likely create significant new obligations on grocers nationwide.

if the agency pursues a meaningful dialogue with our industry rather than rushing through burdensome regulations that could harm grocers, their employees, and their customers.

NGA is concerned that OSHA will draft a rule without considering stakeholder input in a rushed and expedited fashion that could impose greater regulatory burdens and lead to unintended consequences. NGA sent a letter to OSHA, the White House, and Committee leaders in Congress calling on OSHA to instead pursue a formal

As an industry employing nearly a million workers on the frontlines of the pandemic, it’s important for Congress to hear from you.

With the help of our members, NGA will continue working with Congress and the White House to gain support for relief and assistance that makes it easier for independent grocers to fulfil their mission during the Covid-19 pandemic.

For more information on these issues and how you can make your voice heard in Washington, DC, visit www.grocerstakeaction.org. ■

CAL I FO RNIA GRO CER | 19

What’s Poppin’:

Pop Up Grocer in NYC. Photo by Heidis Bridge

the retailer

Small in Size, Big in Clout

By Trish Moratto

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In 2021, consumers are numbing their thumbs scrolling through Instagram. In the process, they are constantly bombarded with strategically targeted ads for custom-advertised products. Last year, shoppers added goods to their carts to balance their macros, soothe with CBD and plump with collagen packets. This year, direct-to-consumer grocery shopping is gaining ground, bringing the missing in-person element to the coveted emerging goods category.

For early-stage brands, finding the right venue to reach customers is valuable. That’s where Pop Up Grocer comes in. The company curates a small assortment of emerging goods and sells them for a limited duration of time. The goal is discovery – to connect the up-and-coming product with the curious shopper.

From apple cider vinegar gummies and kelp jerky to plant-based lamb, Pop Up Grocer is connecting the dots between brands and adventurous consumers. And not just any consumers: the early adopters – those searching for the new and next best thing, be it for their professional education or their culinary passion.

Emily Schildt is the founder and CEO at Pop Up Grocer. Before launching this direct-to-consumer concept (which she describes as a fusion of tradeshow, grocery store and museum), Schildt enjoyed a career as a brand marketing consultant.

The work of launching new products to market helped her identify an industry void.

“From an aesthetic perspective, launching into traditional retail can be pretty lackluster,” says Schildt.

Her goal? To create an experience where “invested individuals” like shoppers, influencers, venture capitalists and buyers can discover and explore new products. Pop Up Grocer was born from the desire to create that ideal physical environment.

upending the traditional model

Pop Up Grocer started as an experiment. The initial idea quickly caught fire and morphed into a shop featuring 350 products. The pop-up market runs for 30 days in trendy locations, such as Venice, Austin and New York.

Between abundant media coverage and social media attention, Schildt quickly realized she had found an untapped opportunity. This spring the sixth Pop Up Grocer will open in Chicago.

The Pop Up Grocer model completely bypasses distributors. Brands approximate the inventory necessary for 30 days and ship directly to the pop-up location. Products are then sold on consignment, and brands can opt for their excess inventory to be shipped back or donated to local food banks. Pop Up Grocer charges a 20 percent showcase fee, and the brand is paid for 80 percent of the sale. Brands set their own retail prices.

Continued on page 22 ▶

CAL I FO RNIA GRO CER | 21

Pop Up Grocer in NYC. Photo by Heidis Bridge

Pop Up Grocer in NYC. Photo by Heidis Bridge

“pop up grocer was born from the desire to create that ideal physical environment.” ◀ Continued from page 21

Comparatively, in a traditional retail model, the brands would pay a host of fees to retailers, including slotting fees, broker fees and marketing fees. Plus, brands would also endure additional costs from the intermediaries, costs they can forgo with the Pop Up Grocer model.

“We provide an efficient and direct path to market for modern brands,” says Schildt.

“For smaller companies, it can be challenging and costly to get shelf space. Pop Up Grocer provides exposure to thousands of consumers, members of the media, buyers and influences. Getting a modern brand’s products in front of those meaningful individuals is critical.”

This type of direct-to-consumer model is not revolutionary, but it has gained traction in recent years with breakout retailers like Beta, Showfield, Naked Retail and Neighborhood Goods. Schildt says she hasn’t seen any direct competition yet in the grocery space, but recognizes the model is growing across industries. In the model, brands are charged for only a fraction of the overall square footage compared to having a full-sized store and participate in what amounts to a revenue-sharing model.

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With this structure, Pop Up Grocer falls in the center of the Venn diagram between e-commerce and traditional brick-andmortar retail. The company entices customers with cache food, beverage, home, pet, and body care products that aren’t widely available in the market. And the allure of the newest trend excites consumers.

“We also offer factors missing from the e-commerce experience,” says Schildt.

“Once on-site, shoppers have the education, humanity and interactions that are missing from online-only retailers.”

take a look

Although many brands solicit Pop Up Grocer for a spot on its shelves, the company is committed to only curating items that meet three criteria.

1. Is the product interesting, innovative and creative? Is the brand introducing something different, novel and intriguing? Is the brand sustainable?

2. For food products, how high-quality are the ingredients? Is the company using responsible sourcing?

3. How eye-catching is the packaging?

Pop Up Grocer believes people shop with their eyes, so the appearance needs to captivate.

The goal of having these criteria in place is simple: to enhance the relationship with the items shoppers can discover. Most brands Pop Up Grocer selects come from brand partners and community referrals.

Even with referrals, adhering to the three criteria and running a new business during the era of the coronavirus has not been without challenges.

“We had to adjust timing. All our in-store operations were masked, and we developed sanitation practices and limited the store’s occupancy to six to eight guests at a time,” says Schildt.

Attending events has generally come to a halt in pandemic-times, so this grocerymeets-event provides an experience that brings joy and excitement to shoppers in a safe and exciting way. And it’s doing so at a time when shopping and eating habits are changing in response to the pandemic.

Pop Up Grocer in Los Angeles. Photo by Anna Beeke

With less time lost to commutes, shoppers are cooking at home and have more time to dedicate to meal preparation.

Those combined factors have translated into traffic for Pop Up Grocer, consistent with pre-Covid-19 times as grocery stores haven’t experienced closures. For that, Schildt says, she is grateful.

high praise

One of the emerging brands that is partnering with Pop Up Grocer to stock pop-up shelves is Gossamer, which describes itself as a company “for people who also smoke weed.”

In 2016, Gossamer launched as a lifestyle magazine that covers travel, design, art, culture and food – all through a green lens. The graphic design, photo essays and product recommendations offer an approach to cannabis that is unique – and arguably more sophisticated – in an industry that has come into bloom in recent years.

Gossamer sells edible CBD treats that taste as good as they look and a duo of nighttime and morning CBD tinctures.

Those tinctures, “Dusk” and “Dawn,” are representative of products that fit naturally with the Pop Up Grocer model.

The packaging is eye-catching and modern, and the products also ultimately fill a unique niche since the market is not saturated with CBD Turkish delights or morning CBD that pairs well with coffee.

Gossamer has been on the shelf at Pop Up Grocer since its first location in Brooklyn, New York. The two organizations worked together for the CBD X Gossamer collection.

The relationship is symbiotic. Gossamer brings credibility to the curation at Pop Up Grocer with a deep understanding of testing, quality, ingredients, efficacy and approvals.

“There are murky and disingenuous brands out there on the market,” said Verena von Pfetten, co-founder of Gossamer. “Often cannabis products are marketed by how to get the highest for the cheapest. That’s a total disconnect from the community we serve

and our relationship with the plant. We insist on third-party testing to ensure all the claims on the package match the results.” von Pfetten says a goal with Gossamer is to destigmatize cannabis use by putting the product alongside items consumers are comfortable with.

Customers find the CBD products adjacent to cheese made from sunflowers and upcycled carrots.

Pop Up Grocer in Los Angeles. Photo by Anna Beeke

“the pop up grocer concept may provide a new path to consumer exposure that doesn’t necessarily exist otherwise.”

With Pop Up Grocer, Gossamer customers also have engagement with staff, which can really educate shoppers, especially with costs running around $65 for a one-ounce bottle of product.The product recommendations and usage tips from an evangelist can help convert the sale, which is a dynamic that Pop Up Grocer provides that traditional online or brick-and-mortar sales can’t always offer.

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iStock

“the model creates the potential for consumers to be so excited about the in-store experience that they then go back online to share about it.”

iStock

◀ Continued from page 23

the experience economy

Pop Up Grocer is also a natural fit as the economy becomes more experience-driven.

“This model is something we need to rediscover with food, in this digicentric world,” says entrepreneur Will Rosenzweig.

“So much about food is our live interaction with individual products.”

Rosenzweig has a lifetime of experience watching brands launch into the marketplace.

As an entrepreneur, investor and advisor to entrepreneurs through his work at the Haas School of Business at the University of California, Berkey, Rosenzweig can identify a good idea when he sees one. For him, the concept of Pop Up Grocer harkens back to when he was the founder and first CEO of The Republic of Tea. To make impressions on consumers, he would stand in front of grocery stores and Macy’s serving tea.

“Especially for the early part of a product launch, the Pop Up Grocer concept may provide a new path to consumer exposure that doesn’t necessarily exist otherwise,”

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says Rosenzweig. “People are often so busy that they aren’t going into the grocery store and really spending time reading about the products.”

Pop Up Grocer is helping bridge shoppers from a digital realm into an in-person experiential realm. Indeed, the model creates the potential for consumers to be so excited about the in-store experience that they then go back online to share about it.

According to Rosenzweig, Pop Up Grocer also bypasses the very real vulnerabilities many small brands faced in 2020 and into 2021, with their reliance on co-packers.

There has been such a proliferation of small direct-to-consumer companies that have small runs and face abundant challenges in scaling up and meeting demand. The pop-up model inherently avoids the fall out of this problem, avoiding the empty shelves seen at large retailers when enough inventory can’t be secured.

Schildt herself recognizes that Pop Up Grocer does not offer space for long-term sales in a reliable way.

Rosenzweig also explores questions about the long-term strategy for Pop Up Grocer: How far will people actually drive to visit?

It’s an unusual time given Covid-19 and various workers’ issues. Is the initial success sustainable? How will Pop Up Grocer produce a long-term competitive advantage?

If the model gains ground, how will large retailers respond? He does, however, nod to the concept as being inherently fun, “like theater.”

The question Rosenzweig poses about how retailers could respond will be tied into the bandwidth large corporate retailers have to be proactive. “So many business choices in 2020 were reactively made in order to handle the pandemic,” he says.

“It’s wonderful that Pop Up Grocer is off to the races,” says Rosenzweig.

“But remember, it takes 15 years to become an overnight success.” ■

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 The Golden State’s favorite grocer. And we’re proud to employ more than 76,000 hard-working, talented Californians in our stores and other facilities..

To us local means…

fresher | better | California

Christopher Vega on Unsplash

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By Nate Rose

At the end of November, Rachel Wagoner was appointed by Gov. Gavin Newson to tackle some of California’s most complicated environmental policy issues.

Can you outline your political experience for us and how you came to lead CalRecycle?

“I have worked in and around the Capitol for more than 20 years. Previous to being appointed director, I had the honor and privilege to work for Governor Newsom as part of his legislative unit working on issues related to environmental quality, energy, natural resource protection, and agriculture.

“Prior to that, I spent a decade working for the California State Senate in its Environmental Quality Committee. I was the chief consultant to that committee.

So really, I have dedicated my career to environmental quality, and it is the true passion of my career – helping solve California’s environmental problems through creative problem solving and unique solutions that engage all Californians.

“I’ve had the incredible honor to work on so many important issues. But at the end of last year, I was talking to Governor Newsom and (how) building a foundation for a circular economy for California is really important to him. He asked me to take on this job of building out a circular economy for the state.”

How did you arrive at this passion for environmental policy?

“I was a fellow in Governor Gray Davis’s office in 1998 and worked in his legislative unit. I was working for his legislative secretary, who asked me to work on

legislation related to building schools on formerly-contaminated land. There was a huge site in Los Angeles where a very large school complex had been built.

It was very controversial at the time.

“I beca me really impa s s io n e d ab o ut t h e inte r s e c t io n be t w e e n w hat w e d o in an d t o the e n v iro n me n t an d how t hat in t e r s e c t s in eve ry day life .”

“Ultimately, it ended up not being able to be used because it was built on a former oil field. So legislatures and the administration was interested in making sure we had statutory assurances to make sure we didn’t ever build schools on contaminated property again.

“Rick Simpson, who was the Governor’s legislative secretary at the time, said, ‘Here go work on this,’ and I said ‘Okay, I don’t have any idea what I’m doing.’ But it was fantastic, and I became really impassioned about the intersection between what we do in and to the environment and how that intersects in everyday life.

“If you think about how the environment intersects every day in your life through the air you breathe, the water you drink, ultimately the garbage or waste or trash we are throwing away, or hopefully not throwing away, we interact with our environment each and every day. That’s really what sparked my passion.”

Because your past experience is on the legislative side, rather than regulatory, do you bring something new to CalRecycle in terms of your policymaking mentality?

“That’s such a good question.

I really hope and think that I do. Having worked in the Legislature with the members that are currently there, and the members prior to them, I feel I can speak to what they are intending to do around public policy and what they would like us to accomplish. I think I help bring that perspective into the regulatory world.

“I am so excited for the opportunity to implement some of these programs I was able to help craft the statute around and was there as a committee consultant or staff working through the legislation – I now get the incredible privilege of helping to implement that and bring it to fruition.

Continued on page 28 ▶

CAL I FO RNIA GRO CER | 27

“ W hat w e are t h inki ng ab o ut is h ow d o we b uild a syst e m w h e re t h e man ufac t ure r , at t h e v e ry be g in n ing of t h e life o f t h is it e m , i s t h in k in g ab o ut h ow d o w e g i v e it a n e x t li f e an d a life aft e r t hat.” ◀ Continued from page 41 iStock ◀ Continued from page 27

“I think of things like the SB 1383 statute.* The regulations were just adopted prior to my arrival here at CalRecycle. I get the incredible honor to help this department implement those.

“And so as we go, and as we are working with jurisdictions to implement those regulations, I can say, ‘instead of my conversations with Senator Lara, or in my conversations with Senator Wieckowski or my conversation with Senator Hill – this is what we were talking about.

“So I think I bring some of that legislative perspective to that conversation, and then I get to help make it real.”

Earlier you mentioned the circular economy. What is the circular economy and how do you think about it in terms of policymaking?

“When we think about the circular economy, at the simplest level, a manufacturer manufactures a consumer good that you then buy and you use.

When you are done with whatever that thing is, whether it’s a bottle that you use

once or a toothbrush you use many times, or even your clothing and your textiles; when you are done with whatever that system is, what happens to it next?

modernizing the beverage container, so the ‘Bottle Bill’ program. Stabilizing that program and making it as successful as possible.

“What we’re trying to build here in California is the idea that this isn’t linear.

It doesn’t just go into a trash can that goes to die in a landfill and breakdown and produce methane and other contaminants.

What we are thinking about is how do we build a system where the manufacturer, at the very beginning of the life of this item, is thinking about how do we give it a next life and a life after that. So there is a continuous circle for that water bottle, or that pair of jeans. How do we design what we are using to have an infinite life so that we actually get out of the landfill business?”

“The second piece of that plan is full implementation of SB 1383 by Senator Lara which is the organics bill, and launching that in the most successful way possible to meet its goals.

Do you have a 90-day plan or a list of priorities you are targeting for your first year as director?

“I have a 2021 priority list that I built with my executive staff at CalRecycle. One, is to start building that foundation for the circular economy. Within that is included

“Third, would be stabilizing the recycling program so that we can meet the targets that exist in statute for the bottle bill for organics, and all our other recyclables. I think it sets the foundation we’re looking for in the circular economy and saying, ‘look these are the kinds of programs we can build and we can do more of this.’”

How would you characterize the current state of the bottle bill?

“There’s always room for improvement right?

There’s work we can do across the board.

I think Californians are legs above much of the rest of the country in our understanding of the need to recycle and our commitment to doing that.

*SB 1383 requires a 50 percent reduction in organic waste disposal from 2014 levels by 2020, and a 75 percent reduction by 2025 – essentially requiring the diversion of up to 27 million tons of organic waste – to reduce greenhouse gas (GHG) emissions. In addition, SB 1383 requires that not less than 20 percent of edible food that is currently disposed be recovered for human consumption by 2025.

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“The beverage container program is actually very successful in the context of what we get that is recyclable and is being recycled. 71 percent of the beverage containers were recycled last year from the beverage container program. So the high number of clean feedstock that we get out of that program is really good.

But it is a little bit of a clunky program.

“It was created in 1986, and it doesn’t serve all of our consumers to the best of its ability.

So I do think the government could do more, that we could do more, to modernize the program to make it more accessible to consumer, easier to access and really truly function better. I know there’s great legislative interest in doing that, and I look forward to working with them to do that.”

It seems like a lot of people point to China refusing to take back some of our recyclables as a wake-up call in terms of how people think about recycling?

“When (Project) National Sword happened a couple of years ago, and China decided it was no longer taking a lot of our feedstock, it really did call into question whether or not our system worked and whether we understood what was happening with our recycling system. It called into question whether we were doing the best we could do.

“That’s why when I talk to the secretary of Cal EPA, or the Governor, and I would talk about this issue, we would say we need to build the missing links of the economy here in California for the people of California.

We need to be working with California manufacturers to build products that are easily recyclable here in the state of Californian and easily manufacture red into their next life.

“That is the role that government can play in helping set up that system so that consumers can feel confident when they are putting things in the blue bin that it is truly being recycled and going into its next life.”

Curre n t Bev e r ag e Contain e r Re c yc lin g Pro g r a m Pil o t Pro je c t s

iStock

AB 54 (Ting, Chapter 793, Statutes of 2019) approved the expenditure of up to $5,000,000 to support up to 5 pilot projects approved by CalRecycle under SB 458 (Wiener, Chapter 648 Statutes of 2017). CalRecycle currently has 5 approved pilot projects in the jurisdictions of:

San Francisco San Francisco’s pilot project combines a traditional recycling center site with a bag-drop collection program that will use collection bins at various locations throughout the city. Consumers will be able to locate collection bins using their mobile phone, drop their tagged bag of empty beverage containers in the bin, and receive electronic payment for their materials after the material is processed.

Culver City Culver City’s pilot project features a mobile redemption center that will rotate between two selected locations six days a week for a total of 43 hours. The city and pilot project recycler may add additional locations in the future.

San Mateo County San Mateo County’s pilot project was designed to overcome local challenges like high real estate costs, limited parking, and neighborhood opposition to new CRV take-back sites. The project will establish three additional fixed CRV take-back operations at nontraditional community locations. Each site will include a 20-foot metal shipping container to store equipment and materials.

Irvine Irvine’s pilot program was designed to help overcome local code restrictions that limit new take-back sites in the city. Customers can place empty containers into a marked bag, schedule a residential pickup (by phone or online), and receive payment via mailed check, PayPal, Venmo, Zelle Pay, debit, or charitable donation after the material is processed.

Sonoma County – Cities of Santa Rosa, Petaluma, Sonoma, Sebastopol, Healdsburg, and Cloverdale Sonoma County’s pilot project was designed by a coalition of six cities with diverse regional needs. It establishes 10 new bag drop locations in the cities that allow consumers to drop off tagged bags of material and receive CRV payments electronically after the material is processed.

Continued on page 30 ▶

CAL I FO RNIA GRO CER | 29

Request f or Additio nal Beve r age Containe r Re c yc lin g Pro gr am Pilot Pro je c t s Governor Gavin Newsom’s proposed budget (released on Jan. 8, 2021) includes an additional $10 million for the Pilot Program and authority for CalRecycle to approve an additional 5 pilot projects.

✓ CalRecycle requested $5,000,000 in fiscal year 2020–21 and $5,000,000 in fiscal year 2021–22 from the Beverage Container Recycling Fund to augment the Beverage Container Recycling Pilot Project Program.

✓ The proposal also proposes statutory changes such as authorizing an additional 5 pilot projects and extending the program sunset date to December 31, 2025.

✓ The Beverage Container Recycling Pilot Project Program provides grants to jurisdictions to expand consumer convenience to recycle beverage containers in rural areas and areas underserved by recycling centers.

◀ Continued from page 29

When you think about your policymaking style, are you an incrementalist or do you like to take big swings?

“I am not an incrementalist unless it’s necessary. I think when you talk about policy questions or legislative questions you ask yourself what are you solving for and you set out on the best path for solving that problem. Sometimes that’s an incremental path, but I’m always in support of getting to a solution to a problem as quickly as possible.”

What do you think the appetite is for a fix to the Bottle Bill?

“The long and short of it is all the stakeholders need to come to the table with a willingness to come up with a solution. The complexity of the Bottle Bill is that everybody needs to give something in order to fix the system.

“At the end of the day, it has been limping along for a number of years now, and it can’t sustain the current system. It’s really, in my mind, a question of when do the stakeholders come to the table with a willingness to fix it and how broken does it have to be.

30 | CAL I FOR N I A G R OC E R

“I think for the Legislature, it’s as broken as they want it to get. I say that as a former legislative staffer and having had conversations with them in my previous position.

in both schools of thought, and I really just offer myself as a resource to help them build whichever direction they want to go.”

How closely have you followed the recycling pilot projects happening across the state?

“I’m really excited about the pilot projects.

Those were funded in the 2018–19 budget, and the funding was fully allocated to five separate pilot projects around the state.

They all now have received their funding, and they’re all now getting up in running.

“I think Culver City is the one that has opened its doors to stores. They’re all trying different things. San Francisco is looking to site some reverse vending machines. We have mobile redemption centers in Culver City, and I believe also in San Francisco. San Mateo is adding three CRV-takeback locations. Up in Sonoma County they are doing a consumer bag and tag CRV material drop off.

“It’s really interesting how we are testing different types of systems to see if we can provide greater consumer access to this system. The Governor’s current budget contains five more pilot projects and actually seeks “Some t ime s t hat ’s an to fund those in the current incre me n tal pat h , b ut budget year, so mid-year, and add an additional chunk of I’m always in supp o rt o f money for the budget year so get t in g t o a s o l ut io n we can actually expand this.

t o a pro ble m a s

quick ly a s p o s s ible .”

“You know Senator Wieckowski has legislation on it this year. It comes up every year during the budget conversations. Even though this program is successful it cannot sustain itself under its current structure.

“And so it becomes a question, in my mind, as to whether the Legislature, with their stakeholders and their constituents – whether they want to fix the program as it is or build something new and what does modernization look like. There are camps

“I think there’s a really exciting opportunity to explore ways that we can tailor solutions to bottle bill challenges in different regions of the state by testing some of these other technologies.”

So it’s not just a moonshot?

These programs have the potential to scale.

“Oh absolutely, and I think it will advise future changes to this program. I think it absolutely has that potential.

Jonathan Chng on Unsplash

iStock

“It’s interesting, I’ve had conversations with very large jurisdictions that are testing this out and some rural jurisdictions that are very interested in being involved with future pilot projects. Because as is illustrated in our current situation, every area of the state is kind of having different types of challenges and so different types of solutions to these challenges, as opposed to a one size fits all, presents a huge opportunity for the bottle bill and beyond.”

For the Bottle Bill, are there specific models you are looking at as inspiration?

“We’re looking at all types of models.

That’s, to my mind, the fun of this. It is working with jurisdictions to look at all of the potential solutions and loosening up some of those requirements in the current statute so that they can explore some opportunities and really see how that could potentially be a great benefit.”

“I thin k t h e re ’s a really excit in g o pp o rt un it y t o expl o re ways t hat w e can tail o r s o l ut io n s t o b ot tle bill c halle n g e s in diffe re n t re g io n s of th e stat e by t e st in g some o f t h e s e o t h e r te ch n o l o g ie s.”

You brought up organics earlier, can you dive a bit further into your focus on that policy category?

“This is a huge one, and I know that your members already participate immensely and are huge stewards of our efforts to decrease and reduce as much organic waste as humanly possible.

“And one of the big things I’m excited about working on is food recovery and the opportunities where we can get food prior to it becoming waste and really helping serve the community. I know Ralphs, Raley’s, Safeway; a lot of your members are really working hard on this front and look for opportunities to get this food out to the community to help serve people.

“Right now, that is so critically important with one in five Californians being food insecure. Where we have children hungry every day. It is critically important that we figure out how to reduce the waste and massive impact on the climate by creating organics waste, but how do we turn that around and make it a win to serve our communities. Organics is one of my top priorities this year.” ■

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A MORE TURBULENT FUTURE

By Len Lewis

In catching up with the latest research on what the postpandemic retail world will look like, Covid-19 appears to be a test run for operating in retail’s disjointed future.

Will consumers be coming back to your stores for that old time shopping trip or will direct-to-consumer strategies become the norm in a post-Covid world and permanently change the face of retailing?

These are questions that a broad spectrum of retailers on the domestic and international scene are wrestling with as the world enters the second year of the devastating pandemic with only a faint glimmer of light at the end of the tunnel.

But is it an issue that’s becoming increasingly irrelevant since no one will emerge from this social and economic debacle unscathed or unchanged? To survive and, hopefully, flourish retailers must retool for recovery by adopting a consumer-first attitude that includes enhancing the in–store experience as well as preparing for a new era of “touchless” selling.

Commenting on its recent CEO survey, Bain & Co. noted: “They view the Covid-19 crisis as a dress rehearsal for a more turbulent world to come.”

Much of this turbulence will be the result of e-commerce which has jumped five years ahead of it time and industry observers will be forced to up their investments in online selling and marketing.

“If 2020 has taught us anything, it’s that nothing is outside the realm of possibility as far as the future goes,” says Ciaran Bollard, CEO of Kooomo, an ecommerce platform provider. “Brick and mortar retailers were forced to place digital transformation at the top of their agendas and online retailers have had to respond to the immediate, and unprecedented changes to consumer behavior at the hands of Covid-19.

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“To survive and, hopefully, flourish, retailers must retool for recovery by adopting a consumer-first attitude that includes enhancing the in–store experience as well as preparing for a new era of ‘touchless’ selling.”

“2021 is set to be an exciting year,” Bollard added. “There may be some difficult times ahead for the industry as a whole. But retailers who implement these strategies, and other innovations will differentiate themselves from their competitors and have a better chance of succeeding.”

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This may be the key to battling Amazon’s increasingly pervasive presence in retailing.

Joe Jensen, vice president of Intel’s IoT group and general manager of retail, banking, hospitality and education has said, “consumers want to remove all the friction and hassle from their life. They’ll gravitate toward what’s easiest every time. So while price is important, experience is even more so. Retailers may blame Amazon for the challenges they face,

but in reality it is about rapidly changing consumer expectations. Online retailers like Amazon have simply been nimbler in meeting these needs.”

That may be changing as well, according to observers who note that Walmart is expanding its use of robotics to speed up order fulfillment times in order to defend its position against Amazon Prime’s membership model. At present, the chain is planning to build 20,000–35,000-squarefoot within or next to specific stores to cut fulfillment and delivery times.

“What we want to do is fill as many orders as we can,” said Tom Ward, Walmart’s senior vice president of customer product.

“The system allows us to pick orders and dispense them with great speed.” Details of the time savings have yet to be released.

But the issue is much broader than online selling, industry observers said.

Retailers have to prove to consumers that their stores are worth visiting and not just dark store repositories for toilet paper, paper towels and sanitizers.

“It is an opportunity for flexible retailers to rebrand themselves by keeping consumers center stage in everything from the in-store experience to supply chain strategies,” one consultant noted.

This rebranding process could include new locations as well as formats. A business brief

by Retail Dive said that with traffic down nearly 50 percent, some normally popular malls are retooling leases as they come out of the pandemic. This includes inviting in new non-retail tenants, according to market research firm Placer.ai.

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Additionally, the company found that pandemic-related trends will continue, including a boom by value-oriented retailers like dollar stores and other deep discounters, warehouse clubs, Walmart and Target. Still unclear is whether the exodus from the cities like New York

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“The pandemic has forced people and companies to try out these new fulfillment methods, in effect normalizing them.” which experienced a 42 percent drop in population, could lead to a new retail mix on suburban streets or in malls.

Disinfectants, air purifiers and touchless gadgets were also presented by appliance companies including Kohler and LG.

reported. One example is the Breakfast Club chain, which is using QR code on tables to direct people to its online menu.

This indicates a geographic shift among consumers, which could lead some retailers who cater primarily to city shoppers to follow them into suburban areas.

The focus was also on home delivery and curb pickup of online purchases, both of which are likely to continue post pandemic, according to retailers like Corie Barry, ceo of Best Buy. Speaking at a CES session she noted: “The pandemic has forced people and companies to try out these new fulfillment methods, in effect normalizing them.”

On another front, British cosmetics retailer Lush has introduced an app called Lush Lens, which customers use to scan products and read the packaging for information without having to touch the products.

Meantime, consumer habits data from Accenture indicate that ecommerce purchasing will increase an estimated 169 percent in the post-pandemic period not only due to health and safety issues but the fact that 86 percent of consumers surveyed plan to continue working from home.

This was evident at this year’s virtual CES event where many products were geared to safety and comfort. For example, Targus introduced a number of products for disinfecting workstations.

Dell introduced a monitor designed specifically for angled videoconferencing calls and Shure has a new microphone to enhance sound quality during zoom calls.

This may be the key to retail survival, according to a McKinsey & Co., survey which revealed that 67 percent of consumers are optimistic that businesses will recover if they implement sustainable long-term solutions.

Although the question of when more people will return to physical shopping trips remains up in the air, it will involve technology that makes them feel safe. As such, many restaurants have introduced digital menus, enabling customers from touching things others have handled, Computer Weekly

In the U.S. Moosejaw, an outdoor apparel retailer is giving tablets to store employees who scan QR codes on garments and then ask customers a few questions about their body type in order to get them the best fit without using changing rooms. This combines the demand for personalization with safety.

And since April, Frasers Property at malls in Singapore has been using mobile robots that emit UV disinfecting light in order to insure shopper safety and to reduce the amount of labor needed for cleaning.

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“Although the question of when more people will return to physical shopping trips remains up in the air, it will involve technology that makes them feel safe.” iStock

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Emerging from the pandemic also means developing ways to avoid potential disruptions in the supply chain and discouraging panic buying. As such, growth in product sales will continue after the pandemic, but not at as rapid a pace, according to McKinsey. This includes an estimated 9 percent increase in purchase of household supplies; nine percent in over-the-counter drugs and seven percent in groceries, compared with a 15 percent increase prior to the pandemic.

Any slowdown in growth can be traced to increased use of digital or low-contact channels. For example, eight percent of consumers intend to continue getting restaurant deliveries, and 11 percent will maintain grocery delivery, bringing to 51 percent the total percentage of consumers using the latter service. Along these lines, nine percent more consumers are expected to use BOPIS (buy-online-pickup-in-store) after Covid. This rises to 12 percent for curbside pickup.

As online capabilities become more ubiquitous, retailers have to explore new ways to differentiate themselves from competitors and prove their value, according to McKinsey. This includes delivery speed,

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wider assortment and personalization.

However, it also puts productivity under pressure, resulting in the need for more expensive logistics systems to handle higher inventory needed for increased customer demand, it was noted.

Here, the question is not only whether companies are wiling to make these and other changes, but to stick with them once the Covid crisis in the rear view.

This was one of the conclusions in a report from PwC global strategy leaders Blair Sheppard and Kevin Burrowes which stated: “With the arrival of vaccines that hold out the possibility of a resumption of many activities, companies will actually face their biggest test – can they make fundamental change decisions in an accelerated timeline.

Are they able to apply, in a post-virus environment, the agile and crisply executed managerial processes they embraced when survival was at risk?

Companies also have to think about unintended consequences, they said.

“Some meat packers ignored worker safety to maintain profits and that choice came back to harm them in fines and reputation. ■

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!

OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES

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Influencing others in a zoom call or other virtual meetings isn’t easy.

But there are some rules to follow, according to Karlin Sloan ceo, Sloan Group International, a leadership development firm. Tips for virtual success include: ✓ Don’t fold your arms ✓ Look into the camera and not yourself onscreen ✓ Use hand gestures and facial expressions to convey messages ✓ Avoid fidgeting

DIGITAL CHARISMA

✓ Make sure you are well lit ✓ Smile. People respond positively

MARKETING UNREST

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In the wake of the Capitol Hill riot, Ad Age has started a blog tracking the marketing industry’s response to the recent political unrest. The magazine said it would be updated regularly with information on how marketers and agencies are responding to the situation.

Restaurants To Go Eateries used to celebrate “Restaurant Week” with in house dining specials. Now, it’s about pandemicsafe dining. The celebration is still going on across the country, but it’s all about takeout with special menus and deals. It’s been so successful that New York City recently extended its off-premise event.

In Ann Arbor, Michigan, Restaurant Week now includes Zoom cooking demos and prerecorded video tutorials.

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Mob Mentality

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Comparing corporate culture with criminal enterprises is not always a bad thing, according to a new book called Relentless: The Forensics of Mobsters’ Business Practices. Certain practices will simply help build a stronger company. This includes: decentralized decision-making; long-term recruiting mechanisms; and an incredibly strong culture.

OUTSIDE THE BOX

Dog Days iStock

CHILD’S PLAY

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First there was Chubby Hubby and Cherry Garcia. Now Ben & Jerry’s has unveiled Doggie Desserts with a sunflower butter base that is gentler on a dog’s stomach than dairy. The first flavors are named after the founders’ dogs – Ponch’s Mix, which is peanut butter and pretzels and Rose’s Batch, pumpkin an cookie mix.

Falling Out

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2020 was a record year for bankruptcies but 2021 might not be much better with a BDO survey reporting that 42 percent of retailers expect to restructure or reorganize this year as a result of the pandemic and a difficult financial environment. On the bright side 48 percent are making further investment in digital transformation including ecommerce but also in physical store.

Time to EGG-cecute

A new generation of entrepreneurs is on their way.

Twenty-two-year-old Nick Hamburger and Zack Schreier invented a line of healthy, egg white-based chips called Quevos and have received a $400,000 investment, or 10 percent of the company, on the ABC TV reality show “Shark Tank” from Daniel Lubetzky, who invented Kind Bars. “We were hoping to make a deal with Daniel because he’s amazingly experienced and successful in [the] healthy-food space,” Hamburger said.

One of the few bright pots last year was in the toy industry where sales rose to $25.1 billion, up 16 percent from the prior year.

Families in lockdown shifted disposable income from other types of entertainment.

Sales spiked 38 percent in May, a month after federal stimulus checks were distributed.

Sales of sports toys such as skateboards and scooters rose the most, followed by fashion dolls and accessories and building sets like Legos, said NPD research.

The NEW Loyalty iStock

Loyalty isn’t what they used to be. Instead of asking customers to be loyal, restaurants are using AI to get to IA. In other words getting data from artificial intelligence to develop individual action programs that can predict customer behavior and personalize the dining experience. Surveys indicate that 68 percent of restaurants are investing in like this over the next few years.

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CGA gives me a voice in Sacramento that I otherwise wouldn’t have. Through CGA I’ve been able to lobby directly with elected officials and their staff on issues that effect my business.

RICK STEWART, PRESIDENT SUSANVILLE SUPERMARKET ONE STORE – SUSANVILLE, CA

Want to learn more about the benefits to CGA membership?

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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CGA NEWS NEW MEMBERS CGA welcomes the following members:

Boney’s Bayside Market 155 Orange Ave Coronado, CA 92118 Contact: Debbie-Lyn Carter, Bookkeeper Phone: (619) 435-0776 Website: baysidemarket.com

Dri Mark Products Inc. 99 South Oyster Bay Rd Ste 312 Bethpage, NY 11714 Contact: Michelle Knabbe, Marketing Manager E-mail: michelle@drimark.com Phone: (516) 484-6200 Website: drimark.com

Good Earth Natural Foods, Inc. 720 Center Blvd Fairfax, CA 94930 Contact: Al Baylacq, Owner/Partner Phone: (415) 454-0123 Website: genatural.com

Hamilton Meats & Provisions 3515 Main St Ste 208 Chula Vista, CA 91911 Contact: Jason Paolini, General Manager E-mail: jpaolini@hamiltonmeat.com Phone: (866) 796-3287 Website: hamiltonmeat.com

Leading Edge Power Solutions 4343 Von Karman Ave Ste 250-C Newport Beach, CA 92660 Contact: Mimi Walter, Chief Commercial Officer E-mail: mimi@lepsenergy.com Phone: (949) 476-1000 Website: lepsenergy.com

Little Diversified Architectural Consulting 1901 Newport Blvd Ste 300 Costa Mesa, CA 92627 Contact: Henry Kwon, Studio Principal E-mail: henry.kwon@littleonline.com Phone: (949) 698-1403 Website: littleonline.com

Morandell Imports 17107 S Figueroa St Gardena, CA 90248-3020 Contact: Carl Morandell, Sales Manager E-mail: cdm@morandell.us Phone: (310) 328-5010 Website: morandell.us

Mother’s Market & Kitchen 100 Kalmus Dr Costa Mesa, CA 92626 Contact: Chuck Kirk, Chief Financial Officer Phone: (714) 549-6400 Website: mothersmarket.com

Sacramento Natural Foods Co-op 2820 R St Sacramento, CA 95816 Contact: Sean K. Eakins, General Manager Phone: (916) 732-3101 Website: sac.coop

ShopEase (BuyKnowing Corp.)

555 Bryant St #237 Palo Alto, CA 94301 Contact: Bill Breck, VP, Operations E-mail: bbreck@shopease.us Phone: (650) 646-4931 Website: shopease.us

Sprouts Farmers Market (Ronald Cohn, Inc.) 690 3rd Ave Chula Vista, CA 91910 Contact: Zach Cohn, Co-Owner Phone: (619) 409-7630 Website: sproutscv.com

CAL I FO RNIA GRO CER | 43

MOMMY BLOGGER

The School of Life K I M B ER LY R A E M I L L ER WR ITER , ACTR ES S

Kids learn important life lessons when they shop with their parents.

I still have the unicorn party supplies I bought for my daughter’s first birthday in a box next to my desk. A year ago, as I called the bakery to cancel her birthday cake, I took comfort in the fact that if nothing else, I didn’t have to go to work on my baby’s first birthday. Next year, I thought, would be different.

It’s next year and it’s not different…yet.

The unicorn-themed plates and cups and party hats will have to wait one more year.

As we gear up for her second homebound birthday, I can’t wait to expose her to all the normal life stuff she’s missed in the last year.

At 22-months, she can’t remember ever going to a restaurant. She’s never had a play date, gone to a fair, picked an ice-pop from the ice cream truck or gleefully raced down grocery store aisles in a cart driven by her dad while I yell, “Stop, please don’t hit anyone!”

Grocery shopping with kids is, despite the unavoidable meltdowns, something I miss.

I miss seeing my son, who has never been much of an eater, get excited by food. I miss plotting our own baking projects as we roam the bakery section. I miss the way he tries to strike up conversations with everyone he sees.

For most of us, shopping for food is just a part of daily life, something we have to do, but for small children, it’s an adventure. The grocery store is where kids get to exercise a small amount of control, helping to choose family meals. It’s where they learn about commerce. Where they learn about nutrition.

It’s where they learn what is appropriate and inappropriate behavior. Where they discover foods from other cultures. Where they meet their neighbors. Sure, it’s where we buy food, but it’s also where we teach our kids important lessons about how to take care of themselves.

I took it for granted before, but when as the world opens back up, I’m looking forward to including my daughter into our grocery store adventures. I don’t know how many more years I have that my kids will actually want to roam the produce aisles with me, sneaking unwashed raspberries into their mouths despite my protestations.

The raspberries are a battle I’ll never win, so I’ll just savor it while it lasts.

Mark your calendars, next year we’re having one “rager” of a third birthday party. I hope you like unicorns. ■

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UNIQUE SKUs

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SELECTION BUILDING BETTER.

He’s going to need a bigger cart.

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