California Grocer, Issue 2, 2020

California

Keep California Safe Initiative Update PAGE 48

PSPS: Don’t Look Now PAGE 68 2020, ISSUE 2

CALIFORNIA GROCERS ASSOCIATION

Well Done!

During these unprecedented times, California’s grocery industry has served as a beacon of resiliency – sustaining the communities we serve by providing life’s essentials and a small sense of normalcy amidst uncertainty.

The California Grocers Association and the CGA Educational Foundation applaud the hundreds of thousands of hard-working grocery employees who continue to transport goods, stock shelves and serve customers, all while maintaining a safe and healthy shopping experience.

From frontline team members to grocery distribution centers, your perseverance and dedication has been vital for communities across California.

CGA | BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

CHAIR APPOINTMENTS

Chair Phil Miller C&S Wholesale Grocers

Second Vice Chair Renee Amen Super A Foods, Inc.

Secretary Lynn Melillo Bristol Farms

First Vice Chair Hee-Sook Nelson Gelson’s Markets

Treasurer Dennis Darling Foods Etc.

Immediate Past Chair Kendra Doyel Ralphs Grocery Company

Denny Belcastro Kimberly-Clark Corporation

Steve Dietz United Natural Foods, Inc.

Casey McQuaid E&J Gallo Winery

Independent Operators Committee Chair

Elliott Stone Mollie Stone’s Markets

DIRECTORS

Mark Arrington Post Consumer Brands

David Higginbotham Stater Bros. Markets

Joe Mueller Kellogg Company

Jeanne-ette Boshoff Molson Coors

Bryan Jankans Mondelēz International

Ken Mueller Raley’s

Bob Bukovec Tyson Foods, Inc.

Saj Khan Nugget Markets

Subriana Pierce Navigator Sales & Marketing

Pamela Burke Grocery Outlet, Inc.

Nancy Krystal Jelly Belly Candy Co.

Doug Christman Beverages & More, Inc.

Michel LeClerc North State Grocery Inc.

Chris Podesto Food 4 Less-Stockton/ Rancho San Miguel

Brent Cotten The Hershey Company

Hillen Lee Procter & Gamble

Willie Crocker Bimbo Bakeries USA

Hal Levitt The Save Mart Companies

DJ Deutsch California Fresh Market

John Mastropaolo Chobani, Inc.

Jake Fermanian Super King Markets

Jonathan Mayes Albertsons Companies, Inc.

Damon Franzia Classic Wines of California

Mark McLean CROSSMARK

Sergio Gonzalez Northgate Gonzalez Markets

Doug Minor Numero Uno Market

President/CEO Ronald Fong

Director CGA Educational Foundation Brianne Page

California Grocer is the official publication of the California Grocers Association.

Director Digital Communications Nate Rose

1005 12th Street, Suite 200 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com

CALIFORNIA GROCERS ASSOCIATION

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 Administration & Human Resources Jennifer Gold Controller Gary Brewer

Mike Ridenour The Kraft Heinz Company Casey Rodacker Mar-Val Food Stores Jaclyn Rosenberg Nielsen Jeff Schmiege Unilever Jeff Severns PepsiCo Beverages North America

Jeff Sigmen Reyes Coca-Cola Bottling LLC Scott Silverman KeHE Distributors, LLC Lee Smith Smart & Final Stores Diane Snyder Whole Foods Market Southern Pacific Region Rick Stewart Susanville Supermarket IGA Joe Toscano Nestlé Purina PetCare Richard Wardwell Superior Grocers Karl Wissmann C & K Market, Inc. Kevin Young Young’s Payless Market IGA

Greg Sheldon Anheuser-Busch InBev

For association members, subscription is included in membership dues.

Subscription rate for non-members is $100.

© 2020 California Grocers Association Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Maria Tillman mtillman@cagrocers.com

CONTENTS | ISSUE 2

FEATURES

36 The New Normal?

As companies look to a post-COVID world, industry experts and grocery executives are trying to determine what a “new normal” will be as they take a look back at key learnings from the pandemic.

16

CGA’S COVID-19 RESPONSE

COLUMNS President’s Message A Snapshot in Time. . . . . . . . . . . . . . . . . . . . 4

48

Chair’s Message Change is Inevitable.. . . . . . . . . . . . . . . . . . . 6

Keep California Safe Initiative Update This November, voters will go to the polls with the opportunity to strengthen state anti-theft laws. CGA strongly supports this initiative and will need member involvement to help get it passed.

Government Relations Grocery in the Time of Covid-19. . . . . . . . 20 Capitol Insider A Look at the November Initiatives. . . . . . 24 Inside the Beltway Protecting Good Actors and Extraordinary Action. . . . . . . . . . . . . 26

56

Washington Report Everything has Changed. . . . . . . . . . . . . . . . . 30 Mommy Blogger Shopping Through the Pandemic. . . . . . . 76

t c A ic ng

A Balancing Act: Meet Illuminator Headlite Juan Trillas

It’s been a unique year so far for Juan Trillas, but despite the challenges, the new Illuminator Headlite is determined to move the Association forward and grow its sphere of influence.

68A

Viewpoint Letter from the Pandemic. . . . . . . . . . . . . . 10

n a l Ba

DEPARTMENTS CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 34 Know the Law Prop. 65 Food Notices Abundant During COVID-19.. . . . . . . . . . 54

Don’t Look Now As if California businesses haven’t had enough to worry about in the first half of 2020, its next major disaster – with the summer fire season started – may be the return of Public Safety Power Shutoffs.

las

15 Minutes With John Ross. . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Index to Advertisers. . . . . . . . . . . . . . . . . . 75

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PRESIDENT’S MESSAGE

A Snapshot in Time

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

In this month’s issue, California Grocer pauses to recap the unprecedented events that have occurred since mid-March.

After a promising beginning to 2020, the world was thrown into uncharted turmoil when we began to realize the full impact of this horrific pandemic.

Being labeled an essential business, our industry was thrust into the media spotlight as consumers and elected officials focused on our efforts to ensure an ongoing supply of goods in a safe environment for both employee and shopper.

To the credit of the hundreds of thousands of grocery workers, this monumental task was met head-on. As you will read in Kelly Ash’s column, our industry was quick to implement increased safety measures well before local and state mandates were issued.

This comes as no surprise to an industry that has always quickly responded during a plethora of disasters including cataclysmic earthquakes, floods, wildfires, riots, droughts, and power outages to name just a few.

Food safety has always been one of our industry’s highest priorities. Ensuring a safe, secure, and wholesome food supply has been a hallmark of the grocery industry throughout its history.

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So, too, has its ability to provide a continuous supply of goods and services.

Californians have fully come to expect stocked aisle shelves, frozen cases and produce bins featuring a wide assortment of goods.

But that industry norm was put to the test in March as stores were overrun with shoppers uncertain of the state’s future in the wake of growing concerns over the full extent of the pandemic.

Realizing the need to shift consumer behavior away from overbuying, CGA embarked on a public facing campaign centered on the theme “Buy Smart. Don’t Overfill Your Cart.” That was followed by a consumer-focused campaign that provided safe shopping tips. Both efforts received considerable media coverage and helped position the Association and industry in an extremely positive light with consumers and elected officials.

This issue also highlights the Association’s extensive efforts to advocate on behalf of the industry. Of course, our success was the result of the extensive involvement of you, our members. Working together we were

able to intercede on the industry’s behalf. It has also raised the industry’s position in the highest offices in California.

As reported on page 12, I’ve been appointed to the Governor’s Task Force on Business and Jobs Recovery. This is a tremendous opportunity for our industry to have a seat at the table, along with some of the biggest names in business. I look forward to providing you updates on our progress as we strive to get California working again.

And finally, I want to thank all of our members, and the entire grocery industry, for the tremendous role you have played in keeping California fed. You performed magnificently in the face of overwhelming risk, and I believe through our efforts and many more, you have elevated in the minds of consumers and elected officials alike the critical role we play in the lives of every Californian.

From a grateful Association, thank you. ■

An Open Letter to Our Nation’s Retailers and Food Distributors

Thank you! As much of our daily lives has changed in significant ways, you continue to serve in providing an essential function for all of us. What we once took for granted as normal routine, going to the grocery store, has fundamentally changed. You – retailers, your stores, and all team members throughout the food distribution system – are our heroes and we thank you!

Our California farmers, ranchers and farmworkers understand the challenge this crisis has delivered to our retailer partners: to manage adequate supply, maintain efficient distribution, and most of all provide a safe shopping environment for customers and employees. All of this has been accomplished with a level of care, service and dedication that makes us proud to be a part of your supply chain.

We are thankful for the warehouse workers pulling double shifts, the truck drivers who are adding routes, the direct-to-customer services that are being offered, and the new outlets being created to provide food. We are grateful for food retail-employees, delivery drivers, and those working at headquarters who have helped us adapt to a new way of life by providing a sense of order in these uncertain times.

California producers are here for you. Each harvest provides a brighter future, and together we will do what we’ve always done to provide healthy nutritious food (and beautiful flowers) for your customers, our neighbors and communities across this state and nation.

We commend you for your ongoing efforts. Your work and service has been nothing less than world class.

Sincerely,

californiagrown.org @cagrownofficial @cagrownoffical cagrown

Karen Ross Secretary California Department of Food and Agriculture

CHAIR’S MESSAGE

Change is Inevitable

P H I L M I L L ER C& S WHOLE S ALE GR OCE R S

There are only a very few constants in our journey through this life, but the reality that nothing rarely stays the same forever is more real now than ever before.

Kendra Doyel, Vice President, Merchandising, Ralphs Grocery Company, and CGA’s Immediate Chair, once said that “We must get comfortable being uncomfortable,” which is exactly what we have had to realize during these extraordinarily difficult times. The pandemic has turned everything normal in our lives upside down.

vastly different from what any of us could have imagined. The question is, how is our industry going to adjust?

It has caused individuals and families to think more critically about the very basics of life and react more strategically, not only to protect themselves from potential exposure to this virus but also to safely obtain the bare essentials for survival from day to day.

At the center of it, our industry sits in one of the most critical positions on the front lines alongside healthcare workers. It is easy to take for granted some of life’s necessities until they are stripped from us.

The inevitable correction is guaranteed to come. We all are in constant search of data points that will potentially predict, how, when, and what the recovery will look like. One thing is certain; it will look

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iStock

In the blink of an eye, our collective focus shifted to enhanced safety measures for our employees and consumers, consumer demand pressure on the supply chain, retrofitting our businesses for COVID-19 compliance protocols, and the list goes on.

Our society has become so connected through social media outlets that at times we are extremely disconnected from the realities of the world. We are now so disconnected due to the impact of COVID-19 social distancing measures that it appeared we started to become more humanly connected than ever.

It felt as if we were headed towards a greater appreciation of human existence, engaging in authentic interactions between people of all ages and all races sharing experiences of how we were going through some of the same challenges and then…the painful, harsh reality of our country’s history rose and reared its ugly head.

Our nation is going through one of the toughest times in its history, and we once again find ourselves face to face with the compounding effects of racial injustice.

If we are completely honest with ourselves, this underlying inhumanity has served as the foundation of how our country was built, beginning in 1619 – identified as the turning point for Slavery in American History.

We are now watching thousands of people from all races speak out against this fear and inhumanity that has gripped our Black and African-American communities throughout our history who often do not

CHAIR’S MESSAGE

feel safe, seen, or heard. Our industry is not exempt from some of these actions and effects of this reality.

The topic of race relations, injustice, and inequality unfairly placed on the necks of black men and women isn’t a new discussion topic or a new pain point for people of color.

The visibility of George Floyd’s senseless death has offered clarity to the end that our nation and the entire world has realized the truth behind many of the stories that we have heard and previously not provided creditability to over hundreds of years.

That is not to place blame because we all have different experiences, and we tend to listen to people based on our own life’s experience vs. listening “authentically” to what they are saying with the sincere intent to understand, learn and grow from that interaction.

What can we do to change the history of this pathological and systemic frequency with which black men and women are harmed by those who are supposed to serve and protect them? It begins by acknowledging that these experiences are real and face the facts that we have not done enough to address it.

Our industry typically sits squarely in the center of happiness for people of all races. We are uniquely positioned in the communities we serve to educate, inspire, and support this movement and change the course of our nation. We are interconnected in this battle for stability regardless of race.

It is time for us to address the racial and social inequities and injustices that have impacted people of color for generations.

This is so much bigger than police brutality.

I encourage and challenge each of us to embrace this bold objective. Gather your associates in person or virtually in small groups and allow for open discussions on these topics. People all around the world are crying out to be heard. We cannot overlook the real pain, fear, and frustrations of the people in our circle of family, friends, and business colleagues.

Paying this forward requires us to take a step outside of our comfort zone and become comfortable with this discussion and serve as a catalyst for change within our communities. Let us not overcomplicate this process. It simply starts with open and honest communication with the intent to listen and understand.

Change is inevitable and long overdue. ■

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 Molson Coors Tyson Foods, Inc. United Natural Foods, Inc.

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Fresh‌

Since 1918, C&S Wholesale Grocers has been committed to sourcing and shipping the freshest, highest quality produce available. Our dedication to procuring the best product, at the best cost, is what truly sets C&S apart.

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

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

new site. new look. same great service.

Modern Design with You in Mind.

CGAEF.org now features integrated access to our Workplace Harassment Training platform and an overhauled Tuition Reimbursement application.

www.cgaef.org

VIEWPOINT

Letter From The Pandemic

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

“New normal” is a phrase tossed around a lot, but I’m pretty sure that most people think it will be much like the old normal, except sometimes with masks. I disagree.

So, what’s new?

Silly question, I know. These are odd times, to say the least, and it is hard to say whether our sense of connections is heightened because we’re all Zooming with each other – sometimes for pleasure, sometimes for work, and always a little bit nicer if it can be turned into a virtual happy hour. (I used to invite people for a virtual drink until I realized what we were doing was having a virtual meeting for a real drink.)

Or, are the connections we normally would feel to each other diminished by the various shelter-at-home orders, whatever they happened to be called in different locales, but always adding up to the same thing?

The small pleasures of Zooming remain, though.

I don’t know about you, but I find it fun to see where people live and work. What kind of art do they have hanging? Can I read the name of the books on the shelves behind them? And it is particularly entertaining when a pet or small child ventures into camera range, proving a unique perspective on real life.

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I’m in Connecticut as I write this missive, and I will almost certainly be in Connecticut when you read it. Several West Coast trips have been canceled, as have the speeches I was supposed to give at them.

But that seems like a small sacrifice – as does wearing a mask when I go to the store and then waiting in line and then following the one-way only aisle markers inside.

When I get tired and frustrated, I remind myself that • I am in a high-risk category because of my age (when the hell did that happen), • When I wear a mask and obey the rules I am doing something good for my fellow shoppers and citizens because my mask protects them, not me, and • I am in a high-risk category because of my age.

(Seriously. When the hell did that happen?)

As I try to obey the rules and be socially responsible in my behavior, I find myself increasingly cranky with people who don’t.

Still, I mostly feel sorry for the employees who have against their wills been drafted into hall monitor roles.

Occasionally, there are news stories about young employees verbally abused by adult customers impatient for their items or for the shopping trip to be over. These stories say nothing good about these people, who long ago seem to have succumbed to a different kind of virus – you know, the one that makes you think you are the center of the universe and that your needs and wants are more important than everyone else.

Retailers dealing with such meshugge behavior may be having some of the busiest quarters of their professional lives, but it seems to me that – based on a lot of conversations and email exchanges I’ve been having with folks over the past two months – there may not be enough thinking about the future taking place.

I hear many more people saying, “when things get back to normal,” than I hear people saying, “we have to prepare for a future we have not anticipated.” Sure, “new normal” is a phrase tossed around a lot, but I’m pretty sure that most people think it will be much like the old normal, except sometimes with masks.

I disagree. I think there will be very little that is “normal” about the “new normal.”

VIEWPOINT

The grocer that in my experience has been killing it day in and day out is Stew Leonard’s. Each of its seven stores has about 1,000-1,500 SKUs and is primarily focused on fresh foods (unique to them) and private label (unique to them), as well as already having few out of stock issues (except, of course, for toilet paper, but nobody goes to Stew’s for toilet paper anyway) and a directed traffic flow through one-way aisles (which is what everybody else is trying to create these days).

iStock

“As I try to obey the rules and be socially responsible in my behavior, I find myself increasingly cranky with people who don’t.”

For one thing, it will be all about the future.

My friend Tom Furphy likes to say that the pandemic in many ways provided a kind of slingshot that propelled the supermarket business five years into the future when it comes to e-commerce. Nobody was ready for it, which is why the e-grocery supply chain was stretched so thin.

Not even Amazon was ready – it prepared for two years into the future, maybe three, but not five. But it is repairing this rip in the space-time continuum, which may give it an even greater advantage in the segment than a lot of other retailers.

Amazon annoyed a lot of its customers when it could not live up to its typical one-to-two-day delivery promise, which for many was akin to turning on the faucet and finding out there was no water. It – and a lot of its customers – found out precisely what “essential” means, and it is a good bet that Amazon is reverse-engineering those qualities into its business model.

Which is what every retailer must do.

While “essential” has become an allencompassing adjective to cover anyone who put themselves in harm’s way during the pandemic, it seems that the word has to be re-conceived for the post-pandemic world.

I think this will mean for many retailers, conducting a deep-dive examination into what makes them different. It is hard to be essential with the products and services that everybody else has, but if you have qualities that distinguish and differentiate you, those are the ones you can make essential.

And each of these stores, I’d bet, is doing an average of well over $2 million a week in sales. Stew Leonard’s, I’d argue, was absolutely ready for the pandemic.

I have no idea what the future will look like, but I have a lot of ideas about what the future might look like. That’s what retailers have to traffic in – ideas.

Start here: Create a small team in your organization – what Jeff Bezos would call a “two-pizza team,” small enough that it can be fed with two pizzas – that has the job of imagining how the company’s stores will be different at the end of the pandemic than they were going in.

When the moment comes, and it will, you won’t be able to move slowly. You’ll have to move fast. What you’ll have to do is go at the speed of “zoom.” ■

I also have to wonder if part of this process will be grocers – not all, but some – deciding to edit their grocery selections, which will have the added benefit of potentially reducing and simplifying their supply chains.

If you have 45,000 SKUs in your store, how many are essential to your customers, essential to your value proposition, essential to your differentiated brand identity?

Maybe 4,500? 450? If I were a retailer, I’d be thinking about that. Seriously.

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CGA NEWS

CGA PRESIDENT NAMED TO JOBS RECOVERY TASK FORCE California Governor Gavin Newsom has appointed California Grocers Association President and CEO Ron Fong to serve on his bi-partisan Task Force on Business and Jobs Recovery.

The task force is responsible for helping plan the state’s economic recovery following the financial calamity resulting from COVID-19.

“I am extremely honored to participate in this very impressive and diverse task force that gives the grocery industry a seat at the table as we work to get our state economy up and running again,” Fong said. California’s grocery industry is one of the state’s largest employers, employing more than 350,000 Californians.

“I look forward to collaborating with thought leaders from throughout California as we develop recommendations for both

PANDEMIC FORCES EVENT RESCHEDULING AND CANCELLATIONS CGA and its Foundation suffered the same fate of nearly every organization with scheduled events and meetings after March 15 – postponements and cancellations. The Association has moved its annual Grocers Day at the Capitol to August 4. It will be a virtual event. Details are to come.

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government and business to help revive our economy and guide the state back toward economic growth and recovery,” he added.

Former U.S. presidential candidate and billionaire philanthropist Tom Steyer and Gov. Newsom’s Chief of Staff Ann O’Leary will co-chair the 80-member task force. It includes representatives from business, labor, environment, social justice, state Legislature, and four former California governors.

The Task Force will work to develop actions government and businesses can take to help Californians recover as fast as safely possible from the COVID-19 induced recession and to shape a fair, green, and prosperous future.

They will meet twice a month throughout 2020 to develop options that would work for all Californians, with a particular focus on those hardest hit by the pandemic.

The Association has cancelled its Independent Retailers Golf Tournament, that had been scheduled for early June. Plans are under way to modify the September CGA Strategic Conference. Specific details will be unveiled sometime in late June, or early July. The Foundation has postponed its 2020 events including the Hall of Achievement and its two golf classics.

The Association will convey any additional cancellations, postponements and rescheduling through its normal communication channels.

“To be represented on this task force is a tremendous honor for our industry,” said CGA Chair Phil Miller, C&S Wholesale Grocers. “This pandemic has hit families and businesses in ways none of us could have ever imagined. Ron is uniquely positioned to add a valuable perspective as he represents California’s grocery industry, which sits squarely on the front lines of helping keep families fed and energized as we collectively navigate through this crisis.”

Changes due to the pandemic also include all CGA meetings. The Association and Foundation joined the digital meeting world, shifting their board and committee meetings to online.

“It’s been an interesting experiment in digital,” confesses CGA President & CEO Ron Fong.

“Our staff has become experts in conducting digital meetings. I’m sure we all look forward to returning to our regular meeting process.

Continued on page 14 ▶

CGA NEWS ◀ Continued from page 12

CGA, FOUNDATION ANNOUNCE NEW STAFF Two new employees have joined the teams of the California Grocers Association and the CGA Educational Foundation.

Kate Henneinke

Kate Henneinke brings more than seven years of association experience to the team as Manager for the CGA Educational Foundation. Prior to CGA, Kate held several director/coordinator positions with the California Medical Association and before that the California Association of School Business Officials. She will work under the direction of CGAEF Director Brianne Page and assist with the Foundation’s many educational programs.

Leticia “Leti” Garcia was named Director, State Government Relations, just days before the Association closed its offices and instituted a work from home policy due to COVID-19. Leti has extensive knowledge of the legislative process, having worked more than six years for four California legislators.

“These two recent hires continue our efforts to staff the Association with skilled employees with direct experience in their work areas,” said CGA President and CEO Ron Fong, who also serves as Foundation President. “We look forward to the skills and knowledge both Leti and Kate will bring to the Association and Foundation.”

Leticia “Leti” Garcia

NEW MEMBERS CGA welcomes the following members:

99 Cents Only Stores LLC 4000 Union Pacific Ave Commerce, CA 90023 Contact: Mary Kasper, Chief Legal Officer, General Counsel & Secretary Phone: (323) 881-5748 Website: 99only.com/home

Asian Food Trade Association PO Box 911429 Los Angeles, CA 90091 Contact: Timothy Sher, President E-mail: tim@hcfoods.net Phone: (323) 722-8648 Website: www.aftaus.org

California Milk Advisory Board 2316 Orchard Parkway Ste 200 Tracy, CA 95377 Contact: Katelyn Harmon, Business Development Manager E-mail: kharmon@cmab.net Phone: (209) 883-6455 Website: realcaliforniamilk.com

West Coast Shopping Cart Service, Inc. 1773 W San Bernardino Rd Ste F88 West Covina, CA 91790 Contact: Jose Pacheco, Chief Executive Officer E-mail: jose@wcshoppingcart.com Phone: (888) 787-2278 Website: www.wcshoppingcart.com

Imperial Western Products, Inc. 86600 Avenue 54 Coachella, CA 92236 Contact: David Isen, Risk Manager E-mail: disen@iwpusa.com Phone: (760) 398-0815 Website: www.OrganicSolutionsRecycling.com

Jyve Corporation 340 S Lemon Ave #5983 Walnut, CA 91789 Contact: Stephanie Conell, Head of Marketing E-mail: stephanie.conell@jyve.com Phone: (415) 901-8100 Website: jyve.com

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CGA NEWS

CALIFORNIA GROCERS ASSOCIATION

COVID-19 RESPONSE

CGA staff delivered masks to local Sacramento grocers.

The rush started on a Wednesday. It was the week of March 9, which marked the first time the coronavirus appeared to grab hold of Americans’ collective imaginations. And it was the week shoppers started emptying store shelves.

Nervous consumers depleted store shelves of paper products, sanitizer, and just about everything else. Fueled by relentless media coverage and the challenge of processing the real-time reporting of cases and deaths, by the weekend, the onslaught of panic buying was in full swing. California was facing a pandemic, and the state’s grocery community was left staggering in the wake of COVID19’s trickle-down effects.

By Friday, CGA had begun fielding the first of what would be many media calls.

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CGA was interviewed by media statewide.

On Sunday, the Association coordinated a joint press conference with Los Angeles Mayor Eric Garcetti to reassure Californians who were not used to seeing empty store shelves. With the help of member companies, CGA also jumped into action to remove roadblocks slowing the flow of goods and services.

“We immediately realized we were going to have to do everything possible to help our members,” said CGA President & CEO Ron Fong. “With strong relationships in place at the state and local level, we knew our members would request our advocacy efforts. Our goal was to anticipate these needs and address them head-on.”

Similar to some of the initial actions taken by grocers across the state, CGA’s first step was to create an internal coronavirus team

that would meet each morning to evaluate and plan its COVID-19 strategy. This daily meeting grew to have added importance as the state’s “stay-at-home” order closed business offices throughout the state. With the scenarios changing by the hour, the team also introduced a daily email Coronavirus Alert to increase the velocity of Association and membership communications.

“Our daily meetings became essential in planning each day,” Fong said. “By sharing information at the state and local level, along with media updates, we were able to anticipate and address our industry’s major concerns.”

The following is a synopsis of the major projects CGA undertook in the first 75 days of the pandemic.

CGA NEWS

Public Affairs Campaign As the grocery community became a central focus of the media, elected officials, and everyday Californians, the Association recognized the need to lead the industry through a cohesive and multi-channel public affairs campaign. This public affairs campaign focused on two timely messages – consumer overbuying and safe shopping guidance.

CGA engaged a well-respected crisis communications firm to help the Association control the narrative and promote industry-supported messaging through media interviews, a paid social media campaign, video assets, and a consumer-focused website.

“Buy Smart – Don’t Overfill Your Cart,” became the rallying cry for the industry.

Nearly 40 local television stations, 15 radio stations, and more than 40 newspapers reported our message. CGA also created a video featuring CGA President Ron Fong that had more than 150,000 views on Facebook.

“This was an extremely successful campaign that helped promote our two key messages,” Fong said. “In addition to the tremendous coverage within the state, many news outlets repurposed our messaging nationwide.”

To further amplify these messages, member companies and elected officials were also equipped with marketing materials and talking points to encourage consumers not to overbuy. Social media platforms were used to target positive messaging in key areas of the state. In conjunction with the California League of Cities, CGA delivered its information packets to hundreds of local elected officials that utilized their social media to spread our messaging.

normal life for its constituents. And so relationships forged over the years and in the early days of the crisis played a key role in having the industry’s voice heard at all government levels.

CGA’s statewide advocacy efforts took center stage as the government relations team began stepped-up discussions with legislators, regulators, and the Governor’s staff. While the Association didn’t agree with every decision, our advocacy efforts softened those unfavorable outcomes. For a complete rundown of CGA’s statewide effort, read Kelly Ash’s column on page 20.

“With the help of member companies, CGA also jumped into action to remove roadblocks slowing the flow of goods and services.”

Executive Orders Although CGA did not support several of the Governor’s coronavirus-related executive orders, it did successfully advocate for a temporary suspension of the state’s bag ban and in-store beverage container takebacks.

Additional industry-related Executive Orders can also be found on page 20.

State Government Relations

Transportation Waivers

One positive aspect of grocery’s vital importance during the pandemic is that elected officials relied upon the industry to maintain one of the last vestiges of

CGA’s government relations team was successful in securing the suspension of several transportation regulatory restrictions, including hours of delivery and vehicle weight.

Price Gouging After learning from Association members that rising meat prices due to COVID-19’s impact on meat processing plants and its rippling effect throughout the supply chain was becoming a concern of law enforcement, CGA reached out to the State Attorney General and local district attorneys, to explain the circumstances surrounding the increases, and ensure our industry was not price gouging.

Disposable Surgical Masks At CGA’s request, the State of California allocated a limited emergency allotment of disposable surgical face masks for the Association to distribute at no cost to its retail grocery members. CGA distributed more than 480,000 masks to 45 CGAmember companies. The Association wishes to thank wholesalers, C&S Wholesale Grocery and UNFI, for assisting in distributing the hundreds of thousands of masks throughout the state.

Local Government Relations Because of the “local-up” nature of Gov. Gavin Newsom’s pandemic strategy, local government lobbying played a significant role in shaping policy actions related to the grocery industry and advocated strongly on its behalf.

During the early stages of the pandemic, CGA tracked and reported on local Emergency Orders. After the orders were in place, the Association worked to secure relief for those cities and counties not impacted by the Governor’s executive order to suspend carryout bag ordinance mandates. The team also leveraged the essential nature of the grocery industry during the pandemic to play defense against employee scheduling and paid sick leave ordinances.

Outside of direct advocacy, the local government team monitored and maintained databases on local orders, including curfews and facial covering requirements.

Continued on page 18 ▶

CAL I FO RNIA GRO CER | 17

CGA NEWS ◀ Continued from page 17

CGA’s campaign included a strong digital media strategy.

Gov. Gavin Newsom repeatedly recognized industry for its efforts during the pandemic.

“With strong relationships in place at the state and local level, we knew our members would request our advocacy efforts. Our goal was to anticipate these needs and address them head-on.”

Domestic Violence Campaigns CGA collaborated with several district attorney offices, including Los Angeles County, the city of Los Angeles, and Sacramento County in a coordinated campaign to support domestic violence victim awareness. Grocery stores were asked to post crime victim resource signage as part of its #BehindClosedDoors campaign.

CGA Whitepaper Confusion regarding the enforcement of wearing facial masks in grocery stores, along with questions on accommodating consumers and employees who opt not to

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

wear masks, prompted CGA to produce a white paper, “Guidance for Grocers on Responding to Employees’ or Disabled Customers’ Requests to Go Without Face Covering,” for its membership.

Webinars The CGA Educational Foundation has hosted several COVID-19 related webinars on topics including PPP loan forgiveness, workers’ comp, Families First Coronavirus Response Act, and Cal-OSHA/COVID-19 updates. The Foundation will schedule additional webinars as needed. To access previous webinars, visit cagrocers.com/ resources/webinars-seminars.

Governor Task Force Appointment CGA’s efforts to engage and keep the Governor’s office informed on industry efforts to fight the pandemic resulted in CGA President and CEO Ron Fong’s selection to serve on a special Task Force on Business and Job Recovery. The task force will help jump-start the state’s economy and features prominent business leaders, elected officials, and all four former state governors.

See page 12.

CGA Recognition The industry’s work to lead in areas, including in-store safety, did not go unnoticed. Multiple times during his daily COVID-19 briefings, Gov. Gavin Newsom singled out the grocery industry for its “positive process” related to employee and shopper safety, calling grocers “a model in terms of guidelines for safely reopening.”

Local government officials, including Los Angeles Mayor Eric Garcetti, also praised the industry.

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GOVERNMENT RELATIONS

Grocery in the Time of COVID-19

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

It goes without saying that these are unprecedented times.

In January, CGA was focused on legislative and regulatory issues like fixing the broken recycling system.

However, 2020 had different plans for the entire world, nonetheless California.

Despite what anyone thinks regarding government rules and orders issued in the last three months, the grocery industry has again met a serious problem with tireless effort and support for our communities.

CGA has been a proud partner during this pandemic challenge, working diligently to support our industry and its employees to the extent possible.

Early on, it was clear the issue of overbuying was creating supply chain concerns.

The supply was there, but too much was

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purchased too quickly. CGA saw the need to work with federal counterparts to get federal and state trucking restrictions alleviated a bit to be able to allow trucks to be driven longer hours and to have larger delivery weights.

Many grocery retailers voluntarily implemented more stringent sanitization protocols, updated COVID-19 specific procedures, and implemented social distancing guidance within the stores.

CGA approached the Governor’s office with a list of concerns and issues needing to be addressed during the pandemic.

The Association brought members together with the Governor and his staff on a call to lend industry expertise on the real concerns stores would face in the coming weeks. The Governor asked our industry to

join with labor to discuss all the needs for the industry and find solutions agreeable to both sides.

So, CGA and members met with labor to discuss issues including paid sick leave, instore CRV redemption, employee protective equipment, priority access to testing, and childcare assistance. While not everything came through in the Governor’s executive orders as the agreement was finalized, many items were addressed to make grocery stores a safer place to work and shop.

It hasn’t all been executive orders and regulatory directives, though. CGA and members have engaged with the Governor’s staff, state agencies, and food banks to find ways to help our communities during this difficult time.

In my brief time with CGA, I’ve had the privilege to witness the grocery industry come to the aid of their communities regularly and in times of great need.

Without hesitation, retailers support local youth through sponsorships and scholarships; they divert truckloads of food, supplies, and funding to fire-torn areas or places without power, and so much more.

So, when many at-risk Californians couldn’t make it to the store to buy the food and supplies or needed special hours, it’s no surprise that members stepped up and

GOVERNMENT RELATIONS

“CGA has been a proud partner during this pandemic challenge, working diligently to support our industry and its employees to the extent possible.”

CGA continues to broach these topics with the administration, our federal counterparts, state agencies, and local governments to ensure the best environment for Association members and their employees.

Our members have a unique view from the ground floor that others don’t. CGA is grateful to share information and understanding to help craft a smart and sustainable reopening of California.

More recently, the Governor announced atask force that would collaborate on the best ways to reopen the State. What this may look like, guidance for businesses that reopen, and what California’s “new normal” may be still remain unknown.

voluntarily created senior and at-risk hours, priority delivery access, and support for local food banks. And the list goes on.

CGA President and CEO Ron Fong was tapped as a resource and conduit through which the grocery industry can advise and lend real-time knowledge to other industries that haven’t been open and serve the public during this health crisis.

A critical takeaway from this pandemic is that grocers have remained a resilient and stable source for their communities throughout it all. They have been through countless fires, earthquakes, health crises, recessions, and more, yet remained cornerstones in their communities, staying open to provide resources in a time of need and jobs during a time of uncertainly.

With input from membership and allied coalitions, CGA will address additional issues, including illness/death liability, workers’ compensation, and emergency personnel status for essential employees in public-facing positions.

There are many new things to learn from 2020 so far, and I am sure more to come, but the grocery industry will continue to work hard and remain a stable piece of the communities they serve. ■

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 | 21

CAPITOL INSIDER

A Look at the November Initiatives

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

In addition to the CGA-supported Keep California Safe initiative, here are the other propositions on this year’s ballot.

Brown

The Covid-19 Pandemic has been an extremely challenging time for our society, economy and government.

This crisis has caused unemployment to climb to 15 percent, and Gov. Gavin Newsom recently announced that California is facing a $54 billion budget shortfall.

However, the challenges we face would be far greater if not for the bravery shown by grocery employees throughout the country.

By keeping shelves stocked, aisles clean and stores open, grocery employees have helped secure our nation’s food supply and provide a sense of normalcy during this national emergency. On behalf of shoppers everywhere, I would like to thank all of the grocery industry’s brave men and women for their hard work during this crisis.

Every part of society has had to adapt during the Covid-19 crisis, and elections are no different.

Gov. Newsom recently announced that California will become the first state to automatically mail all registered voters a ballot for the November election. This will be a significant change from past elections as now more than 20 million ballots will be sent at the beginning of October, and voters will have more than 30 days to cast their ballot.

It is unknown how this new policy will shape election results, but it’s anticipated it will not be the last election where this occurs.

The 2020 election ballot will be very crowded as not only will Californians vote for the next President,

but they will also vote on multiple ballot initiatives. In addition to the CGA-sponsored Prop 47 reform initiative, the other measures do the following:

Split Roll This will remove commercial property from the protection against large taxincreases contained in Proposition 13 and require it be assessed for real market value every three years. The anticipated revenue is approximately $11 billion per year and will fund education and local governments. This effort may wind up as the most expensive ballot fight of the year. It’s estimated that more than $100 million will be spent on this one initiative.

Protect App-Based Services and Drivers Act This initiative establishes different criteria for determining whether rideshare and delivery drivers are employees or independent contractors. Independent contractors are not entitled to certain state-law protections afforded employees, including minimum wage, overtime, unemployment insurance, and workers’ compensation. Unlike AB 5, passed last year, this measure is limited to rideshare companies, like Uber, Lyft, Instacart and DoorDash, and will set minimum wage standards and benefits.

Continued on page 27 ▶

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As a broker, CGA is critical to our business growth. The relationships we develop with our retailer customers, enhancing relationships with our brand partners, and being in the forefront of the grocery industry through the educational elements that CGA provides....

It’s a business imperative for any brands and brokers doing business in CA. SUBRIANA PIERCE, MANAGING PARTNER NAVIGATOR SALES AND MARKETING – MEMBER SINCE 2019

Want to learn more about the benefits to advertising with CGA? Contact Sunny Porter to learn more and start the conversation with your fellow industry peers at sporter@cagrocers.com or call (916) 448-3545.

cagrocers.com

INSIDE THE BELTWAY

Protecting Good Actors a n d E x t r a o r d i n a ry A c t i o n 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

Grocers have always been prepared for emergencies – floods, fires, tornadoes, hurricanes – we have been through almost any crisis that could be envisioned until coronavirus.

There is perhaps no better descriptor than “extraordinary” to describe these times and the tests that have been endured.

Even though this emergency has tested every part of our supply chain at once, the tireless team efforts of creative, dedicated, talented people have ensured that grocery store shelves are stocked, stores are clean and sanitized, and customers are practicing social distancing.

Even with the great uncertainty of the health crisis still ahead, a significant threat to our future is a team of bad actors dreaming up lawsuits and recruiting plaintiffs to try to line their own pockets.

We are already seeing advertising and marketing campaigns designed to try to entice “plaintiffs.” Given this real and developing threat of potentially damaging and time-consuming litigation, we are asking Congress to put some reasonable liability protections in place against such needless lawsuits.

Grocers have followed a growing list of evolving government recommendations from the FDA, CDC, EPA, USDA, OSHA,

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NIOSH and others; marked six-foot intervals in stores, installed barriers when possible, limited the number of customers, turned some store aisles into one-way passages, reminded customers of social distancing via continuous in-store announcements and signage, expanded pickup and delivery services when possible, closed stores early for overnight cleaning and stocking in many cases, and utilized hundreds upon hundreds of hours of CDCapproved cleaning and sanitization

with EPA-approved disinfectants weekly in stores, warehouses and facilities, and worked to secure PPE for our associates.

Grocers have followed this evolving government guidance and implemented these unprecedented measures to minimize any harm to associates or the public. Yet, it is because grocers and the food supply chain have remained open during these times of tremendous legal uncertainty, we now risk becoming the targets of coronavirus-related lawsuits that will ultimately do nothing to reduce the spread of this disease or alleviate the suffering or distress of millions of our fellow Americans. Companies like yours that have continued to operate to provide food to their communities have confronted new and difficult legal questions every day.

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INSIDE THE BELTWAY

Federal and state rules and guidance on how to operate during this crisis have evolved rapidly and, at times, have created legitimate confusion over performing ordinarily simple tasks.

United States Senate Majority Leader Mitch McConnell has insisted the next legislation to come out of the Senate needs to aid the emergency needs to put rational limited protections for these good actors and good actions in place.

FMI could not agree more. The U.S. Chamber of Commerce recently released a national survey that found 84 percent of those surveyed agreed it was essential to protect businesses like grocery stores and pharmacies from lawsuits related to coronavirus.

We would urge you to add your voice to this chorus for tailored reform. Send a letter to your elected officials today via our grassroots portal to convey your support for these efforts. Author an op-ed or a letter to the editor. Text LIABILITY to 52886 receive a draft letter.

Our country is facing an unprecedented crisis. America’s essential businesses have been stepping up to provide for the critical needs of our people despite incredible uncertainty and a continually shifting environment. FMI will work with members of Congress on both sides of the aisle and both sides of the U.S. Capitol to put in place fair, sensible rules that protect businesses working to keep Americans safe and healthy during this crisis and will hopefully help move us toward recovery. ■

◀ Capitol Insider continued from page 24

“California will become the first state to automatically mail all registered voters a ballot for the November election.”

“Grocers have followed this evolving government guidance and implemented these unprecedented measures to minimize any harm to associates or the public.”

CAPITOL INSIDER

The California Privacy Rights Act (CPRA) This act permits consumers to prevent businesses from sharing personal information and limit businesses’ use of “sensitive personal information” – such as precise geolocation; race; ethnicity; religion; genetic data; union membership; private communications; and certain sexual orientation, health, and biometric information.

Additionally, it prohibits businesses’ retention of personal information for longer than reasonably necessary and triples maximum penalties for violations concerning consumers under age 16.

This measure will have a significant impact on how retailers administer rewards programs.

Other statewide measures appearing on the November Ballot include an effort to enact statewide rent-control, repeal of 2018 bail reform and an economic resiliency bond to help with the state’s economic recovery and address the General Fund shortfall.

Regardless of the November election outcomes, California grocers should be extremely proud of the public service they’ve provided during the COVID-19 pandemic. You have shown state leaders in Sacramento that the success of future emergency responses hinges on having a thriving grocery industry. ■

CAL I FO RNIA GRO CER | 27

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

NAVIGATE THE

“

GROCERY INDUSTRY

The level of decision-maker detail is truly valuable and impressive.

I found the interface easy to navigate, search and drill down for detail. A must have for any supplier doing business in California.

”

Scott P. Silverman Vice President of Business Development KeHE Distributors, LLC

DIGITAL BUYERS’ GUIDE Expand your network and discover new connections in real-time with just a click

With the convenience of the nation’s largest grocery marketplace at your fingertips, you’ll gain immediate access to California’s key grocery retail decision-makers, familiarize yourself with their organizational structure and search CGA’s supplier membership by product category and type.

Visit our Buyers’ Guide: cagrocers.com/new-digital-buyers-guide CAL I FO RNIA GRO CER | 29

WASHINGTON REPORT

E v e ry t h i n g H a s C h a n g e d

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

In the midst of a global pandemic, grocery store operators, their employees and our shoppers are all in this together, using every tool in our toolbox to keep the food supply chain humming.

Before the onset of the coronavirus (COVID-19) outbreak, most of us took for granted a trip to the grocery store. Now, everything has changed.

During this public health crisis, the grocery industry has stepped up to the challenge, overcoming obstacles to fulfill its mission of keeping store shelves stocked with lifesustaining food, beverages, personal care, and household products needed by 329 million Americans.

There is no manual for this, so independent grocers have had to rely on their expertise and instincts to come up with new and strategies to keep the supply chain running as smoothly as possible and to protect employee and customer health and safety.

During this time, NGA is working with lawmakers on Capitol Hill and in the White House to gain support, relief, or assistance that makes it easier for our members to fulfill our mission under challenging circumstances. Below is an update and outlook on critical policy issues in the supermarket industry during this time.

Federal Government COVID-19 Response As the public health crisis continues to unfold, Congress has passed three major legislation pieces to assist families and the U.S. economy. On March 27, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act. Building off of the previously passed $8.3 billion emergency public health funding and the Families First Coronavirus Response Act, the CARES Act was a product of bipartisan negotiations between Republican and Democrat leadership and was intended to be the third round of federal government support.

The $2.3 trillion stimulus package provides funds to individuals, businesses, and states, among others, in response to the coronavirus pandemic. The bill includes $500 billion for loans and assistance to companies and state and local governments, $349 billion in low-interest small business loans, direct cash payments of as much as $1,200 for individual

taxpayers, and $500 per child, and an additional $600 per week for those receiving unemployment benefits.

Following reports that the Paycheck Protection Program (PPP), a new loan initiative included in CARES to help small businesses, had run out of money in mid-April, Congress passed the Paycheck Protection Program and Health Care Enhancement Act. More commonly known as “Phase 3.5,” the $484 billion package provides $321 billion additional funding for PPP – with $60 billion set aside for loans originating from smaller lenders, an additional $60 billion for disaster and other emergency loan programs, $75 billion for hospitals and other healthcare providers, and $25 billion to fund further COVID-19 testing.

House Democrats and the White House now say they want to launch negotiations on a fifth bill that could top more than a trillion dollars, providing states and localities with assistance to plug revenue shortfalls and possibly a second round of direct stimulus payments.

Continued on page 32 ▶

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An 8% Increase in Volume ― Rain or Shine ―

THE RESULTS ADD UP: t r i e d & trul y

Stores that utilize our retail materials see a 13% increase in dollars and an 8% increase in volume.1 By studying the market and monitoring consumer purchasing behavior, the Star Ranch Angus® brand team continually produces high-impact in-store promotions that work.

For us, partnership goes beyond the meat case and straight to your bottom line.

StarRanchAngus.com | #CookingUpClassics

© 2013 Tyson Foods, Inc. Trademarks and registered trademarks are owned by Tyson Foods, Inc. or its subsidiaries ®/© 2016 Tyson Foods, Inc.

BIGGER SALES, BETTER IN-STORE SUPPORT: TysonFreshMeats.com/SRA 1

Star Ranch Angus Beef In-store Promotion Material Test Midan Marketing. Spring 2015 ®/™/© 2019 Tyson Foods, Inc.

WAHSINGTON REPORT ◀ Continued from page 30

“During this public health crisis, the grocery industry has stepped up to the challenge.”

iStock

At the time of this writing, the Senate planned to return to session the week of May 4, but the House announced it would delay its return. With negotiations still ongoing for this additional relief package, various policy priorities remain on the table for what lawmakers are calling “CARES 2”.

From drug pricing and pharmacy reforms to allowing public sector employers to be eligible for the tax breaks for offering emergency paid leave, questions remain over the size and scope of this next bill. Speaker Nancy Pelosi (D-CA) has floated a “guaranteed income” policy for certain individuals who make below a certain threshold.

Meanwhile, Majority Leader Mitch McConnell (R-KY) is focused on shielding healthcare and other businesses from liability regarding COVID-19.

The White House has also weighed in on the forthcoming package, with recent statements in support of a second round of direct payments to individuals.

Supplemental Nutrition Assistance Program (SNAP) Recipients of SNAP will receive a temporary 40 percent increase in monthly benefits to provide relief from the pandemic-related

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economic slowdown. The boost lets families obtaining less than their maximum benefit get the greatest amount per their household size for as long as two months.

The extra SNAP money comes as the spread of COVID-19 continues to push the unemployment rate to levels not seen since the Great Depression. School shutdowns are forcing parents to provide their children with meals that otherwise would have been provided by their school.

“USDA is providing a 40 percent increase in SNAP benefits to ensure that low-income individuals have enough food to feed themselves and their families during this national emergency,” Agriculture Secretary Sonny Perdue said.

Supporting Frontline Workers Supermarket employees are working hard every day to ensure Americans have access to food during this unprecedented emergency.

A proposal is being discussed in Congress that provides income tax relief for those working in a duty station that is part of DHS-designated critical infrastructure up to the first $8,900 per month of pay, as well as payroll tax relief for these individuals up to the first $50,000 of their income to ensure a tax benefit for workers who do not currently owe income tax. ■

!

OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES

Making it Up Beauty brands and retailers are taking matters into their own digital hands. With all the store closures, these companies are focusing on live streaming by transitioning associates into digital beauty advisors, building online communities, and launching new products for GenZers – a key demographic.

iStock

Paycheck Funds While Congress argues over ways to replenish the Small Business Association’s Paycheck Protection Program information on who got the money before the funds ran dry are under scrutiny.

It seems that construction companies and manufacturers got the lion’s share of loans under this program, retailers and restaurants that got hit hardest by the pandemic and have the largest job losses received less than 9 percent of the funds. iStock

FOOD FIX

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FINGER LICKINʼ GOOD? Ikea stores may be closed, but customers can still get their favorite product. Not ready-to-assemble bookcases, but the chain’s famous Swedish meatballs with a Twitter recipe on how to make them at home. The recipes are done in sixstep line drawings like Ikea’s famous furniture instructions.

Offering a bit of whimsy into a world consumed by more pressing matters, KFC Corp. was reportedly joining Crocs to produce limitededition clogs that look like fried chicken topped by chicken-scented drumsticks.

They are to sell for $59.99, which is just a bit less than three buckets of the Colonel’s chicken.

OUTSIDE THE BOX

The Soft Sell

iStock

CONSUMER CRISIS BEHAVIOR

With retail sales down a devastating 8.7 percent, retailers are desperate to sell product. But how to do it in the time of a health crisis is the question.

Experts suggest retailers and marketers reach housebound online customers that for every five posts on places like Instagram or Facebook, three posts should be about shopping and product and the other two about home life.

Coresight Research has issued a new survey on the coronavirus crisis and its impact on consumer buying behavior and how retailers are adapting with new business models. Examples include using technology like live streaming, virtual try-ons, and virtual storefronts to enhance the customer experience; extended features like save-a-sale programs and alternative payment options; cross channel selling; and, forming partnerships with other companies to diversify offerings.

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PEOPLE

SHORTAGE

Having trouble finding new employees?

Blame the gig economy. Trying to avoid jobs with a greater risk of exposure to COVID-19, employees are flocking to delivery companies like Instacart, FreshDirect and Shipt, which are on hiring sprees. Plus, these gig jobs often pay more and give deliverers the opportunity for significant tips.

iStock

Gurgling Along Companies looking to keep themselves in the public eye during an advertising drought are becoming increasingly creative. The cooler brand Yeti has a streaming service called Yeti+. What are they showing? What else – streams. iStock

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FACING REALITY Facebook, which has been slow to delete any content due to First Amendment concerns, particularly those from politicians, is becoming proactive when it comes to misinformation about the coronavirus.

Now, anything that is deemed harmful to people, no matter the source, will be quickly taken off the site.

CAL I FO RNIA GRO CER | 35

BY JESSICA DUMONT

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BEFORE COVID-19 BECAME A REGULAR PART OF THE WORLD’S VOCABULARY, FEW COULD HAVE EVER PREDICTED A PANDEMIC LIKE THE ONE WE’VE WITNESSED, AND EVEN FEWER WOULD HAVE IMAGINED THAT THEIR NEIGHBORHOOD GROCERY STORE WOULD BECOME SO CENTRAL TO THEIR LIVES AS EVERYTHING ELSE CAME TO A STANDSTILL.

A few months wiser, we now know how and why the grocery industry, and the heroic people working in it, moved to the front lines of the pandemic. At every point, starting with panicked shoppers rushing to stock their pantries to social distancing and staged reopening, grocery stores have had to adjust their operations, serve customers and continue business under the most challenging circumstances.

Now, as companies look to a post-COVID world, industry experts and grocery executives are trying to determine what’s next, and what a “new normal” will be as they take a look back at key learnings from the pandemic.

GROCERS MOBILIZED QUICKLY Government agencies like the California Department of Public Health (CDPH) played an important role in setting guidelines for California businesses, including grocery stores.

On March 16, the agency released a document addressing operations for various retail, food and beverage businesses during the COVID-19 pandemic.

CDPH noted in its document that the food distribution chain “is critical to the public’s health,” and that grocery stores should remain fully open and operational. The agency advised operators to ensure social distancing of six feet per person for both customers and employees, and to limit the number of customers in the store at one time. They also encouraged employee training on proper hygiene and handwashing, and to increase cleaning and sanitation of high-traffic areas.

Continued on page 38 ▶

CAL I FO RNIA GRO CER | 37

◀ Continued from page 59 37

“Companies look to a post-COVID world, industry experts and grocery executives are trying to determine what’s next, and what a ‘new normal’ will be as they take a look back at key learnings from the pandemic.” iStock

Some California grocers mobilized in response to the coronavirus outbreak prior to guidelines from the Centers for Disease Control (CDC) and CDPH, while others implemented new procedures following the official guidance.

CDPH, and also took their own measures based on their teams and local communities.

most integral piece of their response since the store doesn’t offer e-commerce.

At PAQ Inc., a 100 percent employee-owned company that operates 14 Food 4 Less stores and six Rancho San Miguel stores, communication has been key.

At Raley’s in Northern California, Corporate Director of Consumer Affairs Chelsea Minor said the company had its first meeting to discuss its COVID crisis plan on February 27, 2020. By mid-March, everyone in the company who could work remotely was doing so.

“We established an Emergency Response Team and an Emergency Response Plan,” said Senior Vice President and General Manager Chris Podesto. “We implement wellness, deep cleaning and safety protocols company-wide and continue to reinforce the importance of being diligent in these areas.”

In his 32 years running Foods Etc., owner Dennis Darling said he’s never seen anything like the COVID-19 pandemic. And while Lake County is a more rural area with only eight reported cases of the virus, Darling said it’s been important to understand what they needed to do.

Smart & Final, which has 240 stores in California, was also thinking early on about coronavirus. CEO Dave Hirz said the company had its first conversation around the virus in January, and by March 4 had started communicating information to its stores, store support center and warehouses.

Hirz said his team put together an internal coronavirus response task force that same week, and by March 13, the company had entered full crisis planning mode.

Food 4 Less adopted several of the recommended tactics like social distancing, sanitation, installation of plexiglass dividers at all checkouts, limited shopping hours and mandatory masks for all employees on the sales floor. The company also implemented a two-dollar-an-hour increase in pay for frontline employees to thank them for their dedication.

As COVID-19 began to surface more widely, retailers were quick to embrace recommendations from the CDC and

Foods Etc. installed plexiglass barriers and gave personal protective equipment to customer-facing employees, and Darling said the store has also added about 160 hours a week of labor to provide deeper cleaning and sanitizing – which has been a significant expense.

The grocer has continued to followed recommendations from its local health department, and Darling said CGA and IGA, which it is part of, have been extremely helpful in providing guidance and best practices.

At Foods Etc., an independent grocery store operating for 40 years in Clearlake, Calif., cleaning and sanitation were perhaps the Continued on page 40 ▶

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UNIQUE SKUs

UNMATCHED WHOLE-STORE

SELECTION BUILDING BETTER.

He’s going to need a bigger cart.

◀ Continued from page 38

In addition to limiting traffic in stores, increasing overnight cleaning with thirdparty crews, offering senior hours and providing masks to associates, Hirz said Smart & Final only opened every other check stand to make sure employees had plenty of space. The company also installed a six-footlong plexiglass barrier, which he said at first seemed too large compared to the standard sizes that other grocers were using, but after one of his operations leaders, Sean Mahony, insisted they were needed to keep cashiers safe, he decided to install them at every check stand.

Smart & Final also started paying its associates an extra $2.25 an hour to acknowledge their hard work.

“Really, people didn’t ask for it and people weren’t calling in sick, it was amazing, but we did this in recognition of their efforts to get us through this incredible time,” Hirz said.

Director of Corporate Affairs John Votava said as the company’s response took shape, Ralphs had an advantage with the strength of Kroger behind it. Kroger was able to procure items like masks and plexiglass barriers quickly, while Ralphs could tailor additional measures, like reduced service hours and senior shopping hours, based on the needs of its associates and the local community. iStock

Ralphs, a Kroger banner that operates 188 stores from the Central Coast down to San Diego, has made wearing gloves and face coverings mandatory for associates to better protect themselves and customers, even in areas like Orange County and Riverside county that don’t have face covering ordinances in place.

UNIQUE INITIATIVES Aside from more common practices, there were some unique initiatives put into place across companies.

Raley’s, for example, added a new role at the store level known as the Cleaning Marshal.

Every day, that person is responsible for implementing and enforcing all new cleaning and sanitization protocols.

Congratulations Headlite Juan Trillas Bimbo Bakeries USA

From your friends at the California Grocers Association

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

The company also started offering prepacked “essential bags” to help senior customers and those at risk who chose to stay out of the grocery store. The bags are still available with no intended end date to the program. There are two options: A $20 bag and a $35 bag. The $20 option includes fresh items as well as pantry staples such as oatmeal, canned goods, pasta and oranges.

The $35 bag offers freshly prepared heatand-eat entrees and salads.

According to Minor, the goal with the senior bags was to help seniors avoid going out in public and being exposed to COVID-19.

“While some of our competitors focused on senior hours, we truly believe that increasing our online pickup and delivery options, offering a quick replenishment like a bag and those types of things were the right avenues to protect those at risk and seniors,” Minor said.

One particularly innovative effort from Ralphs is the store’s capacity limits, which are being managed with a technology called QueVision. Votava said that infrared sensors have been installed at store entrances, which track how many people go in and out of the stores. When a store reaches 25 percent capacity, management will be alerted and they’ll close the doors until the crowd drops back down.

“Once we see the store traffic dissipate a bit, then we’ll let customers in one by one to make sure we can maintain the physical distance in stores,” Votava said.

Smart & Final has launched a digital queuing system to make the checkout process more efficient and help customers better adhere to social distancing. The practice began in early March and is now rolling out to every store.

queue up in a single line near the front of the store behind a swinging gate. A digital screen will alert a customer when a new register is open, and will also display reminders about social distancing and other safety practices.

At Gelson’s Market, which operates 27 stores from Santa Barbara down to San Diego, one new innovation coming out of COVID-19 was curbside pickup of freshly prepared meals. Vice President of Team Development and Public Affairs Hee-Sook Nelson said customers can now place orders for a gourmet-style “kitchen meal” online and pick them up at the front of the store within a 15-minute window.

“In our delis, we’re trying to provide service in a way where we can still serve fresh food in a quick manner, without a lot of thought for the customer,” Nelson said.

Rather than keeping individual lines at each check stand, Smart & Final customers will

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THANK YOU frontline grocery associates for your committment to serving the community during this time. We appreciate you!

CAL I FO RNIA GRO CER | 41

◀ Continued from page 41

“I think it’s incumbent upon us that we’re doing everything possible to see to it that we have the cleanest and most sanitary shopping place available.”

iStock

COLLABORATION ACROSS PUBLIC AND PRIVATE SECTORS According to Doug Baker, vice president of industry relations with FMI – The Food Industry Association (formerly the Food Marketing Institute), close coordination with government agencies was key in the successful response not only from grocers, but the foodservice industry as well.

Nationally, FMI was able to work with the U.S. Department of Agriculture and the Food and Drug Administration along with local authorities to get waivers so they could redirect food from foodservice to grocery.

This allowed restaurants to sell their food in grocery stores, even though it wasn’t packaged according to retail requirements.

“Having those strong relationships at various levels of government was significant,” Baker said.

Raley’s also had some innovative partnerships amid the pandemic, including one with city government in Rancho Cordova, California. Minor said the city instituted a program called “Rancho Delivers,” which paid for grocery delivery for residents to help minimize the need to leave their homes. City officials put out a special

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promo code for residents that they could use for free delivery of Raley’s groceries.

“We were very creative in our solutions in working with both local governments as well as partners who wanted to support.

We worked in singular regions to support the needs of that individual community,” Minor said.

Various levels of government and local jurisdiction have also proven to be difficult, however. Nelson noted that the way regulations kept changing on a daily basis around guidance, health and safety requirements was challenging. She noted things were different on a county-by-county basis, with some counties coming on board later than others around things like masks, social distancing and sanitation protocols.

“A chain like Gelson’s with only 27 stores, it was challenging enough. I can’t imagine being one of the larger chains with more than 300 stores,” she said.

WHAT IS “NORMAL” IN STORES NOW? The general consensus among experts and retailers is that the “new normal” will include some of the practices that have come into play since COVID-19 entered the U.S.

Podesto noted that with reports stating COVID-19 could surge again in the fall, Food 4 Less will keep stock of protective gear and keep plexiglass barriers up at check stands.

“We won’t be caught off guard,” he said.

The company will also continue to encourage customers to wear masks if they want to and provide gloves and masks to its team. Food 4 Less locations will also maintain reduced business hours and continue their enhanced, deep cleaning practices.

Darling at Foods Etc. agrees that things like gloves, masks and plexiglass barriers will remain in place for a long time, if not forever. While he’s proud of his store’s response to COVID-19 and its new sanitation and safety practices, they’re likely to become even more important.

“People are going to decide where they shop based on their perception of how safe they are there,” Darling said. “And I think it’s incumbent upon us that we’re doing everything possible to have the cleanest and most sanitary shopping place available.”

Hirz with Smart & Final anticipates the detailed cleaning of high touch areas like pin pads, check stands and door handles will remain important, possibly remaining in place for the next several years, he said.

At Raley’s, Minor said they’ll continue to complete wellness checks, which includes both employees’ temperatures and asking questions around any symptoms before they start work. Additionally, she said an important takeaway from the pandemic is that employees need support from their employers to take sick time when they don’t feel well to prevent the spread of illness.

“Though manufacturers didn’t face the public directly, the impact of COVID-19 on their operations, and on the supply chain, has been massive.”

Votava noted the commitment to employees will also remain essential to operations moving forward.

“What we’re going to continue to do is focus on our associates and make sure they’re comfortable coming to work every day,” he said.

Retailers’ foodservice departments will look different as stores continue to reopen and adjust their operations post-COVID. Minor said the future of foodservice areas and bulk sections is still being discussed at Raley’s, and a plan to address those is to be determined.

Podesto, meanwhile, questions whether bulk sections will ever come back.

Baker with FMI expects self-service departments, like salad bars or hot bars, will go behind the deli rather than being self-service. Alternatively, retailers may start

“Before the pandemic, customers, especially in California, typically shopped at multiple stores,” Hirz said. “They would shop at maybe a Trader Joe’s, a club store and a grocery store or two. Now with social distancing, we’re seeing customers shopping less frequently, but the average sale per customer has gone up dramatically.”

Since the outbreak, Votava said Ralphs has also seen a drop in customer count but a boost in basket sizes.

“Before this, people would consider working while sick sometimes because they didn’t feel supported or they needed the money,” Minor said. “So having the conversation and transparency around support for team members to take much-needed time off to take care of themselves and their families is important.”

Raley’s will also continue to employ Cleaning Marshals to maintain sanitization standards, with greater attention to public spaces like bathrooms and break rooms. Minor said Raley’s is also evaluating how to reopen spaces like drinking fountains and how to keep them sanitary.

By March, it was clear the growth was related to COVID-19, and the grocer saw a steady increase in volume until mid-March. But as the volume went up, the customer count dropped, Hirz said.

“We do see customers coming into our stores and leaving with bigger carts,” Votava said. “Since restaurants aren’t open, their only option is to shop for groceries. They’re loading up and trying to fill their pantries for weeks at a time, at least.”

A LOOK AT THE SUPPLY CHAIN iStock

to have these areas staffed by an employee to serve customers instead of them helping themselves.

At Gelson’s, Nelson said the company is still figuring out how in-store dining, selfservice food and the demo components of its business will come back, especially with the grocer’s mask requirements for both shoppers and associates.

“That aspect of the business is probably going to look different, so we’re trying to reimagine the components and how all that is going to work,” Nelson said.

The other big change retailers expect is that customer count will remain low while volume will be up. Smart & Final began seeing increases in February, and at the time they were not certain what was driving the increases.

Though manufacturers didn’t face the public directly, the impact of COVID-19 on their operations, and on the supply chain, has been massive.

First, there was the panic phase, which experts say wasn’t an issue of supply chain as much as demand overload from worried consumers. For example, Baker said that in March, the U.S. went through 12 weeks of safety stock in a matter of 10 days in certain paper categories.

“I’ve had a few people ask me, ‘Is it really demand or do we really have a shortage?’

And I said, ‘The consumer demand is what created the shortage,’” he said.

And while the supply chain is seen as resilient among industry groups, Baker noted when a customer walks into a store and doesn’t see the product they want on the shelf, for them it doesn’t seem resilient.

Continued on page 44 ▶ CAL I FO RNIA GRO CER | 43

◀ Continued from page 43

At Foods Etc., Darling said the stock-up craze at the beginning of March wiped out a lot of the store’s supplies, and much of it has still not been replenished. Where typically its wholesaler’s service level is 95 percent, Darling said now service is often under 40 percent.

“It’s really been difficult. We’ve scrambled to find alternative sources of supply,” Darling said. Currently, the store is even buying from Costco to supplement its stock because they have more available than Food Etc.’s regular wholesaler.

“We’re in a small community and we’re doing our best to keep our community fed,” Darling said. “The supply chain is getting a little better but it’s still been an issue.”

The issues in supply have led the manufacturing side of the industry to have conversations around how to be more efficient to get products on the shelves, and how the situation could be improved to reassure consumers.

Manufacturers have experienced the pandemic differently and have tried to respond in turn. According to the Food

Institute, Hershey’s saw sales of products like cocoa and chocolate chips jump 30 percent as more people baked at home.

Quaker Oats and Frito-Lay saw revenue increase about 7 percent. Companies have said they will try to have more inventory on hand and respond faster when possible to meet consumer demand.

According to Podesto, Food 4 Less felt the impact on the supply chain and realized that it’s more vulnerable than the industry thought.

In the meat category, Tyson Foods. Inc. reported a 92 percent growth in pound sales during the peak stock-up period in March compared to the same week last year. The company is adjusting its expectations of what and how people will buy meat in the future, including a shift toward less expensive cuts as the economy enters a downturn.

An additional challenge with the supply chain for Food 4 Less is when the company has supply chain issues, its costs go up, which means the customer also sees price increases.

Now, while most of the crushing demand has slowed down for things like paper goods, new issues have arisen around the meat supply chain as manufacturers have had several reported cases of COVID-19 and have had to limit the number of employees working in facilities to adhere to social distancing guidelines.

“When plants close, there’s a long-term impact on the industry. We’re seeing that right now with beef; we’ve had challenges with chicken and pork,” he said.

As the food industry looks to adjust to what’s “normal now,” Baker said shortages may remain, unless sales abate and consumers feel more comfortable they have what they need in their homes. That will give the supply chain an opportunity to rebound and refill the supply chain.

“We have to anticipate that we’ll continue to have some shortages within manufacturing and food processing simply because of social distancing requirements,” he said.

“And that will quickly become the new normal until there’s something from the medical community that will allow us to increase the labor activity.”

Timeline of critical events in California’s COVID-19 pandemic

January 26: First confirmed case of COVID-19 in California

March 11: World Health Organization declared COVID-19 a pandemic

March 4: Governor Gavin Newsom declares state of emergency to help California address COVID-19

March 13: Panic buying gains statewide attention

Continued on page 38 ▶

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THE SURGE OF E-COMMERCE AMID COVID As more people looked to stay home and avoid public places, e-commerce surged well beyond anything companies have ever seen. According to Baker, about 3 percent of retailers’ sales were online prior to COVID-19 and amid the pandemic, they’ve surged to as much as 50 percent of some grocers’ sales.

“I think grocers have done an amazing job of trying to keep up with this unexpected demand and this exponential increase in online orders,” said Diana Medina, director of e-commerce solutions at Inmar. “Many of them were not even set up, especially independent retailers, to accommodate online orders, and they were very resourceful in that process.”

One capability Food 4 Less didn’t have in place during the pandemic was curbside pickup – something the company is now preparing to launch out of one of its Lodi stores, with plans to roll it out broadly in the next couple months.

“Once we were able to get those people up and running, we learned a lot around training, onboarding, and how to be more efficient in those realms,” Minor said.

“Then it was about expanding those time slots and offerings for customers.”

“What we’re going to continue to do is focus on our associates and make sure they’re comfortable coming to work every day.”

For Ralphs, growth in curbside pickup was particularly notable. The grocer experienced some strain in the beginning, but Votava said they hired 5,000 new employees during the pandemic, many of whom have helped support pickup operations. By the end of March, curbside pickup had expanded to more Ralphs locations and customers have seen improved access to time slots for pickup.

Medina noted that retailers who were not set up for e-commerce began taking orders over the phone or by email to meet consumer needs amid the outbreak.

“It was part of our strategy but we’ve fasttracked it since this pandemic, because we realize the e-commerce platform is critical now more than ever,” Podesto said.

Podesto, which works with Instacart, said Food 4 Less saw an increase of 300 percent in its e-commerce business. The stores weren’t necessarily ready for the deluge of online orders, but Podesto said neither was anyone else, even Instacart.

Raley’s saw a major surge in both curbside pickup and delivery as well, and Minor said the company hired more than 750 people to support its e-commerce operations, specifically for picking orders.

March 16: CDPH issues health and safety guidelines for businesses, including grocers

Hirz said Smart & Final also saw a big jump in e-commerce, with double the penetration of the previous year. The grocer works with both Instacart and Shipt to fulfill online orders. While customers can go to Instacart directly to order from Smart & Final, the company also has its own platform, which uses Shipt for picking and delivering.

Continued on page 46 ▶

April 28: The U.S. surpasses 1 million cases of COVID-19

March 20: Gavin Newsom issues statewide shelter-in-place order for California

May 8: “Non-essential” retailers in California are allowed to reopen following proper safety protocol

CAL I FO RNIA GRO CER | 45

◀ Continued from page 45

brought down to six minutes, which opens more windows for consumers to place orders and get their products more quickly.

“The biggest challenge has been maintaining adequate inventory levels on some sensitive items, so in-stock has been a challenge, and time slots for delivery,” Hirz said.

“We see that there’s going to be some additional growth in micro-fulfillment whether it be in a standalone facility or in a back room of a large grocery store,” Baker said. “And that takes pressure off the center store, it takes pressure off stocking and it takes pressure off the supply chain as well.”

THE FUTURE OF E-COMMERCE As grocers look ahead, Medina recommends they consider owning more of their e-commerce infrastructure so they can be better prepared for growing demand.

With the recent exponential growth of sales, retailers that have a comfortable amount of cash on hand could make smart investments in their online infrastructure.

“They don’t necessarily have to go big and purchase every single piece of equipment or technology that is out there, but I think they need to be very realistic about where they are in the evolution of their e-commerce program,” she said.

For larger grocers that don’t already own their e-commerce experience end-to-end (meaning they partner with a third party like Instacart or Shipt or other fulfillment platform), Medina thinks the pandemic may have shown them the importance of being more involved in their experience.

“Understanding now that a much larger volume of their orders are going to go through an online channel means they’re going to have to be a lot more careful about how they manage those aspects of the interaction with the customer,” she said.

And for smaller grocers and independent chains, Medina said this is an opportunity to learn how to scale their e-commerce better and enhance their operations for future growth.

“Some of the crazy volume will dissipate a bit and normalize, but I do believe customers will be more willing to participate in online ordering now that they have removed barrier in their minds and are more comfortable with the service now,” she said.

Baker also noted the growing role of micro-fulfillment in grocery e-commerce and how more grocers could invest in that as online sales continue to be important.

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iStock

“I’ve had a few people ask me, ‘Is it really demand or do we really have a shortage?’ And I said, ‘The consumer demand is what created the shortage.’”

With online sales forecast to be $143 billion by 2025, according to the FMI’s predictions with Nielsen, which Baker said they’ll soon revise, the industry needs to speed up online fulfillment and make it more widely available.

Today most online orders are picked from the same store customers and third-party shoppers, like Instacart contractors, are picking from. They are dealing with the same out-of-stocks, and the process is labor intensive, taking about 60 minutes per order.

“Micro-fulfillment is one option for retailers to be able to respond to that,” Baker said.

In some cases that could mean operating dark stores with human employees, which banners like Whole Foods and Kroger are testing. In other cases, retailers can set up a micro-fulfillment center using robotics, which can also be set up in a dark store or in the back of a fully operating store. With micro-fulfillment, 60-minute picks can be

THE INDUSTRY WILL REMAIN ESSENTIAL Whether it’s improving e-commerce operations or equipping stores for a safer in-person shopping experience, retailers will continue to be alert and responsive even as the COVID-19 pandemic subsides.

“There are really two audiences that retailers are going to respond to,” Baker said. “Their government and their consumers. Retailers will take that feedback seriously. Retailers are focused on keeping their customers and staff comfortable, and they’ll follow whatever regulations are required of them.”

Hirz noted that the grocery industry, which had fallen out of favor with investors after four years of the highest level of food deflation in more than 60 years, has a renewed importance to both consumers and investors.

“I would say the grocery industry is dramatically different today than it was a few months ago. Shopping habits have changed in a way I think is going to continue for years to come,” he said. ■

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ORNIA SAFE INITIATIVE UPDATE New polling shows trust in grocers extremely high, and strong support for anti-shoplifting initiative backed by the California Grocers Association.

California grocers are trusted, respected and on the “heroes list” for their efforts to ensure safe supplies of food and other essential goods during the COVID-19 crisis, based on the findings of a new independent statewide survey conducted

by Smart Decision Research.

According to the poll, 84 percent of voters have a favorable view of California grocers, and an overwhelming 93 percent agree with the grocers' decision to limit the purchase of essential items like toilet paper and disinfectants during the crisis “to prevent panic buying, hoarding and to help ensure there is enough for all their customers.”

The poll also shows voters, by a wide margin, are standing with grocers in support of the “Reducing Crime and Keeping California Safe Act of 2020” – an initiative appearing on the November ballot aimed at curbing the steep rise in retail theft, fueled mainly by the passage of Proposition 47 five years ago.

Proposition 47 reclassified theft, illegal drug use and a number of other crimes, reducing them from felony offenses to simple misdemeanors. As a result, offenders are now free to steal up to $950 worth of property or merchandise and face only misdemeanor charges – for each act of theft, regardless of the number of individual thefts committed each day, provided each theft stays below the $950 threshold.

Because of this, California communities are experiencing an explosion of car break-ins, burglaries and other property crimes, while shoplifting has soared up to 25 percent, costing the state’s grocers and retailers billions of dollars in additional loss since Proposition 47 passed.

As theft escalates, voters are becoming increasingly aware of the problem – and concerned. When asked if the laws against theft in retail and grocery stores are being enforced, 73 percent of voters said “no” or that enforcement “could be better,” according to the survey.

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CAL I FO RNIA GRO CER | 49

When asked if the laws against theft in retail and grocery stores are being enforced, 73 percent of voters said “no” or that enforcement “could be better.”

◀ Continued from page 49

Increasingly, voters are seeing a link between weaker theft laws and homelessness and other issues that are eroding California’s quality of life, and are equally concerned about the impact theft is having on grocers, the cost of food, and their personal safety when shopping. According to the survey: • 70 percent of voters believe California’s weaker anti-theft policies are connected to the growing increase in illegal drug use, homelessness, street crime and vandalism • 70 percent agree the increase in shoplifting “has cost businesses billions, limits product availability for paying customers, and raises prices.”

• 91 percent support the adoption of new laws and policies making it harder to sell stolen merchandise online, a growing marketplace for stolen property

A key provision of the Keep California Safe Initiative responds to this growing public demand for stronger anti-theft laws and more rigorous enforcement.

Initiative takes aim at serial theft Under the Keep California Safe initiative, offenders with three or more convictions for theft would be subject to felony prosecution, regardless of the amount stolen on the third offense – a provision supported by 70 percent of voters, according to the poll.

“These are exceedingly strong numbers,” says Richard Temple, chief strategist for the Keep California Safe campaign.

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“Clearly, voters are concerned about theft and ready to take serious action to stop it.”

Crime has now emerged as one of the top five issues of concern for voters, with 54 percent saying reducing crime is “very important” to them.

“Voters are becoming more troubled about crime and their personal safety,” said Temple.

“It’s part of a growing concern among voters that California is breaking down. They want it fixed, and they see the Keep California Safe initiative as an important way to help put the state back on track.”

across the board – Democrats, Republicans and Independents. This is a very popular initiative, and if we’re able to get our message out, we’re going to win.”

Broad-based, bi-partisan support driving initiative

“A lot of groups are coming together in support of what we’re doing,” says Democratic Assemblyman Jim Cooper, who is co-chairing the Keep California Safe Campaign. “It’s an impressive coalition representing a wide range of views.

But we all agree on the need to strengthen public safety initiative, offenders and provide better protection or more convictions against theft and other crimes.”

Under the with three for theft would be subject to felony prosecution.

• 69 percent of voters surveyed believe California communities are more lawless “because there are no longer consequences for repeat offenders who steal or use illegal drugs” • 70 percent believe that many inmates are being released from prison “without a plan to ensure they don’t return to crime”

“When people learn more about the initiative and what it does, support for it grows even stronger,” says Temple. “We’re winning in every media market in the state, including the key markets of San Francisco and Los Angeles, and drawing support from voters

“This is a bi-partisan effort, with people on both sides of the aisle working together,” says Republican Assemblyman Vince Fong, another campaign co-chair. “We’re doing what’s right for California. It’s the way the system should work. Crime doesn’t pay attention to party labels. It hurts all of us.”

Cooper has tried numerous times to pass legislation similar to the initiative, including measures against shoplifting and other theft, but his bills have repeatedly been stalled in committee.

“This is something only the voters can do at this point, otherwise it’s not going to happen,” says Cooper. “And we’re putting together the coalition and resources to make sure they get the message.”

The coalition includes hundreds of elected officials from throughout California, and organizations representing business, labor, law enforcement, crime victims, local government, and advocates for women and children.

In addition to the California Grocers Association, endorsers include the California Retailers Association, CalChamber, the League of California Cities, Crime Victims United, Women Escaping a Violent Environment, the Association of Deputy District Attorneys, the Association for Los Angeles Deputy Sheriffs, the California Police Chiefs Association, Klaas Kids Foundation, Crime Survivors, Inc., the California Contract Cities Association, California Bankers Association, and the Peace Officers Research Association of California (PORAC).

The Keep California Safe Initiative reclassifies date rape, domestic violence, child trafficking and other “non-violent” crimes as “violent” to prevent the early release of inmates convicted of these crimes.

“A lot of groups are coming together in support of what we’re doing,” says Democratic Assemblyman Jim Cooper.

“We all agree on the need to provide better protection against theft and other crimes.”

A final provision of the initiative reinstates DNA collection for certain crimes that Proposition 47 reduced to misdemeanors, including shoplifting, grand theft, forgery and fraud under $950.

Like the other provisions, this too is popular with voters, 65 percent of whom agree with the need to expand DNA collection.

Multiple studies have shown that DNA collected from theft and drug crime offenders has helped solve more serious and violent crimes like robbery, rape and murder.

In addition to new protections against theft, the initiative offers new protections against criminals convicted of violent crimes.

As a result, inmates convicted of these and other “non-violent” crimes that are clearly violent are eligible for early release under Proposition 57, another recent “reform” initiative which, like Proposition 47, was seriously flawed with dangerous unintended consequences – including a recent court ruling that says Proposition 57 also allows the early release of child molesters and violent sexual predators.

“There’s almost universal agreement that these are violent crimes and people convicted of them should not be released from prison early,” says Temple. “Our opponents will have a very difficult time arguing that crimes like date rape and pimping a child for sex are non-violent and should stay that way.”

“DNA collection is an essential public safety tool, and voters want it put back in the hands of law enforcement,” says Assemblyman Cooper, a former Deputy Sheriff. “Our initiative does that.”

Initiative makes date rape and child trafficking “violent”

Under current California law, a number of violent crimes are not classified as “violent,” including rape of an unconscious person, assault on a police officer, felony domestic violence, pimping a child for sex and assault with the potential for great bodily harm, including assault on a child.

domestic violence should be reclassified as violent to prevent the early release of inmates convicted of them.

Messages “move the needle” The campaign has already created and tested several campaign ads, all of which are effective with voters. iStock

“When voters learn that crimes like date rape and child trafficking are not considered violent under California law, they’re stunned,” says Crime Survivors CEO Patricia Wenskunas, whose organization has endorsed the initiative. “And their support for the initiative grows exponentially.”

“The ads move the needle by big margins,” says Temple. “The ads are believable to voters and persuasive, which isn’t surprising.

We’re offering voters something they want – better protection against crime. And the ads succeed in convincing them that the initiative will provide them with this added protection.”

According to the survey, 81 percent of voters agree that crimes like rape of an unconscious person, child trafficking and

Continued on page 52 ▶

CAL I FO RNIA GRO CER | 51

◀ Continued from page 51

“When voters learn that crimes like date rape and child trafficking are not considered violent under California law, support for the initiative grows exponentially,” says Crime Survivors CEO Patricia Wenskunas.

An aggressive grassroots and social media campaign in support of the initiative is already underway and producing results, with visits to the campaign’s website increasing dramatically and Facebook “likes” and “shares” growing daily.

Targeted internet ads are scheduled to begin soon.

Local support for the initiative is growing as well. A number of local city councils and boards of supervisors have passed resolutions supporting the initiative, and a growing number of district attorneys, sheriffs and police chiefs from around the state are signing up in support.

“This will be California’s first statewide ‘mail only’ election, so we’re honing our strategy accordingly,” says Temple. “We have an aggressive television campaign and other marketing activities planned, knowing that

many voters will be casting their ballots early.

We’ll be reaching the right voters at the right time, with messages that move them.”

“Here’s the bottom line,” says Assemblyman Cooper, “We have a very popular initiative backed by people and organizations who are trusted and respected. We have a powerful message and the right people to carry it to voters. With the right resources, we’ll win the fight.

“It’s time to step up and make this happen,” says Cooper. “It’ll be a crime if we miss this opportunity.”

The campaign’s website – keepcalsafe.org – has more information about the initiative, a complete list of endorsers, television ads, coalition resources, and a “tool kit” with the materials needed for grassroots action. ■

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. www.cagrocers.com/members/supplier-executive-council/

past store tour hosts: Brad Askeland, VP North Division Gary Reese, VP South Division North State Grocery

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

Bryan Kaltenbach, Division President, Food 4 Less The Kroger Company

Brad Street, Division President Safeway Northern California

Kevin Konkel, COO Chuck Williamson, District Mgr Raley’s

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KNOW THE LAW

Prop. 65 Food Notices Abundant During COVID-19 S OP HIA CASTIL LO, PA R T N ER , DOW N EY B R A ND, LLP

The COVID-19 pandemic, shelter-in-place orders and associated California court closures are all unprecedented events in the lives of Californians.

None of these events, however, slowed Proposition 65 plaintiff groups, who sent a record number of Prop. 65 Notices of Violation (“Notices”) during the first months of the COVID-19 pandemic.

These Notices allege that the food products contain chemicals on the Prop. 65 list, and therefore, also allege that the products must contain the all too familiar “Prop.

65 warning” on their label or packaging.

Grocers, national food brands, and private label suppliers have received Notices in the last three months.

Prop. 65, also known as the Safe Drinking Water and Toxic Enforcement Act of 1986, requires “clear and reasonable warnings” on consumer products (including foods) sold in California if use of the products causes an exposure to chemicals on the Prop. 65 List at a harmful level. The regulation authorizes monetary penalties for violations, and alleged violators also pay attorney’s fees of the plaintiff enforcers that send the Notices.

Typically, Prop. 65 food Notices allege that lead, mercury, acrylamide, arsenic, and cadmium content in food products requires a warning. Prop. 65 plaintiffs have sent the numerous Notices during the COVID-19

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period alleging that a variety of food products contain these chemicals. Types of food products noticed include: Seaweed & seafood products (lead, arsenic & cadmium), canned goods, including fruits & vegetables (mercury, lead & acrylamide), vinegars (lead & carbaryl), baby food fruit & vegetable pouches (acrylamide & lead), almond products, including butters (acrylamide), Crackers, cookies & chips (acrylamide), waffles (acrylamide), and baby teething wafers & baby cookies (acrylamide).

These Notices are significant in their volume and their variety. Some of these Notices have updated prior Notices with supplier/manufacturer information, and other Notices are completely new. Certain products, including vinegars, baby foods, and canned seafood have been the subject of Prop. 65 Notices in the past. The variety of products identified in acrylamide Notices, in particular, are growing increasingly creative.

In addition to these Notices for “typical food chemicals,” Notices in the COVID-19 period also alleged that food products contained chemicals triggering a Prop. 65 warning that typically are not mentioned in Prop. 65 food claims – carbaryl and furan. Several Notices during the COVID-19 period alleged that

vinegar products contained carbaryl, an insecticide. As of the date of this article, a number of these had been withdrawn.

Regarding furan, two Notices were sent in May, alleging that furan content in canned goods required a warning. These two Notices are the first time that plaintiff groups have alleged that furan content in foods requires a Prop. 65 warning.

It is important for grocers to be aware of and monitor these trends. The confluence of circumstances related to the COVID-19 pandemic has created a shifting risk analysis for businesses subject to the regulation.

On the one hand, grocers have been open during the SIP months as “essential” businesses and may see an uptick in Notices for food products as a result.

On the other hand, California courts have been closed for much of SIP, and Plaintiffs are correspondingly hamstrung to file lawsuits and prosecute their cases during this downtime.

In the midst of other crucial decisionmaking in the COVID-19 period, those receiving Notices during this time of “suspended animation” in the Courts would be well served, to the best of their abilities, to shore up their Prop. 65 procedures and risk analyses, evaluate the possible settlement of the Notices they receive, and ready themselves to defend these claims as the Courts re-open. ■

KNOW THE LAW

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A

t c A g n i

c n a l a B

illa r T an u J ite l d a He r IS o t a LEW n N i LE m BY u l l I t Mee

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s

Noted author and baker Peter Reinhart has said the art of baking is a balancing act between time, temperature and ingredients.

Taking this a step further, the same elements have become the mantra of the Illuminators, and no one knows this better than the organization’s current Sidelite and incoming Headlite Juan Trillas, Account Executive, Retail Companies for the California region at Bimbo Bakeries USA.

“The Illuminators have been around since 1928, and one of the most important things has been to maintain the relevancy of the organization as we moved forward. One of our most important endeavors is our Diversity & Inclusion outreach events,” Trillas says.

Trillas has spent more than three decades in the baking industry, the last seven years with Bimbo, one of the largest and most diverse in the U.S., and before that had extensive careers with Earthgrains, Sara Lee and Colombo Baking Co., including being part of four acquisitions.

“The Illuminators have increased focus on reaching all of those involved within our industries and continue lighting a path to becoming the most inclusive organization of tomorrow,” he adds.

Through it all, he’s worked on the production side, distribution, transportation and now on the account side for Bimbo. As he puts it somewhat tongue in cheek: “I’ve done just about everything you can do in the bread industry, and I think having that broad background helps.”

He became a member of The Illuminators 11 years ago at the suggestion of Rick DuCharme, his mentor at Earthgrains Baking Co. “He said it would enhance my career and create opportunities in the industry, and he was certainly right about that,” Trillas recalls.

He concedes it can be challenging to get people involved since it does require time and effort.

“But one of the banner strategies of The Illuminators is what we call Servant Leadership, and if you fully embrace it, it’s something that will pay dividends tenfold down the line,” he says.

Clearly, Trillas is coming on board as Headlite when the Servant Leadership role will be more challenging than ever.

“SOCIAL MEDIA, AN OPERATIONAL NECESSITY FOR EVERY COMPANY, IS BEING RELIED ON NOW MORE THAN EVER AT THE ILLUMINATORS.”

The account executive says that as the industry goes through the COVID-19 pandemic, a big part of staying relevant is for the organization to remain as fluid as possible in its thinking and programs.

The association bases its year on two major events – the Western Association of Food Chains, which was canceled this year, and the CGA Strategic Conference in September.

“The latter will be even more important in keeping our relevancy and increasing our membership in the food industry,” Trillas says. “This means we have to be pretty nimble in our thinking and that’s what being fluid is all about. We have to be reactionary, literally on a day’s notice.”

Meanwhile, he and the organization are considering how the current situation will impact the agenda for 2020 and beyond.

“We’ve had discussions with current and incoming board members, and one of our main focus points is how to adapt to the current scenario and conduct business,” he says.

Continued on page 58 ▶

CAL I FO RNIA GRO CER | 57

◀ Continued from page 57

Juan Trillas and family

“Nothing is set in stone as yet, and that’s the basis for being fluid every day,” Trillas notes.

“As you can imagine, the grocery industry is going through massive changes in consumer shopping habits and consumption.”

As such, the association is asking a lot more of its membership in terms of their time. It’s a balancing act and we’re not quite sure how to accomplish everything yet because of the current business climate.”

In fact, The Illuminators recently held its first virtual board meeting.

“Hopefully, it will be the only one we have. But going forward, it may be the way we conduct our business in the future – the new normal,” he said. “However, things change; we need to be able to react.”

Asked if any Illuminator programs have had to be scaled back or eliminated, Trillas replied: “Well, we’ve already done that. We canceled our last Diversity & Inclusion April event and rescheduled it for October in Sacramento. We’ll see what happens.”

He says the key is to keep events between now and then top of mind with the industry and the membership.

Juan Trillas and his wife Stephanie

“One key factor is using our media and social outreach abilities to make sure it stays on everyone’s mind,” Trillas says.

Social media, an operational necessity for every company, is being relied on now more than ever at The Illuminators, it’s progressing nicely, according to Trillas.

“COMMUNICATIONS IN WHATEVER FORM HAS ALWAYS BEEN A CRUCIAL PART OF THE ILLUMINATORS STRATEGY.” “It’s not grown at the rate we’d like it to – but what does?” he asks. “No one’s ever completely satisfied with the results of everything. It’s a meaningful way to maintain relevancy within the industry.

“More companies are using social media and online efforts exclusively,” Trillas says.

“We’re taking steps to do that with our social media expansion. Of course, we’d like to see a scenario where we could get back to normal.

But no one is sure at this point what normal will be.”

But communications in whatever form has always been a crucial part of The Illuminators strategy. Trillas quips that he’s no stranger to the dynamics of excellent communication since he and his wife Stephanie have seven children, ages ranging from 38 to 10.

“Internally we have maintained a quarterly newsletter to coordinate with membership,” he says. “And we might have to increase the frequency to keep everyone involved, engaged and updated on what’s going on.”

Meanwhile, an active social media committee is charged with increasing the organization’s online presence “and they’ve been working diligently to keep us relevant,” said Trillas.

“We’ve got new generations coming into the business, and social media has been a part of their lives since they were born,” he adds.

“As soon as we realized we had to adapt our social engagement with millennials and other generations whose primary communication is through social media, we adapted in ways we didn’t or might not have done before.”

Fortunately, Trillas says, past Headlites have seen the future and the needs of new generations of employees, and that’s what the association is building on.

Continued on page 60 ▶

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CONGRATULATIONS JUAN TRILLAS

AS THIS YEAR’S ILLUMINATOR HEADLITE! From your friends & colleagues at Bimbo Bakeries USA

BimboBakeriesUSA.com

©2020 Bimbo Bakeries USA, Inc. All rights reserved.

CAL I FO RNIA GRO CER | 59

◀ Continued from page 58

“WE’RE TRYING HARD TO MAKE SURE THAT THE YOUNGER GENERATION UNDERSTANDS THE VALUE-ADDED OF ILLUMINATOR MEMBERSHIP, BOTH PERSONALLY AND PROFESSIONALLY, IN THEIR OWN COMPANIES AND CAREERS…”

Going forward, Trillas also sees more events and organizations combined. “It’s going to maintain strength through numbers to keep the industry strong and again increase our relevancy,” he says.

As always, one of the key strategies of The Illuminators is to increase membership.

“The Guidelites mentoring program remains a substantial part of what we do, and it’s of enormous help in supporting new members through their Illuminator journey.

“Bob Paul was my Guidelite, and 11 years later, we’re still communicating,” Trillas says.

“It’s a key part of our organization.”

Right now, The Illuminators have 241 members, a number he’d like to see increase 5 to 10 percent annually to ensure the organization’s stability. Membership usually numbers around 300 annually.

To Trillas, communicating that membership in The Illuminators is simply a good business decision. “We’re trying hard to make sure that the younger generation understands the value-added of Illuminator membership, both personally and professionally, in their own companies and careers.”

This is where the association’s diversity programs come into play, he says.

“We have a diversity committee that comes up with what they think the focus points in an organization should be,” noting that the program is headed by Subriana Pierce, Navigator Sales & Marketing, and Monica Abarca, Post Consumer Brands. “They’ve done a tremendous job in identifying what we need to include in our forums.”

Trillas noted that their next Diversity event is scheduled for October in Sacramento.

The one-day luncheon/speaker forum has proven very successful in generating dialogue between attendees and moderators. ■

CONGRATULATIONS Headlite Juan Trillas Bimbo Bakeries USA

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The Illuminators welcome

Juan Trillas

as the 2020 – 2021 Headlite thank you Tracy Lape for your excellent leadership this past year.

1 5 MINUTES WITH…

John Ross C H I EF EXECU TIV E O FFICER IG A , IN C.

For decades, IGA has been synonymous with community-based retailing and a champion of independent operators worldwide. Today, the company and its retail members, like many others, are facing the challenge of operating during the worst pandemic in a century and confronting what may be a new era for retailers in a post-COVID-19 world.

CGA met with CEO John Ross recently to discuss IGA’s retail realities in Asia and the U.S., current solutions, and what the future may hold for the company, its retailers, and the entire industry.

California Grocer : How extensive is the IGA banner in China?”

Including Wuhan?

“Wuhan is our headquarters, and we do have stores there.”

Since China was the epicenter of COVID-19, what was the initial impact?

“We didn’t close any stores, but we did limit hours. It was imperative to redeploy labor to restock and clean. IGA retailers in the U.S. also had to shift hours to keep the stock moving.”

It seems there’s a lot of similarity between China and the U.S.

Ross: “We have a little over 1,000 stores, but there’s a great disparity. In China, only about nine owners operate 1,000 stores – basically they are large chains. But in the U.S., we have about 1,300 stores and maybe 1,200 owners.”

“Yes, but at different times. The China outbreak started in January, but the same things happened in March and April in the U.S. Similarly, we saw a huge sales increase early on at some stores in China with people hoarding shelf-stable foods and cleaning products – way above normal consumption patterns.”

Is there a variation in store size and geography?

How involved was the Chinese government?

“Absolutely. On one end, there are 5,000 square-foot community stores all the way up to mall-based units at several hundred thousand square feet that are like multi-level department stores – more like a Super Target.

And the majority of stores are suburban, semi-suburban and semi-rural.”

“The stores had to decide how to operate in this environment in advance of what the government would say. In hindsight, no one was as prepared as we should have been. However, we could see the train coming. Early on we implemented policies on wiping down surfaces and posting greeters at the front door to issue masks to associates and customers.”

Did you see a similar explosion in online orders when the outbreak started? What impact did it have on in-store sales and traffic?

“It’s hard to know because both are up.

Our stores outside the U.S. are more mature in terms of e-commerce. So many of them have had online alternatives for a while. That said, when you have a 300–400 percent increase in demand you need the e-commerce infrastructure to handle it.

In the first few weeks we were trying to figure things out and probably left some volume on the table.

“But there’s no evidence to suggest that in-store sales were down as a result of online revenues. On a positive note, we think the majority were new shoppers.”

What about supply chain issues in China?

“Same as you see here. We have very modern food distribution networks in other countries designed to deal with variances like a sales spike or some other temporary situation.

However, manufacturers can only run so much safety stock, which is when we started to see shortages.”

Did that mean limiting consumer purchases?

“In some cases like disinfectant, wipes, beans and rice. In some markets it was a directive. Others simply did it as a courtesy to all shoppers. Some of those standards were relaxed as the crisis evolved and the availability of supplies increased.”

Continued on page 64 ▶

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CAL I FO RNIA GRO CER | 63

15 MINUTES WITH… ◀ Continued from page 62

Have retailers been diligent in following the guidelines?

“I’m confident they are.”

Have you worked with them to obtain federal funds that have been available to some businesses?

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“Our long-term goal is to lower the average food costs to our shoppers.”

But you were also able to expand the supply chain?

“Yes. In the early weeks of the program we began to get into secondary sources of supply like commissaries, schools, hotels and restaurants. Some odd SKUs showed up in packaging that you wouldn’t usually find in supermarkets, but shoppers bought them.”

Are you pushing for improvements in the U.S. supply chain to avoid scenarios like this?

“We’ve learned a lot more about our entire supply chain from the farmer to the store in the last few months. Clearly, there are many stops along the way where demand or illness can disrupt the process.

“But let me just say that the U.S. supply chain is nothing short of miraculous. Companies are working 24-hour shifts, and supervisors are working 14-hour days to meet demand.

“The good news is we can look at our analysis of sales in China as a predictor for what’s likely to happen a month from now domestically.

“When we analyzed China sales and placed them on top of U.S. sales, there’s a remarkable correlation to shoppers’ response to the virus in China and here in terms of runs on products like frozen and shelf-stable.”

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Let’s focus on the U.S. now. How effectively have independents approached the situation?

“We are not an authoritarian government like China with de facto guidelines and directives. So independents judge for themselves what works best for their stores.

“But because state guidelines are all over the board. What you have to do in densely populated areas like New York or Chicago may be completely different than what you have to do in the Carolinas.

“Many retailers have not been sure of what policies to put in place in terms of masks, limiting shopper purchases, or limiting the number of shoppers in the stores at one time.”

How has IGA corporate been involved?

“We don’t often direct. Our job is to support and help so we’ve been sharing our experiences in China with independents, including best practices on how to grow sales, protect shoppers and associates, as well as our brand. These policies worked and helped keep all U.S. stores open. We simply passed along some strict guidelines and said that if you (retailers) follow them, everybody will be safe.”

“Well, we make resources available through our IGAalert.com website. It’s where we post all COVID-19 information so retailers won’t be confused about what they are supposed to do. We’ve also partnered with NGA and FMI on webinars, and we are doing weekly calls with our advisory board to discuss issues.

Payment Protection Program loans have been a big one.”

What do they want to know?

“They’re asking if they’ll be in trouble later on if they take the loan and the guidelines change. These are legitimate questions considering the confusion surrounding federal policies.”

Are you working more closely with suppliers and wholesalers and what support you getting from them?

“As close as we can. We’ve talked about the work we’ve done in China, and I think it’s helped them galvanize their own teams and apply insights to their own businesses.”

I know you were preparing to roll out a private label redesign and expansion. What’s the status of that?

“Product is rolling into stores as we speak.

But we’ve delayed the big marketing push to shoppers because people are buying whatever is in stock right now.”

How are private label sales?

“We expected a good year. The business is up dramatically from last year. But we don’t want to launch a major campaign only to have it get lost in all the COVID-19 stuff.

“Since a vaccine isn’t likely any time soon, the big question is what’s happening with the average American over the next six to 12 months. The reality is we’re going to have a lot of financially stressed shoppers trying to feed their families.”

15 MINUTES WITH…

Is private label well-positioned to deal with that?

“We believe that thousands of Americans bought private label simply because it was in stock when there were shortages.

But they’ve since discovered it’s a great product, and they’ll sometimes stay with it because of financial insecurity. But it means retailers will have to make sure the deals are available and private label programs are great.”

It’s hard to conceive at this point.

But what’s a post-COVID environment look like for independents?

“I think we should again look at China.

The restaurants are open, but they’re empty because the largest segment of the population – older consumers – is still afraid to go out. Also, about one-third of the restaurants there didn’t reopen because they didn’t have the cash flow to keep the business going.

“I believe local products – from produce, meat, and dairy to local specialty products – will be critical as a resource for consumers who need family meals and may still feel uneasy about food safety along the supply chain. The more local your food, the fewer

touchpoints it has along the way. Having quality local food options will end up serving all independents well as long as we keep up our service. Frankly, it’s a great time to increase our share.”

There is the question of online shopping and how to get people back into the stores.

“It was already growing by a high percentage in the U.S., but off a small base. I still think the U.S. is probably five years behind most developed nations in this area. However, COVID-19 proved to be a huge accelerant because people have been afraid to shop the open stores.”

And moving forward?

“Because of inertia, some shoppers may never go back to the stores, and everyone is looking at the cost structure of e-commerce orders.

“It’s great that the average online ticket is three times the normal, and the margins tend to be slightly better. But none of us have figured out the pricing model yet.”

Then now is the time for independents to increase their online capabilities?

“The good news is we can look at our analysis of sales in China as a predictor for what’s likely to happen a month from now domestically.”

“If you look at what’s likely to happen, there’s going to be a cycle of episodic reinfections. This will likely lead to periods of openings and closures by marketing area and by county. Any retailer that’s not doing e-commerce should be, and those with a program should be accelerating it. We believe that 65 percent of e-commerce growth is coming from new shoppers.”

What about getting people back in stores and convince them that they and the workers are protected?

“What we’re doing now is the key to keeping our associates and shoppers safe – and getting them into the store. Things like wiping down surfaces, eliminating crowding, and ensuring everyone wear protection will build loyalty among consumers.”

Do you foresee long-term changes to the store itself?

“Coming out of this, we have to figure out how things like salad bars and self-serve areas will have to change. People are nervous about others touching their food, and we may have to shift from ready-to-eat to ready-to-cook meals.

“That’s great for IGA since we have a Blue Apron style program in some stores.

Products like this may change the nature of how meals are served and keep shoppers in the stores.”

What else might change?

“We are learning that we can run a grocery with fewer items. The long-term impact will be SKU rationalization.”

Could that benefit private label?

“Maybe. But manufacturers have really taken the reins. A great example is frozens.

Pre-COVID-19 the category had been down for several years, and last year it was up. Private label didn’t drive this. It was innovation, new formatting, and on-trend packaging and flavors that got shoppers more interested in the category.”

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Continued on page 66 ▶

CAL I FO RNIA GRO CER | 65

15 MINUTES WITH… ◀ Continued from page 65

How do you think that will shake out?

“It might be better for everyone if I can operate an aisle with 80 percent of what I had before. It’s easier for the consumer, it’s easier for the manufacturer to keep one line running longer at a lower cost and it’s easier for me to manage my inventory.”

“Our average store has about 38,000 SKUs. The average Trader Joe’s, for example, has about 6,000. Look at the spread and see

who has higher profitability per square foot and a higher turn on invested capital.

We’ve all been chasing choice, which may not have been in our best interest long term.

It may be a good idea to redeploy just 20 percent of inventory dollars.”

What might be the result?

“If I take 200 SKUs out and put in two that are more productive and open up a market I never had before, I’m looking at real growth.

“I guess we’ll be much smarter about how to drive innovation in stores without having to fill every square inch.”

Does that mean a shift or decline in promotional funds?

“Customers are going to need those funds next year more than ever before. My message to suppliers is whatever you’re going to spend, we need more. At the end of this, we will have pushed a lot more volume through our stores. But, our costs are way up. Will we end up making more money? Well, that’s still a jump ball.

“Our long-term goal is to lower the average food costs to our shoppers. We’ll do our part with private label. But manufacturers have to look at subsidies and promotions.”

What else can IGA do to promote lower-priced options?

“At the end of the day, the cost of goods is what it is. Our wholesalers do a great job of negotiating on behalf of retailers. But the mass discounters like Walmart have an advantage because they can take lower margins on food and make it up in other categories like soft goods. It can feel like you’re constantly fighting a promotions game with one hand tied behind your back.”

But overall, you seem pretty positive about the future.

“Consumers say they want fresher, healthier foods from local growers, and they want to trust their food – a trust that was accelerated by the virus. Last year IGA had one of the best years in its history, and I believe we will come out of this with an even stronger growth model. Shoppers know that we always have what they want.” ■

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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 #

DON’T LOOK NOW

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

The Public Safety Power Shutoff events designed by the state’s major power companies as a preemptive strike against the high winds and dry conditions that have caused the massively destructive wildfires throughout California have become the new normal.

Like all industries, grocery was caught off-guard by the devastating impact of vast regions of the state going dark as electricity was completely cut-off, sometimes for days, forcing grocers to race to save perishables from the loss of power to keep refrigeration cases operating. Despite these efforts, millions of dollars in products were lost both by grocery retailers and suppliers.

State agencies are working more closely than ever with utilities to blunt the impact of these outages and innovative, new modeling technology, including satellites, are helping with strategic preparation.

But no one saw COVID-19 coming and rising to the triple threat of power cuts, fire prevention, and a massive public health crisis is a new challenge.

Abby Browning, chief of the Office of Private Sector NGO Coordination in the California Office of Emergency Services, along with Brian Garcia and Eric Boldt, warning coordination meteorologists for the National Oceanic and Atmospheric Administration (NOAA) in Northern California and Southern California, respectively, discuss the issues that are facing the state and solutions being implemented now and for the future.

Continued on page 70 ▶

By Len Lewis CAL I FO RNIA GRO CER | 69

◀ Continued from page 69

“We analyze incoming weather patterns and provide that analysis to our partner fire agencies so they can make the best decisions for their counties and jurisdictions.”

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CG: Looking back at 2019,

did the extensive power cuts get the results hoped for?

But assume you have some input into the utilities’ decisions?

Are the algorithms a good predictor of what could happen?

Garcia: “The thing about the public power

Browning: “We do, and we don’t. We offer

Garcia: “In terms of the analysis, we

input from the Governor’s office and the state government in general. However, they have an algorithm that takes into account information the National Weather Service puts out, as well as forecasts like heat index and wind.

continue to learn a lot as technology continues to advance at a tremendous pace.

In 2017, there was a new satellite in orbit that had new fire detection algorithms on it.

shutoffs is that they’re done by power agencies like PG&E in Northern California and Southern California Edison (SCE) in the south.

“They have meteorologists on staff to help them decide when to shut down power.

The National Weather Service doesn’t have any say on whether power should be shut down or not.”

The algorithm determines whether they’re looking at a high-risk situation, and that’s when they decide to do power cuts.”

Exactly what is the

Does it work?

agency’s role?

Browning: “That’s something we’ll never

Garcia: “We analyze incoming weather

really know. It’s much like the COVID-19 response right now. Californians are taking extraordinary measures to stay home and isolate. People will ask if it’s worked. Well, our numbers are down, and the curve flattened. It is hard to determine if something works; it is easy to see when something does not work.

patterns and provide analysis to our partner fire agencies so they can make the best decisions for their counties and jurisdictions.”

“We had massive fire seasons in 2017 and 2018 – not last year. Clearly, something was done right last year and the preventative measures put into place to prevent wildfires contributed to that success.”

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

Initially, we weren’t sure if the data coming out of it could be trusted. As it turned out, it could and we’ve learned a lot.”

What about last year?

Garcia: “When the Kincade fire in Sonoma

started in 2019, it was detected in under 10 minutes, and I immediately called Sonoma County to let them know a new fire had started.

“So, when we talk about technology like satellites, fire cameras and weather stations, they are more robust because of what PG&E went through a year before. Numerical modeling is also getting better, so weather models are improving year over year.”

Last year, about 30 counties in the state, and nearly two million customers were affected by power cuts?

Was the PSPS more extensive than previously planned?

Browning: “Absolutely. While we have

this amazing technology getting better at detection, utility companies like PG&E know their infrastructure and whether they will be affected. Many wildfires are due to downed power lines and high wind events.

Also, telecommunications were down in a lot of areas. It was a bad time that no one planned to happen.”

“Fire season may be old hat to those of us in California that have to deal with it. But we have the added concern of Covid-19, and everything’s changed.”

“During the PSPS, we’re always concerned about the small businesses that suffer.

There just aren’t enough government programs to help them.”

programs out there. CAL FIRE, along with all our agencies, is working closely on different tactics. Even the National Weather Service is a form of innovation. If we can catch things early, maybe we won’t have to do PSPS.”

with the utilities to get back online once the red flag warnings end. Getting things back online is what takes the most time. The Governor has said the scope and duration of these outages are unacceptable. This was a direct result of decades of PG&E prioritizing profit over public safety, mismanagement, inadequate investment in fire safety and fire prevention measures, and neglect of critical infrastructure.

but the economic impact is tough to figure out after a disaster. We looked at different numbers, and it was a short time period in our overall economy. But, the Governor’s real concern was for mom-and-pop grocery stores and individual retailers that lose not only product but also two weeks of work.

That’s where the real economic impact is felt.”

to our aid during disasters. I get to see their generosity throughout the state when there’s a disaster. The private sector was the one losing. So the more they stepped up to help, the more they helped themselves.

Garcia: “There are a lot of fire prevention

Browning: “We’re continually working

Browning: “Numbers were passed around,

Browning: “Of course. They always come

Are there alternatives to PSPS? What else can be done?

Is getting back to normal a problem?

Has the Governor’s office calculated the economic cost of a shutdown?

What about the private sector?

Did they step up enough to blunt the impact?

I know forecasting is difficult, but are power cuts the new normal?

Browning: “Yes, and we fully expect them to

iStock

In retrospect, could the PSPS be planned better?

Browning: “Things could always be

better. But, in California, we learn from everything we do. Our preparedness and communication with PG&E could have been better, but things got better every time something happened. As a result, we now have a PG&E staffer embedded in our state operations center.”

happen again and again. It relates directly to climate change. Just look at how quickly last year’s Camp fire moved.

What does modeling tell you about 2020?

Garcia: “It’s a challenge. We look at broad-

scale weather patterns and how things are shaping up and relate that back to previous seasons with similar patterns. This summer, in terms of average precipitation, we’re probably looking at an earlier start to the fire season in Northern California than is typical.

“The CAL FIRE unit in San Benito and Monterrey counties said we are already in fire season because we had late rains that grew grass quickly. On top of that, we’re

Continued on page 72 ▶

CAL I FO RNIA GRO CER | 71

◀ Continued from page 71

expected to warm up quite a bit. So as temperatures increase moisture in grasses, trees and soils evaporate more quickly.

With dry vegetation and no more rain, all we need is a spark and a little wind.”

“It’s hard to make predictions that far out.

Last season we had five significant Santa Ana wind events that caused a lot of our fire problems. If that happens again, we could be back into the thick of it next fall.”

What type of events are you expecting this summer?

Overall, a little short-term good news, uncertainty long term?

Garcia: “Based on current analysis,

we’re estimating a slightly lower number of offshore wind events that bring very dry, breezy conditions. But as I mentioned, all it takes is one spark in the wrong spot and we’re off.”

enabled us to delay the start of the fire season a bit. Once we get into the regular summer heatwaves with little precipitation, wind events in the fall will be key.”

Is it the same scenario in Southern California?

But planning is taking place right now?

Boldt: “In some ways, but on average, Southern California gets less rain than the north. We did get above normal in most areas – especially from L.A. southward, but it doesn’t take long for us to dry out because the area typically gets hotter.

Boldt: “PG&E and SCE are coming to the

“We’ve already had two small heat waves in April and May, and we’re expecting another, so I think we have two grass crops this season.

“Rain back in March and April sets the stage for grassfires. We’re going to see more heatwaves, but the real key for our wildfires are those offshore winds.

They usually hit us as we get into October, November and December.

Boldt: “I think that’s right. Late season rain

table now with our emergency managers and fire agencies. They are concerned about the wind events. Their meteorologists and computer models and our staff are coming to the same conclusions, but the idea of shutting power is still new. In my opinion, there will always be overkill because you can’t predict when a fire will break out.

“Over the years, fire agencies have become very good at pre-deploying resources and putting out fires before become too large.”

Are you looking at potential PSPS dates or periods?

Browning: “No. We’re not involved

with that, and we only find out about it approximately 24 hours before the public does.

So you’ll still get backlash from consumers and businesses because you don’t know what’s going to happen more than a day ahead.

Browning: “Exactly. We don’t even know

when they are going to turn it back on.

Utilities decide as they look at their models.

It would be nice if we knew, but as with any disaster, you can’t predict how it’s going to be until you’re in the middle of it.”

Boldt: “Last fall they shut the power down three different times for 36 hours, but at that time fires broke out in other areas where winds were expected, and they didn’t shut down. So there’s room for improvement on where and when they shut down.”

What preparation are you working on to blunt the impact of the next cutback?

Browning: “A lot of things have been stalled because of this massive pandemic. I have been working with CGA on a new program set up during the last PSPS to loan

“Clearly, something was done right last year, and the preventative measures put into place to prevent wildfires contributed to that success.”

iStock

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

“Power outages aren’t going away any time soon. We’re encouraging companies to make the investments…but remember, it’s not just grocers affected but also restaurants and other locations.”

But there are crossover issues?

Browning: “During a fire, we usually set up

shelters, but we can’t have congregate shelters anymore. People have to be apart with masks and sanitizers. We’re working on solutions now with the American Red Cross to shelter people quickly after a disaster without putting them in the same room.”

What have you come up with?

Browning: “Lots of suggestions are being

discussed. Larger rooms, of course, fewer people in one location and renting hotels instead of putting up large structures.

We are doing that right now to shelter some homeless that are most vulnerable to COVID-19.” iStock

government generators to small grocery stores. We see food as an essential service, and many stores also have pharmacies in them.

“We mapped out all the grocery stores inside dark areas and which ones had generators so a decision could be made on whether government resources could be spent.”

How much equipment might be available from the state?

Browning: “It depends. We don’t have any

things around during a disaster, but power outages aren’t going away any time soon.

We’re encouraging companies to make the investments. We have a small incentive program that provides small businesses with funds to get items like generators. But remember, it’s not just grocers affected but also restaurants and other locations.”

So the message is to start preparing now if you haven’t already?

generators right now. Those were coming from FEMA. They have a lot in storage, but it all depends on what’s happening around the country as to if they are even available to us.”

Browning: “Right. Fire season may be old

Last year grocers lost anywhere from $3,000 to $100,000 per store. But are generators expensive and hard to come by?

How so? Is the crisis draining resources from other areas?

Browning: “There are also air regulations

in California. The Governor’s office has the authority to waive certain rules and move

Do you have enough resources to handle PSPS this year and not have them diverted to deal with COVID-19?

Browning: “The minute I say yes is the

minute something will happen. We do have the resources we need. But this pandemic is the largest most encompassing experience I’ve ever had.

“During other disasters, we’ve been able to call on other states for help and resources – even other countries. This isn’t the case with COVID-19. I’m confident California can rise to the challenge as far as resources are concerned.” ■

hat to those of us in California that have to deal with it. But we have the added concern of COVID-19, and everything’s changed.”

Browning: “We just talked about that.

I have contingency plans for my operations, as do my colleagues. CAL FIRE is not a part of the COVID-19 response. They are actively working on fire prevention, not public health issues.”

CAL I FO RNIA GRO CER | 73

Serving Up the Freshest Eggs for Generations.

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Our local California Family Farms have been providing farm fresh eggs daily to your stores. In addition to producing fresh, nutritious, high-quality eggs, we take pride in the traditions and values of being good stewards of the land, providing superior care for our hens and giving back to the communities that support us.

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Gelson’s Markets

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Moss Adams

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Ralphs/Food 4 Less

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CAL I FO RNIA GRO CER | 75

MOMMY BLOGGER

Shopping through the Pandemic K I M B ER LY R A E M I L L ER WR ITER , ACTR ES S

I’ve learned that grocers really are everyday heroes.

I thought everything would be fine in a couple of weeks if we all stayed home.

I thought we had enough toilet paper.

I thought we could just order groceries online if we needed them. I was wrong about so much.

I’ll be honest, I haven’t stepped foot in a grocery store since early March. My job was on the early end of sending employees home to work remotely. My husband was still commuting to his office, my daycare was still open, and I’d just finished dropping everyone off at their respective locations and decided to play hooky to go grocery shopping.

My local Facebook moms’ group had been circulating photos of the grocery stores in our community. Pictures of long lines and bare shelves were the norm, but there were slivers of hope, people were posting the places we could still find paper towels, diapers, formula, and ground beef.

I decided it was now or never.

I called from my car and what sounded like the voice of a teenage boy greeted me.

“Good morning,” I said. “Do you still have food?”

He laughed. “For now, but there’s a line of about 100 people outside.”

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

I arrived five minutes after the doors opened and the store was packed, but everything I needed was there, and they had toilet paper.

We’ll be good for two weeks, I thought. By then, everything will be back to normal.

I remember looking at a fellow shopper in a mask and plastic gloves and thinking she was going a bit overboard. Times change quickly.

By the following week my town was overrun with COVID-19 cases. I live just outside a major hotspot, where we’ve had our own sizeable outbreak. The tiny community hospital I’d had my daughter at exactly a year earlier was struggling to keep up.

Just going for a walk around the block felt like an act of bravery.

My husband is now responsible for the vast majority of our in-store shopping, going once a week to pick up odds and ends and things that toddlers will actually eat. He’s reported different experiences at different stores.

One smaller shop we frequent price gauged everything so much that we blew our entire monthly food budget for a week’s worth of groceries. Ten dollars for a can of beans.

Fifteen dollars for a gallon of organic milk.

We’ll probably never go back there, even after all this is over.

But the vast majority of his outings, he says, have been positive ones. “Honestly, the people who work there have been really

upbeat,” he says of another grocer that has become our pandemic go-to, “they joke around, lighten the mood – those little moments of humanity really help.”

Even noting one time when store staff had to quickly deescalate a fight among patrons, something that I assume is entirely outside their job purview, but he said they handled it expertly. My guess is tensions running high in the produce section are no longer a rarity.

A former military man, my husband appreciates order, and has been particularly impressed with the way they’ve kept traffic moving within the store, each aisle is now marked clearly for one-way browsing.

While there would normally be a number of lines open for checkout, including a selfserve section, things are now streamlined so that everyone has to checkout through one of two cashiers who always have, he says, been in positive spirits. He also appreciates the notices posted throughout the store that provide updates on foods and supplies that are out of stock.

He makes a point of greeting everyone who works there and thanking them for their service – grocers have become everyday heroes. We couldn’t live without them.

We know they’re putting their lives at risk. We appreciate everything they do for us… and we’ll never complain about slow checkout again. ■

Thank you to our Associates for being there for our communities and going above and beyond to feed our neighbors.

California Grocer Online Read California Grocer on your mobile device, or share with an associate.

www.cagrocers.com

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