California
Meet CGA Chair Kendra Doyel PAGE 42
making sense of brand loyalty 2018, ISSUE 6
PAGE 62 CALIFORNIA GROCERS ASSOCIATION
In-Depth Look
Diversity & Inclusion page 24
The ONLY Federal Credit Union in the United States chartered to serve grocery industry employees and their families www.trugrocer.com
January 6 – 13, 2019 Four Seasons O’ahu at Ko Olina Resort Oahu, Hawaii
FEATURED SPEAKERS
PURPLE GOLDFISH: Little Things Make the Biggest Difference in Customer Service Stan Phelps Founder: purplegoldfish.com
THE SECRETS OF SOCIAL MARKETING SUCCESS: How Social Marketing Gets You Seen, Attracts Talent and Makes You Money Brian Carter Best-Selling Author
BRING A NEW SET OF BRIGHT IDEAS INTO 2019 Join your independent grocer family for a week of creative thinking, inspiration and relaxation. In a world that offers few opportunities to slow down and reset, the New Year marks a time when renewal is possible. Provide yourself with the occasion for fresh thinking by registering for this year’s Symposium. You will come away with a renewed spirit and fresh ideas that will benefit your business for years to come. Registration includes: • 7 nights resort accommodations from January 6 – 13, 2019 • All conference educational sessions and programs • Opening and closing night receptions
SUPERHERO LEADERSHIP: How Everyday People Can Have an Extraordinary Impact
• Breakfast functions (Tuesday, Wednesday & Thursday) For complete information and to register, visit www.cagrocers.com/symposium, or call (916) 448–3545
Brett Culp Acclaimed Filmmaker
EVENT PRODUCED BY CALIFORNIA GROCERS ASSOCIATION INDEPENDENT OPERATORS COMMITTEE
CGA | BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
CHAIRMAN APPOINTMENTS Independent Operator Committee Chair DIRECTORS
CALIFORNIA GROCERS ASSOCIATION
Second Vice Chair Phil Miller C&S Wholesale Grocers
First Vice Chair Kendra Doyel Ralphs Grocery Company
Treasurer Hee-Sook Nelson Gelson’s Markets
Kevin Arceneaux Mondelēz International Inc.
Dave Jones Kellogg Company
Lynn Melillo Bristol Farms
Jon Alden Jelly Belly Candy Co.
Mark Foley Raley’s
Bob Richardson The Clorox Company
Jaclyn Rosenberg Nielsen
Teresa Anaya Northgate Gonzalez Markets
Damon Franzia Classic Wines Of California
Doug Minor Numero Uno Market
Joe Toscano Nestlé Purina PetCare
Joe Angulo Bodega Latina Corp.
David Higginbotham Stater Bros. Markets
Tim Murphy Costco Wholesale
Rob Twyman Whole Foods Market
Mark Arrington Post Consumer Brands
Michel LeClerc North State Grocery Inc.
Nicole Pesco The Save Mart Companies
Jim Van Gorkom NuCal Foods
Denny Belcastro Kimberly-Clark Corporation
Hillen Lee Procter & Gamble
Mike Ridenour The Kraft Heinz Company
Michael Walton Unilever
Jeanne-ette Boshoff MillerCoors
Eric Lindberg, Jr. Grocery Outlet, Inc.
Casey Rodacker Mar-Val Food Stores
Richard Wardwell Superior Grocers
Bob Bukovec Tyson Foods, Inc.
John Mastropaolo Chobani, Inc.
Greg Sheldon Anheuser-Busch InBev
Karl Wissmann C & K Market
Brent Cotten The Hershey Company
Jonathan Mayes Albertsons Companies, Inc.
Jeff Sigmen Reyes Coca-Cola
Kevin Young Young’s Payless Market IGA
Willie Crocker Bimbo Bakeries USA
Joe McDonnell Campbell Soup Company
Lee Smith Smart & Final Stores
Steve Dietz United Natural Foods, Inc.
Mark McLean CROSSMARK
Rick Stewart Susanville Supermarket IGA
Jake Fermanian Super King Markets
Casey McQuaid E & J Gallo Winery
Elliott Stone Mollie Stone’s Market
President/CEO Ronald Fong
Senior Director Events & Sponsorship Beth Wright
Dennis Darling Foods Etc.
Senior Vice President Marketing & Business Development Doug Scholz Vice President Communications Dave Heylen Executive Director CGA Educational Foundation Shiloh London Costello, CFRE
Senior Director Government Relations Aaron Moreno Director CGA Educational Foundation Brianne Page Director Digital Communications Nate Rose Controller Gary Brewer
2 | CAL I FOR N I A G R OC E R
Secretary Renee Amen Super A Foods
Chairman Bob Parriott Twain Harte Market
California Grocer is the official publication of the California Grocers Association. 1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448–3545 (916) 448–2793 Fax www.cagrocers.com For association members, subscription is included in membership dues. Subscription rate for non-members is $100. © 2018 California Grocers Association
Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Dave Heylen dheylen@cagrocers.com
CONTENTS | ISSUE 6
FEATURES conference Highlights
34
24 Diversity & Inclusion Diversity and inclusion may be one of the banner issues of our time. While the lack of both in the workplace may have once been considered the status quo, that is no longer the case.
42 56
52 Building Next Generation Loyalty The grocery industry is facing unprecedented disruption, from changing consumer behavior to new technology and more, that’s making it harder and more critical to focus on loyalty.
Meet
Kendra Doyel A 100-Year
Legacy
COLUMNS President’s Message Consumer First. . . . . . . . . . . . . . . . . . . . . . . 5 Chairman’s Message The End of a Journey. . . . . . . . . . . . . . . . . . . 7 Viewpoint State of Innovation’. . . . . . . . . . . . . . . . . . . . . . . 8 Government Relations A New Era Begins. . . . . . . . . . . . . . . . . . . . 13
62 Making Sense of Brand Loyalty Sensory perceptions is a powerful tool that is often under-leveraged in developing instore brand experiences. This topic was a Whiteboard Session topic at this year’s CGA Strategic Conference.
Local Government Relations Food Packaging – The New Environmental Rallying Cry. . . . 16 Capitol Insider 2018 – Can You Believe It?. . . . . . . . . . . . . 18 Inside the Beltway Three Reasons for Optimism. . . . . . . . . . . 20 Washington Report What’s Next? . . . . . . . . . . . . . . . . . . . . . . . . 22 Mommy Blogger The Little Things That Keep Moms Coming Back.. . . . . . . . . . . . . 80
DEPARTMENTS
72 The Secrets of Social Marketing Success How can independent grocers protect themselves against bigger competitors in 2019? Social media and digital marketing my provide the answers.
CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 14 Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 30 15 Minutes With Brad Oberwager.. . . . . . . . . . . . . . . . . . . . . 68 Index to Advertisers. . . . . . . . . . . . . . . . . . 78 CAL I FO RNIA GRO CER | 3
CELEBRATING YEAR S
Grocery Operations: We Smooth ‘em Out • Availability of cart assets to • perform for customers
• On-site, quick return-to-action • • convenience
• Manufacturer reimbursement for • faster cash flow
• Detailed reporting from an • accountable partner
• Cart Locking System Parts • and services
• Real-time online reporting
• Cart Transfers
• Reduce cart cleaning and • maintenance costs
• Easy sorting, tracking and • calculating with our innovation • • coupon system
“To ethically provide excellence through innovative retail solutions for our customers by increasing their return on investment.”
1020 N. Lake Street Burbank, CA. 91502 818.817.6712 www.retailsolutionsus.com 4 | CAL I FOR N I A G R OC E R
PRESIDENT’S MESSAGE
Consumer First
RO N F O N G PR E S IDE N T AN D CEO CALIFOR N IA GR OCE R S AS S O CIATIO N
At this year’s Leadership Summit, we collectively had a “Eureka” moment that will drive how CGA advocates in the future. In August, CGA hosted its first-ever Leadership Summit, a two-day gathering of senior grocery executives that yielded an unprecedented opportunity to discuss California business, economics and politics, so as to get ahead of any approaching challenges and better position their companies, the industry, and our association for the future.
decision to aggressively market healthier products and its mission to encourage consumers to make healthy choices. This triggered a candid and engaging conversation that, among other things, led to discussing different angles from which CGA can position its advocacy message moving forward.
Speakers included economists, state elected officials, business leaders, and industry insiders. The presentations were very thought-provoking and insightful and provided ample fodder to fuel meaningful discussion by Summit attendees. Some of the notable quotes I took away from the Summit included State Attorney General Xavier Becerra remark that, “You (the industry) are indispensable. We don’t operate without you. You make sure we get fed in the right way.” Noted economist Chris Thornberg warned us to “separate reality from rhetoric” when looking at economic trends and to not listen to what you hear, but to look at the data. Our “Eureka” moment, however, came after hearing Raley’s executives Keith Knopf and Kevin Konkel explain their company’s
Like your businesses, your association must better emphasize the impact of the consumer in its day-to-day operations. Our conversations with elected officials, in many instances, should shift from being business-focused to being consumerfocused. While this has always been a part of CGA’s messaging it typically would be couched within the greater message of how a particular piece of legislation or a regulation would impact our member companies. Wouldn’t it have more of an impact, though, if we talked about how a piece of legislation or regulation would affect the well-being, or choices of our customers? With an overwhelmingly blue State Legislature and Executive Branch, you will see a shift in CGA’s messaging as we evolve our advocacy efforts to support and invest in policies that reflect your customers’ choices.
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As an association, CGA represents one of the most broad and diverse retail sectors in California, if not the nation. We also represent one of the most responsive industries to consumers. Regardless of our individual business models, the bottom line is that we react to what our customers want.
Our first Leadership Summit was a tremendous success. We addressed a wide range of issues and heard extremely diverse presentations. More importantly, it allowed for executives to think out loud about the future of our industry and association, not just the here-and-now. It is my hope that this was the start of a new CGA tradition, and look forward to the next one. ■
So how does this impact CGA’s advocacy efforts? CAL I FO RNIA GRO CER | 5
@ Kimberly-Clark Congratulations and welcome to Kendra Doyel as the chair of the California
Grocers Association. And a heartfelt thank you to outgoing chair Bob Parriott
for your dedication and service to the grocery industry.
Kimberly-Clark and its well-known global brands are an indispensable part of life for people in more than 175 countries. Every day, nearly a quarter of the world's population trust K-C's brands and the solutions they provide to enhance their health, hygiene and well-being. With trusted brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex, and Depend, Kimberly-Clark holds the No. 1 or No. 2 share position in 80 countries. Kimberly-Clark Corporation is proud to support the California Grocers Association - CGA.
6 | CAL I FOR N I A G R OC E R
Ill
CHAIRMAN’S MESSAGE
The End of a Journey
B O B PA R R I OT T TWAIN HAR T E MAR K E T
Wow, the last year sped by so fast, it’s been a blur! I knew taking on the chairmanship of CGA would accelerate the pace of my life for one short year. I just had no idea how fast it could go and how busy I would be. Trying to follow our President and CEO Ron Fong was like stepping onto the “Big Dipper” roller coaster at the Santa Cruz Beach Boardwalk.
Then it was off to Seattle, Wash., for a unique glimpse into the future of retailing. It’s called “Retail Tomorrow,” and it was amazing. It featured fascinating speakers, eye-opening tours and workshops that had us thinking way outside the box.
I received the gavel from then-chair Jim Wallace at last year’s December CGA Board meeting, and like the Big Dipper, began the slow climb to the top where everything seemed so neat and orderly. Then came the plunge. It started in January with the Independent Operators Symposium. This annual event should be on every independent grocer’s “must attend” list. It’s the perfect opportunity to relax, refresh and renew, while hearing fantastic speakers. Next up was CGA’s annual “Staff Day With the Chair.” This was my chance to share a little about our store while strengthening my relationship with CGA’s awesome staff. Staff Day was immediately followed by the Association’s annual Grocers Day at the Capitol, another “must-attend” for all CGA members. This is an eye-opening experience for anyone unaccustomed to how our state government operates. But more importantly, it helps build important relationships with our elected officials.
CGA staff and especially Doug Scholz for delivering one of the best conferences ever. I don’t know how they keep improving this annual gathering, but they do. It’s a beautiful thing! Now as I disembark from this incredible year as chair, I’m pleased to report that the Association had a tremendous year and we ended up as financially strong as ever, thanks to the watchful eye of our president and our Finance Committee. Oh, and did I mention that we began remodeling our new office building in downtown Sacramento? We had some unexpected construction challenges due to the Santa Rosa/Napa fires, but I’m proud to announce that staff will move into their new offices early next year, only two months behind the original date.
Next up, after a board meeting, or two, was our first-ever “Leadership Summit” in Santa Monica, Calif. We invited a diverse group of speakers, including both gubernatorial candidates, to address some of the major challenges facing California and the business community. This led to frank, open discussions within the group of grocery retailers attending the Summit. Allin-all it was a highly informative gathering.
My thanks and gratitude to the Board of Directors and CGA staff that helped make this the most exciting and memorable year of my professional career. And, a special thanks to the Executive Board for helping me recover from a little health challenge I faced after the conference. And of course, a special thank you goes to my wife, Linda. I couldn’t have done this without her. It’s been a great ride! ■
My roller-coaster ride continued into September as CGA hosted its annual Strategic Conference. Hats off to the entire CAL I FO RNIA GRO CER | 7
VIEWPOINT
State of Innovation
K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M
I’ve spent most of my life living on the East Coast, but I’ve always thought of the West Coast, especially California, as the promised land. Even before I went to college here – Loyola Marymount University, class of 1977 – California lived in my imagination as a place where anything could and often did happen. (If I loved California so much, you may ask, why did I live my life 3,000 miles away? Oldest story in the book. I met a girl. But I digress.) I thought about California as the land of innovation recently when I had a chance to spend two days in the state visiting stores that I believe are highly creative and inventive in very different ways, offering different looks at the future of food retailing.
My first stop was San Francisco, where there is a lot of experimentation taking place in checkout-free retailing. My initial stop was at a store that at this point seems like anything, but an experiment – the first Amazon Go store opened there, at the corner California and Battery, in the middle of the city’s Financial District and just blocks from the Embarcadero. I haven’t been to the Chicago Amazon Go stores yet, but I’d suggest, based on the San Francisco location, that the company is getting a lot more comfortable and confident with the format because this location is a lot busier than any of the Seattle sites. (It is, after all, downtown San Francisco.)
After visiting Amazon Go, I went to two other, independently operated checkout-free stores in the city – Zippin, and Standard Market – to see what they’re bringing to this particular competitive table. To be honest, in some ways it’s a little hard to tell from the physical locations, which are anything but prepossessing, or their hours of operation, which are limited to just a couple of hours a day. These stores are not operating retail entities, but modest showrooms designed to sell the technology to retailers and/or investors. I’m not sure I’d gamble on either of them – yet. Zippin consists of just a few square feet of space occupied by a small set of shelves and two coolers; it’s located behind a small door on the side of a building, and there’s no sign, and you can’t even see in the window. Standard is located on a section of Market Street where, while one is waiting to be admitted, the main aroma in the air is that
Lazy Acres 8 | CAL I FOR N I A G R OC E R
VIEWPOINT
Zippin
“While the Lazy Acres and Superior stores are vastly different concerning their approach and target shoppers, I cannot help but feel that both are positioned well to face off with the kind of technology revolution being engineered up the coast.” of human urine; even the scent of cannabis can’t overcome it. It is larger than Zippin, with a few more SKUs, but hardly a place where one can do any serious shopping. But here’s the deal. The technologies, as much as they’re willing to explain them, seems similar – and representatives at both locations emphasize that their business models are a lot less expensive than the technology used at Amazon Go. These reps also say they’re mostly focused on landing a retailer or two with which they can conduct tests that will prove their concepts. (Zippin says it is engaged in active negotiations with four retailers in different parts of the country. Standard isn’t showing its cards.) While I might not be willing to gamble the hard-earned, astronomically high fees that California Grocer pays me to write these columns (just kidding!) in either Zippin or Standard, I think it is noteworthy that there is so much experimentation taking place in the space – in this case, all of it within a couple of square miles of one city. And these are hardly the only three companies focused on this space – Microsoft is just one of the big companies investing in the development of checkout-free systems. This is going to happen. The technology will work better and better, and if the labor market continues to get tighter and tighter,
there will be an enormous amount of pressure on companies to adopt these kinds of solutions. When I left San Francisco and traveled to Los Angeles, though, I found two wonderful examples of stores that, each in their own way, create distinct and differentiated experiences that I think are both relevant and resonant to their customers. I first visited the brand new Lazy Acres store that Bristol Farms has opened on Pacific Coast Highway – and I was blown away. First reaction – if I lived nearby, I would love to shop at this store. It is a celebration of fresh food, from the way in which the produce department runs across the entire front of the store (a look I love, by the way – it sets a wonderful tone and a farmers market sensibility) to the fresh food departments that run across the left wall (my favorite here was the poke bar). For me, this is the kind of store that utterly makes sense and speaks to the continuing value of bricks-and-mortar … so much of this store in sensory that it creates a fresh-and-healthy siren call to which folks in Hermosa Beach, nearby Manhattan Beach, and even Redondo Beach, are likely to respond.
in big pots. Most of Superior’s stores cater to the Hispanic population, but there are some that have primarily African-American and Asian customer bases. In all of these stores, however, there’s no question they are tapped into the immigrant experience, helping people with valuepricing and a selection that is both eclectic and broad to stay in touch with the cuisines of their homelands. At the same time, Superior’s management there recognizes that with new generations will come a kind of assimilation that will change their tastes and preferences, and so the company is developing new stores that will provide a sort of commercial connective tissue between the past and future. While the Lazy Acres and Superior stores are vastly different concerning their approach and target shoppers, I cannot help but feel that both are positioned well to face off with the kind of technology revolution being engineered up the coast. They are places with a specificity of approach and attitude, offering many options that simply cry out to be seen and experienced. Will they also evolve? Of course. That’s not just inevitable, but the mark of smart leadership. I saw just some of what’s happening in California during my recent visit there, and I’ll be back to see more. That’s also inevitable. ■
Then, I went to the Superior Grocers store in Lynnwood – and found a big, colorful, bustling store designed to appeal to big families that make big meals from scratch CAL I FO RNIA GRO CER | 9
Gelson’s thanks
Bob Parriott
of Twain Harte Market
for his dedication & service as the CGA Chairman of the Board.
Welcome
Kendra Doyel
of Ralphs Grocery Company as the incoming CGA Chair of the Board.
Mark Arrington Post Consumer Brands
Reyes Coca-Cola
Jake Fermanian
Lee Smith
Mark Foley
Rick Stewart
Super King Markets
Smart & Final Stores
Join us for The NGA Show, a must-attend food retail industry event. In just three days, you will learn about today’s
ever-changing marketplace and new technologies. With over 60 specialized educational workshops led by retailers for retailers and more than 400 companies on the Expo floor showcasing innovative and game-changing products and solutions, The NGA Show provides countless opportunities to learn from your peers and other industry thought leaders. Bring your whole team to The NGA Show and bring home ideas that will drive profitable growth for your company.
REGISTER TODAY for 10% off with code CG1 Act fast rates increase December 11.
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GOVERNMENT RELATIONS
A New Era Begins
A A RO N M O R EN O S EN IOR DIR ECTOR CGA GOV ER N MEN T R ELATION S
California has a new governor. Where his administration is headed, it’s hard to predict. As we prepare to begin the Gavin Newsom governorship era in California, political observers have attempted to predict what direction his administration will take the state over the next four years.
liberal.” Such a stance would be considered mainstream in most of California, but in San Francisco not so much.
According to his critics on the right, he will drive the state into bankruptcy with his liberal tax-and-spend policies and calls for universal health care. According to his critics on the left, he is nothing more than a corporate Democrat who will betray his progressive roots when push comes to shove. As with most things political, the truth lies somewhere in between. The best way to look forward is, of course, to look backward. Mr. Newsom does, after all, come with a track record from his time as Mayor of San Francisco. To most Californians he is perhaps best known for his defiant stance on same-sex marriage, deliberately disobeying what was state law at the time to give thousands of gay and lesbian couples the opportunity to get married in San Francisco. His record, however, goes beyond that. He did other things and took other stances during his time as Mayor. Few realize, and many would no doubt be shocked to learn, that earlier in his political career Newsom described himself as a “dogmatic fiscal conservative and a social
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As Mayor he governed as a pro-business Democrat, much to the consternation of the progressive wing of the Democratic establishment in San Francisco. But why wouldn’t he? He is, after all, a businessman.
Does this mean he will be with us 100 percent of the time? No. But he will likely be with us more than previous governors and definitely be more sympathetic to the issues we face because they are issues he has faced himself in the operations of his businesses. Ultimately, a lot of Newsom’s governorship will be influenced by forces beyond his control. Many of his campaign pledges (universal healthcare and universal health care, to name a couple), rely on the actions of the Legislature. And it remains to be seen if the Legislature has the political will to impose the necessary tax increases to implement such programs, even with the Democratic supermajorities in both houses. The Newsom model of leadership does exist though. Remember how he described himself in the past. It does provide some insight as to what the future may bring. ■
People forget that before he was a politician, Gavin Newsom was (and still is) a business owner. And of special note to the grocery industry, his businesses are mostly in the retail and hospitality sector. He will bring an understanding of our industry and its challenges that no other California governor has ever had. CAL I FO RNIA GRO CER | 13
CGA NEWS
Joe Falvey
Jim Van Gorkom
Ha l l of Ac hi evem en t Regi s t r at i on Op e ns
G r o c ery I n d u stry Sc h o l ars hi p s Ava i la b le J a n u a ry 1
Joe Falvey, UNFI/SUPERVALU, and Jim Van Gorkom, NuCal Foods, will be inducted into the California Grocers Association Educational Foundation Hall of Achievement on March 28, 2019, during a gala event at the San Ramon Marriott in San Ramon, Calif.
In 2019, the CGA Educational Foundation will award 300 college scholarships totaling more than $600,000. Scholarships are open to high school seniors, college undergraduate and graduate students who are employees of, or the dependent sons or daughters of employees of, a CGA member company. Continuing in 2019, a $10,000 scholarship will be awarded to an employee who is pursuing a career in the grocery or grocery-related manufacturing industries.
Ticket and sponsorship opportunities are available at CGAEF.org. The awards dinner serves as the primary fundraiser supporting the Foundation’s Tuition Reimbursement and College Scholarship programs. For additional information, contact Brianne Page, CGAEF, (916) 448-3545.
Applications may be submitted online between January 1 – April 1, 2019, at www.cgaef.org. Scholarships are awarded based on academic merit, extracurricular and community involvement, leadership, and in some instance, evidence of financial need.
NEW MEMBERS CGA welcomes the following members:
Beach City Sales PO Box 810 Hermosa Beach, CA 90254-0810 Contact: Ian Plumbley, Chief Executive Officer E-mail: ian@beachcitysales.com Phone: (424) 634-8065
California Food Expo 1100 W Shaw Ste 140 Fresno, CA 93711-3708 Contact: Amy Fuentes, Manager E-mail: amy@nalchajian.com Phone: (559) 227-9999 Website: www.californiafoodexpo.com
Hallmark Cards, Inc. PO Box 419580 Kansas City, MO 64141-6580 Contact: Amy McAnarney, VP/GM, Key Accounts & Business Development E-mail: amy.mcanarney@hallmark.com Phone: (816) 274-5341 Website: www.hallmark.com
Harris Ranch PO Box 220 Selma, CA 93662-0200 Contact: Brad Caudill, VP, Marketing E-mail: bcaudill@harrisranch.com Phone: (559) 896-3081 x5264 Website: www.harrisranchbeef.com
Rose Acre Farms, Inc. 19891 Beach Blvd Apt 343 Huntington Beach ,CA 92648-7224 Contact: Matt Neible, National Sales Manager E-mail: mneible@roseacre.com Phone: (812) 498-3775 Website: www.goodegg.com
Shopper’s Corner PO Box 5128 Santa Cruz, CA 95062-5128 Contact: Jim Beauregard, President/CEO Phone: (831) 423-1398 Website: www.shopperscorner.com
14 | CAL I FOR N I A G R OC E R
To us, local means
California
We’re proud to offer more of what Californians are looking for – from locally grown produce to California-raised USDA choice meat. Long before local was cool, our family of stores made it a priority to buy direct from local growers. In fact, some of our current relationships with farmers started over 60 years ago. We’re working hard to be California’s favorite grocer. In our neighborhoods, we are focused on developing offerings unique to the California lifestyle, we’re dedicated to contributing to the community, and we’re honored to call nearly 70,000 Californians our employees. To us… Local means fresher
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Local means better
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Local means California
LOCAL GOVERNMENT RELATIONS
Food Packaging – The New Environmental Rallying Cry T I M JA M ES S EN IOR MAN AGER LOCAL GOV ER N MEN T R ELATIO NS
California is now home to over 120 local food packaging ordinances – about a quarter of the state’s 58 counties and 482 cities. When the first food packaging ordinance was enacted by the City of Berkeley in 1988, no one could predict the complexity and passion for the issue 30 years later. Cities and counties across California have now gone as far as banning entire types of plastic, notably polystyrene (foam and hard), mandating only compostable and biodegradable packaging for single-use purposes, and are banning the retail sale of plastic food service ware.
is no longer satisfying demands from an increasingly vocal progressive coalition of policymakers and environmental advocates.
Eliminating plastic as a component of food packaging and food service ware has become the new environmental rallying cry and a mark of distinction for local governments.
As food packaging mandates become more complicated, a simultaneous effort is underway in jurisdictions across the state to establish curbside composting programs. The programs are primarily in response to the state’s waste mandates and limited landfill space. The new demands from advocates for updated single-use packaging standards, combined with the increasing availability of curbside composting, have begun to spin local food packaging ordinances into a new universe.
The considerations involved with food packaging and related policy have evolved dramatically in the last few years. Many of the ordinances simply ban the use of polystyrene foam and include an exemption for raw meat trays.
The aggressive state mandates on local waste reduction, increasing vilification of all plastic, and progressive environmental policies have created a “perfect storm” that requires a new approach and amended response by the industry.
With the limited amount of foam used by grocers and the exemption for raw meats, these regulations have been relatively harmless and require little, if any, operational adjustments. Unfortunately, this limited policy approach at the municipal level
Central to this discussion is the reality that not a single ordinance calling for food packaging restrictions has been defeated in California. It has not been for lack of trying with various combinations of manufacturers, restaurants, grocers, recyclers and local business organizations – all employing
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different techniques and strategies over the years. The biggest challenge is the vilification of plastic litter, especially in marine and riparian environments. This phenomenon is not dissimilar from the treatment of plastic bags in past years. However, unlike plastic bags, a uniform and workable policy solution for food service ware and packaging does not exist. The growing political trend of limiting or banning single-use plastics paired with the sheer bulk of existing ordinances makes the expectation of defeating new food packaging ordinances in California virtually impossible. Not only are new jurisdictions considering food packaging regulations, but municipalities with regulations already codified are revisiting and strengthening restrictions with updated mandates. This has created two fronts at which the industry must engage: new ordinances and revised ordinances with more sophisticated mandates that have not been seen anywhere in the nation. As an industry, we must begin to reconsider acceptable mandates and parameters and become more aggressive in proactively communicating these positions with policymakers. Over time, CGA has recognized the shift in public support for limiting single-use plastics and is willing to provide a good faith effort to craft workable solutions in the space for both grocers and municipalities.
The major components of CGA’s message on food packaging are ensuring food safety and quality remain the primary consideration in any new ordinance; matching food packaging requirements to the specific waste disposal options in the local jurisdiction; retaining food packaging options for all food offerings; and, ensuring regulations are applied to all competitors.
If CGA can start negotiations from a place of acceptance, acknowledging the political realities we face in California, we believe we can negotiate more favorable terms and achieve the best possible results for the industry and communities. The sheer mass of existing local laws and changing face of food packaging regulation raises several considerations the grocery
“The major components of CGA’s message on food packaging are ensuring food safety and quality remain the primary consideration in any new ordinance.”
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Industry discussions with local decision makers are based on emphasizing that grocery packaging is used primarily for food safety and required to last for several days, if not weeks or months. Packaging must perform well to prevent food waste, which is more environmentally damaging than litter concerns. Mandating packaging products without convenient disposal for consumers provides no environmental gain and is unnecessarily expensive. Under these new political dynamics, CGA will need to be more aggressive presenting industry concerns and opposing harmful policy components. While avoiding additional regulation of any kind is always the first priority, the history of this issue shows that we will do better by manipulating a proposal to have minimal or acceptable impacts.
industry may want to explore in the future. The most impactful is the opportunity to pursue statewide food packaging law to create relief and consistency for grocers. It is worth noting the industry pursued statewide legislation on single-use plastic bags with fewer local governments having already regulated. While the food packaging issue does not have a clear-cut solution like bags did, there may be statewide options preferable to continuing to engage local governments individually. The future is clear that food packaging mandates on California grocers will continue to arise. However, the details of the future mandates are unknown and, to date, troublesome. Instead of continuing an incremental and increasingly burdensome crawl to an unknown future. It is likely time the grocery industry, along with the communities we serve, move towards a consistent, reasonable and impactful policy agreement.
CAL I FO RNIA GRO CER | 17
CAPITOL INSIDER
2018 – Can You Believe it? LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F K HAN, S OAR ES AN D CON WAY, L L P
Every year when we review the Legislative Session, we use phrases like “never seen before,” “one for the ages,” or “can you believe it.” Brown
Well, when describing the 2018 Legislative Session, all those phrases and more will be used. Let’s review what took place during 2018 (not in any particular order): • The election of Senator Toni Atkins as President Pro Tem of the Senate. She is the first woman Pro Tem and the first to have also served as Speaker. In her acceptance speech, she called for more civility in politics and pledged to change the way the Assembly and Senate work together and to make it more collaborative. • California sued the Trump administration over healthcare. • SB 10 passed and was signed into law, eliminating the cash bail industry. The industry is now collecting signature for a referendum on the bill. It is also challenging the constitutionality of SB 10 based on the theory the bill was not in print for 72 hours. • Two initiatives that had qualified for the November ballot were removed by the Legislature after last minute agreements were made with the proponents of each. 18 | CAL I FOR N I A G R OC E R
The consumer privacy initiative was removed when opponents came to understand a legislative solution was more acceptable than an initiative. The limitations on local government spending was removed and the Legislature agreed to a 12-year moratorium on soda taxes. This was the first-time law allowed removal of an initiative by the Legislature, but it will not be the last time we see this action take place. • Assemblywoman Sydney KamlagerDove (D) elected in special election to fill the seat of Sebastian RidleyThomas, who resigned for health reasons. • Senator Josh Newman (D) was recalled and replaced by former Assemblywoman Ling Ling Chang (R). • California sued the Trump administration over immigration. • Senator Tony Mendoza resigned his seat under protest after allegations of sexual misconduct. He ran again for his seat and was defeated.
• Senator Vanessa Delgado was elected in a special election to replace Sen. Mendoza but did not make the top two election to serve a full term. So, Sen. Delgado served for less than one month. • Governor Brown vetoed 16 percent of the bills that reached his desk. This was his highest veto rate in 16 years of serving as Governor. • California sued the Trump administration over census policy. • SB 901 was passed to bail out PG&E, after it threatened bankruptcy because of the potential liability facing it from the wildfire in Northern California. The bill also included the promise of future funding to remove vegetation and overgrowth in California’s forests. • Senate Pro Tem Kevin de Leon announced a campaign against U.S. Senator Dianne Feinstein. • The California Supreme Court issued a ruling in the Dyanamex case creating a new rule for independent contractors and throwing the entire gig economy into chaos. The Legislature chose to defer action on the issue until 2019.
IN-DEPTH CAPITOLFEATURE INSIDER
“As we look ahead, 2019 will bring to town a new Administration, continued one party dominance in the Legislature and a focus on the 2020 Presidential election.” iStock
• The Assembly Republican Caucus lost a seat when the primary for Assembly District 76 resulted in two democrats earning a spot in the November election. This was the seat held by Assembly Member Rocky Chavez, who lost his bid for Congress. • California sued the Trump administration over energy policy. • Governor Jerry Brown gives his final State of the State address and presents his final budget to the State Legislature.
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• Assembly Member Cristina Garcia, a leader of the #MeToo movement was accused by a former legislative staff member of sexual harassment, forcing her to take an extended leave of absence. She was later found innocent by an independent investigation. And, to top it off, the Governor vetoed SB 452, the CGA-supported legislation to modify the bottle bill, which passed the Legislature with unanimous support, bi-partisan co-authors and no known
opposition. This was the culmination of a multi-year effort to place bandaids on a program in significant need of comprehensive reform. As we look ahead, 2019 will bring to town a new Administration, continued one party dominance in the Legislature and a focus on the 2020 Presidential election cycle which no doubt have us repeating the statements “never seen before,” “one for the ages.” and “can you believe it.” ■
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INSIDE THE BELTWAY
Three Reasons for Optimism
J EN N I F ER H ATC H ER S EN IOR V ICE PR ES IDEN T GOV E R N ME N T AN D PUBLIC AFFAIRS FOOD MAR K ET IN G IN S TIT UTE
What a difference a year makes – at least when it comes to food retailers. Tax cuts, fewer regulations and more business-friendly judges have resulted in an improved 2018. The Tax Cuts and Jobs Act (TCJA), which was passed in 2017 and implemented in 2018, brought the beginning of a lower tax rate for corporations as well as pass-through businesses. The new U.S. corporate rate is now 21 percent, down from 35 percent. Historically, Food Marketing Institute (FMI) member companies were paying one of highest effective tax rates; the reduction of the corporate rate was a welcomed relief as was the 20 percent deduction for pass throughs and an increased standard deduction for individuals. Many are already seeing the benefits these reductions have provided. The law also increases expensing levels, which will help with new investments in technology and job growth within our industry. According to FMI’s latest signature research report, “The Food Retailing Industry Speaks 2018,” 36 percent of food retailers said they will increase investments in store development, new equipment and real estate
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as a result of the tax law. Thirty-three percent of companies either have already or will increase wages outside of any legislative mandates. Companies also indicated they will be enhancing employee benefits and bonuses and education and looking for additional ways to invest in their workforce as a result of the relief from the Tax Cuts and Jobs Act. Speaks survey respondents indicated that same-store sales advanced 1.7 percent during fiscal year 2017, up from 1.0 percent the previous year, already showing a clear customer impact as well. The tax law has been effective for less than a year, but it has already provided a powerful signal to companies to move forward with new capital expenditures and additional investments in their company, their employees and their communities that would not have been possible otherwise in this hypercompetitive marketplace. Our industry’s average profit margins have never even hit 2 percent for the decades we have been tracking, which means our industry continues to be focused on its commitment to selling safe, quality and affordable food and ensuring our associates
are competitively compensated and able to reinvest their salary increases and bonuses back into the communities. The reduction in new regulations and a large new group of judicial appointments are two additional areas that are reaping rewards for supermarkets and the food industry in 2018. The Trump administration has been requiring a 2-to-1 ratio for any new regulations: two regulations must be eliminated for each new regulation created – a rule they intend to continue to enforce in 2019. For the third leg of the economic improvements stool, the U.S. Senate has confirmed nearly 90 new judges in districts across the country, many with a business background, that are already having an impact and making their mark on litigation. We look forward to another successful year as 2018 comes to a close and planning for 2019 has already begun. We will see new faces in Washington following the recent midterm elections, and we are excited to educate these new lawmakers on the priorities and complexities of the food retail industry. ■
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 #
CAL I FO RNIA GRO CER | 21
WASHINGTON REPORT
W h at ’ s N e x t ?
PET ER L A R K I N PR E S IDE N T AN D CEO N AT ION AL GR OCER S AS S OCIATIO N
With the 2018 midterm elections over, what can the industry expect from a divided government? With the 2018 midterm elections behind us, where Democrats won the House and the Republicans kept their hold of the Senate majority, Americans now find themselves with a divided government.
Many other employer-friendly rule changes are on the Administration’s docket, and they will continue to be rolled out in the coming months, according to the White House’s Fall 2018 Regulatory agenda.
The House and Senate will look much different next year, with the most diverse group of incoming lawmakers on Capitol Hill. Our industry looks forward to establishing new relationships, as well as welcoming back dozens of champions for the independent supermarket industry to Congress, this coming January.
Secondly, Democrats will use the power of their Committee Chairmanships to pursue investigations and oversight activities over the labor regulators. This increased scrutiny will slow down regulations and rulemakings that favor employers. We expect to see the Administration continue in its efforts to remove employment and labor regulations that are opposed by the business community. Pending rulemakings include rolling back the NLRB’s joint-employer rule that expands franchise liability, revisions to workplace injury and illness tracking rules, revisions to Ambush election regulations, and business-friendly overtime regulations.
The following is a preview, prepared by the National Grocers Association’s Government Relations department, of policy issues that will be on the forefront of many grocers’ minds during the 116th Congress. Labor Policy Regulatory: Most of the significant changes to labor policy have occurred via executive actions under the National Labor Relations Board (NLRB), the Occupational Safety and Health Administration (OSHA), and the Department of Labor (DOL). Some examples include stopping the harmful overtime regulations, reining in NLRB regulations on unions, and a sharp decrease in frivolous OSHA enforcement actions.
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However, since Congress controls the federal government’s purse strings, it’s likely that Democrats will want to pour additional funding into the coffers of the enforcement arms of each employment and labor regulating agency. Therefore, we may see additional scrutiny by government regulators over the employment and labor practices of more businesses because the agencies will have the resources to do so.
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While Democrats may pass legislation in the House aimed at curtailing these regulatory policies, those bills will likely die in a Republican Senate.
Paid Family Leave: Paid Family Leave is expected to take a front seat in Democrats’ efforts to appeal to working families ahead of the 2020 presidential race. With historic amounts of females winning seats in Congress and a White House that has expressed its support for paid family leave reforms, the time is likely ripe for a debate
over new policies that will impact employers and employees. Both Republicans and Democrats agree that something must be done on this issue, but there is no consensus yet.
The day after the election, Trump said he and the Democrats “have a lot of things in common on infrastructure.” Infrastructure could be one of a few areas of partnership between Democrats and Republicans.
Minimum Wage Hike: Democrats intend to push legislation to increase the minimum wage. Many support a $15/hour minimum wage bill. In the past, Republicans have opposed such measures, but the outstanding question now is, will President Trump get behind a wage increase, as he seeks to appeal to working class families in his 2020 campaign?
An infrastructure bill would be the ideal place to address the increasing costs of freight and the labor shortage that’s plaguing the trucking industry. Such initiatives could include reforms to the Hours of Service rules, increasing truck weights, and reforms designed to attract more truck drivers into the labor pool.
Payments With Democrats in control of the House, NGA’s goal to reform the payments system and level the playing field for merchants becomes more attainable. Democrats are known for being aggressive when it comes to regulations of financial institutions, especially if the impact of those rules favors consumers. With Democrats in charge, we could have an opportunity to thoroughly scrutinize the anticompetitive behavior of the card brands, and hopefully usher in changes to some of their most harmful payment acceptance policies.
Independent supermarket operators are driving innovation in the marketplace but operate in a fiercely competitive industry. NGA will continue to work to advance policies that will protect and enable independents to grow and better serve their communities. ■
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Healthcare DIR Fees: DIR fees are the fees that pharmacies may see Pharmacy Benefit Managers (PBMs) charge outside of administrative fees, collected at point of sale, and are often charged retroactively after a sale is made. Grocers with pharmacies have seen skyrocketing DIR fees. A bipartisan coalition is forming to contain the fees. If Congress moves bipartisan healthcare legislation, especially related to drug pricing, then it may be an opportunity to move the needle to fix DIR fees once and for all. Infrastructure Infrastructure package: President Trump came to office promising a trillion dollar plus infrastructure package, but this initiative hit a wall when he discussed the idea with Republican leadership in Congress. Republicans wanted to find a way to offset the cost of such a package, and no consensus emerged on how to do that.
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CAL I FO RNIA GRO CER | 23
&IN
DIVERSITY
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NCLUSION BY JESSICA DUMONT
Diversity and inclusion may be one of the banner issues of our time. While for many years a lack of diversity and discrimination in the workplace may have been considered the status quo, today, we know this type of culture cannot, and should not, be tolerated. Whether it’s intentional or not, many workplaces continue to lack diverse representation from people of different cultures and ethnicities, genders, ages, generations, abilities and disabilities, and sexual orientation. But research shows that companies that embrace diversity and inclusion outperform companies that don’t. Consider these statistics of how diversity impacts organizational performance. According to a McKinsey report released in January, companies were 21 percent more likely to experience above average profitability if they were in the top quartile for gender diversity than those in the fourth quartile, and 33 percent more likely to outperform if they were in the top quartile for ethnic and cultural diversity versus the bottom quartile.
According to Jonathan Mayes, Senior Vice President of External Affairs and Chief Diversity Officer for Albertsons Companies, embracing diversity and inclusion gives a clear competitive advantage over companies that don’t. Up to this point, many companies have made efforts to diversify because it is the “right thing to do,” or because it checks a box. But Mayes says it’s more than that. “For me, and for our company, that is not the top reason. That’s not what this is about. It’s about striving to be the best we can be, and there’s a business case that shows that diversity and inclusion provide numerous benefits, such as enhancing employee retention, morale, and the company’s bottom line,” Mayes says. Still, women and minorities are underrepresented in management and executive-level positions in today’s workplace, and that includes companies in the food and grocery industry. Continued on page 26 ▶
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A Look at Disparity in the Workplace Founded 17 years ago, the Network of Executive Women (NEW) is a not-for-profit organization that is committed to the advancement of women in the retail, consumer goods, financial services and technology sectors. Its membership represents Fortune 500 companies such as The Coca-Cola Co., PepsiCo Inc., Procter & Gamble and Walmart Inc., as well as major grocery companies including Kroger, Albertsons Companies, Wakefern, Publix and convenience store chains.
“You can see that there’s an alarming degree of disparity between the ability for companies in the CPG and retail sector, including grocery, to retain women – particularly at the executive level,” Alter says. The picture is no better when taking into account women of color. In NEW’s latest report, “Advancing All Women: How Women of Color Experience the Workplace,” results showed that as a group, women of color report less satisfaction than white women with their ability to achieve long-term career goals and less of a sense of belonging. This finding was consistent among Asian, Hispanic and Black women.
“I BELIEVE THAT COMPANIES ARE MOST SUCCESSFUL WITH THEIR DIVERSITY AND INCLUSION INITIATIVES WHEN THEY FIRST UNDERSTAND UNCONSCIOUS BIAS AND HOW IT WORKS.” Subriana Pierce knows this experience firsthand. Pierce, who has had an impressive career spanning management roles at Albertsons and Frito-Lay, among others, now runs her own company with her husband. She is the managing partner for Navigator Sales and Marketing, which is a brokerage and consulting company for the food and beverage industry. Pierce says that for many years of her career, she was the only female at the table, and without question the only woman of color at the table.
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NEW conducts research and provides training and professional development programs for its more than 12,000 members in 22 regions in the United States and Canada. In 2017, NEW commissioned a research report, “The Female Leadership Crisis.” According to NEW President and CEO Sarah Alter, the makeup of workplaces is becoming more diverse at the entry-level through middle management tiers. “What we found is that progress has been made on two fronts: If you look at the hiring and promotion rate of women relative to men at the entry level up to the mid-level manager ranks, you see that women are being hired and promoted at the same rate as men. Progress has been made there,” Alter says. In the mid-level tier of employment, NEW found that women are leaving at about a 24 percent rate and men at a 13 percent rate up to the mid-level manager. But at the executive level, the picture is quite different. Alter says that women are leaving at about a 27 percent rate and men at a 7 percent rate. If nothing is done outside of progressive efforts for hiring and promotion, she says that in 10 years, the attrition rate would increase to 50 percent.
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“I think the grocery industry has a ways to go,” Pierce says. “You’d think we would get it, because we know our consumer, we know who’s shopping, but that’s not always reflected in our management and our leadership and in our headquarters.” Mayes with Albertsons Companies agrees. He says that historically, the grocery business has not really been a place for high levels of diversity for women and people of color in the management ranks. “I would just say there is a significant opportunity for us,” Mayes says. “We, as an industry, see the public much more often than a company like Oracle or IBM or Ford Motor Company. These people are coming into our stores millions of times per week across the industry. It seems reasonable that, at some point, store management teams would match the demographics of their communities. As an industry, we’re not there yet.”
The Role of Unconscious Bias There is a deeper factor at play when it comes to diversity and inclusion: the role of bias. While some may fear the term bias has a negative connotation, it’s wise to embrace the fact that it exists, suggests Cassandra Pye, founder and CEO of 3.14 Communications, and senior fellow of the American Leadership Forum (ALF). Pye regularly provides training on behalf of ALF on the topic of unconscious bias, and says that there is a huge body of work that has been conducted by cognitive scientists around how the brain works. “Bias is not the same thing as racism, but we are all biased,” Pye says.
“I think it helps people relax if we start there. It evens the playing field when we accept the fact that our brains all work the same way.” To better understand unconscious or implicit bias, it helps to first look at the cognitive science behind it. According to the research Pye cites, the human brain can process about 11 million bits of information at any given moment, but is only consciously aware of about 40 of those bits of information at any given moment. Just two percent of emotional cognition is available to us at any given moment. The subconscious fills in gaps, sorting people and things and experiences into categories, and the brain creates associations. Racial, gender and other forms of bias tend to reside in those unconscious networks in the brain. “I believe that companies are most successful with their diversity and inclusion initiatives when they first understand unconscious bias and how it works,” Pye says. “If human beings are biased, by nature, then the organizations and structures and processes put in place by humans – i.e., hiring practices – probably aren’t free of bias, are they?” There are a number of organizations around the country that provide trainings for boards, leaders, human resources and legal professionals, including ALF. Inside the workplace, this means that bias has the potential to affect who gets hired and promoted, the assignments they receive or who ends up receiving bonuses. “If you step back and just take a look at your numbers, if you are typically hiring men or if you’re typically hiring men or women of a certain race or culture for certain kinds of jobs, do you need to step back and take a look at the processes that got you there in the first place?” Pye says.
Pye is encouraged by a stronger focus on diversity in leadership, but even those companies that are committed to diversity and inclusion are not going to see progress overnight. She says it takes ongoing investment, resources and holding people accountable. “You’ve got to take a good, hard, honest look at where your gaps are and then take a look at those processes and make sure they aren’t weeding people out based on bias. And make a long-term commitment to driving change,” Pye says.
Despite Progress, More Work Needs to Be Done Reports about how grocers are doing when it comes to diversity and inclusion shows that there is effort in the industry, but limited data and information makes it difficult to measure just how much progress has been made. According to an article from Grocery Dive earlier this year, international grocer Ahold Delhaize is one company that plans to make progress toward diversity and inclusion. The grocery company has set a goal to achieve 50-50 gender parity between men and women in leadership roles by 2025. But, this doesn’t address diversity when it comes to ethnicity, age, or ability. Other recent findings show that Kroger is among the top in the grocery industry for diversity in both gender and ethnicity, being ranked as one of the top 10 inclusive corporations in the U.S. Experts agree that many companies are showing a commitment to bring about change for the better, and for the long term, but there is still work to be done. Ongoing effort is necessary to bring diverse representation to the table and to eliminate the issue of unconscious bias and creating workplaces that are more diverse and inclusive. Continued on page 28 ▶
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“I believe that over the years, people have hoped that diversity, discrimination, unconscious bias, would not be an issue in the future,” says Teena Massingill, Director of Corporate Public Affairs and Diversity for Albertsons. “Yet still, in 2018, it is. What happens is it evolves, it changes face, but it doesn’t go away. I believe that how we view it and how we react to it has to change as it changes.” Pierce says that in an industry that is so data-driven and data savvy, companies should use that to think forward and be the change. “I would argue over 95 percent of decisions that are made are in hindsight. Until we move the needle to where we’re looking at insight and then foresight, companies won’t get it. They’ve got to start looking forward,” Pierce says.
How to Take Action Toward Diversity & Inclusion Some companies may be working toward their diversity and inclusion goals, while others are unsure where to begin. To truly translate talk into change, there are specific actions that companies can take. Pye explains that change begins with addressing processes and procedures. “We have to be very careful and very intentional and very mindful about setting up processes and procedures to help everyone attain goals and have opportunities,” she says. “In the hiring process, maybe that means something as simple as blacking out a college or a surname or gender on applications and resumes. Even, in some instances, blacking out dates of graduation so as not to be influenced by an applicant’s age, for example.” Alter says that NEW has created a blueprint to help companies achieve equality among employees from entry level to executive boardroom. NEW’s blueprint calls for companies to apply the following principles, which must be implemented together to work: • Set gender equality high on the CEO and C-Suite agenda as a strategic business imperative • Drive and embed an open, inclusive culture where strong values underpin gender equality • Mandate equal pay down to the job title, and uphold gender-neutral policies and practices that are consistent, flexible and fair • Ensure open access to all jobs • Be transparent; share talent data and progress toward goals Pierce encourages companies to let their employees engage with organizations, like NEW, and utilize the resources they offer. “There are organizations that are there to help figure it out,” she says. “And one of the big things that retailers or manufactures can do, versus trying to figure everything out themselves, is to allow their employees to engage with those organizations and in those discussions. Together we can all solve it. Individually we can’t.” ■
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How to Even the Playing Field for All Employees Jonathan Mayes with Albertsons Companies says there are two important points for an organization to consider as they approach their diversity and inclusion efforts. First, he says that enacting diversity and inclusion does not mean displacing anyone that is currently in a role. Secondly, he says the goal is not to hire or promote anyone who’s not qualified for a position. According to Mayes, employers can be intentional about their diversity and inclusion efforts, and decreasing unconscious bias, through the following steps: • Try to de-bias job descriptions. For example, the word “energetic” can imply a younger person. A “strong” leader can indicate a need for physical strength, while being “effective” is probably a more desirable goal. Be intentional about word choice. • Get a diverse candidate pool from the very beginning. • Where do you post the job? Where can you go to find different types of people than the typical pool you draw from? • Structure the interview process to be more position and skills-based, saving small talk for the end and asking all candidates the same questions. • Use a diverse group to interview. Be intentional about trying to get diverse perspectives into the process. • Offer career training and development, as well as mentoring and coaching. • Provide performance reviews and timely feedback.
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OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES
Looking Good
for Less
You know private label has come a long way when dollar stores want in on the action. That’s the situation with UK-based Poundland, which recently introduced an upscale, budget-priced skincare collection called #6. The line, suitable for all skin types, was blindtested among customers and includes an anti-aging cream, cleansing water, a collagen filler and derma serum. iStock
LAST GASP? Sears, the perennial candidate for bankruptcy, is still trying to avoid it with a “last ditch” effort to save the company by asking creditors to restructure about $1.1 billion in debt and sell $1.5 billion in real estate and divest $1.75 billion of assets. Bottom line is that this once-iconic brand is simply running out of cash. iStock
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The Turning Point?
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It’s been a prolonged bull market for virtually every industry. But it may be coming to an end based on numbers in the housing market which is said to be heading for the biggest slowdown in years even in hot markets like Seattle, Silicon Valley and Austin, Texas. Buyers are thinking twice as a result of being squeezed by high prices and rising interest rates. This means that many first-time and younger buyers are being shut out of the home market.
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STORES RULE! Selling wireless devices doesn’t mean you can eliminate brick and mortar and sell exclusively online. Comcast, the nation’s largest cable company, plans to expand sales of its Xfinity mobile wireless service by focusing efforts on 300 retail stores.
OUTSIDE THE BOX
The Next
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ADVERTISING OUTLET The news that Sirius XM Holdings will acquire the music streaming service Pandora for about $3.5 billion in stock didn’t cause much uproar in the investing world, but it will enable Sirius to go beyond its subscription car radio service into an advertising-supported digital radio business. Sirius has 36 million subscribers in North America and its latest move will make it an even more powerful selling tool.
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Allen Edmonds, one of the last surviving U.S. footwear manufacturers, is kicking off a marketing campaign to highlight its 96-year history of shoemaking in America. The question being asked is whether patriotism will inspire people to pay more. A recent Reuters poll found that 70 percent of Americans find it “very” or “somewhat” important to buy U.S.-made goods. But only 21 percent are willing to pay more.
Sole Survivor
CONTAINING SUPPLY You, too, can have your very own farm. Local Roots Farms, based in Los Angeles, is retrofitting 40-ft long shipping containers into terrafarms that can produce as many greens as five acres of land with minimal water. The company is leasing the containers to wholesalers and restaurants, and the United Nations is going to field test the concept.
Disruptor
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The fashion industry supply chain is getting stronger thanks to advances in 3D design and a new generation of design software that is enabling apparel companies to keep up with speedier consumer interest in new trends. The technology allows manufacturers to streamline logistics giving them more flexibility to be creative while adopting on-demand manufacturing.
M A S C U LINE M A K E O VERS
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If you’re looking for trends in the male grooming market, turn east to China. The market is projected to grow at nearly 7 percent thanks to interest by urban Chinese men and image-conscious Millennials, according to Euromonitor. The research firm has found that all urban Chinese men spend more time grooming themselves for different occasions than those in other areas. Urban Millennials, in particular, were said to spend an average of $28 monthly on these products.
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Today’s fragmented, hypercompetitive and channel-free grocery industry requires both retailers and suppliers alike to tap into their sixth sense in order to capture today’s diverse shopper.
Luncheon Keynote Kindra Hall. 34 | CAL I FOR N I A G R OC E R
More than 1,000 business meetings were scheduled over two days. Peter Sheahan.
That need to heighten their business sense was the focus of the 2018 CGA Strategic Conference last September in Palm Springs, Calif. Once again, the California Grocers Association hosted this three-day annual gathering of grocery retailers, suppliers, wholesalers and brokers. Attendees heard industry-thought leaders, participated in face-to-face business meetings and enjoyed business-focused networking events. “Each year, our goal is to provide a conference that challenges its attendees to learn new ideas, while providing the perfect venue to get business accomplished,” said CGA President Ron Fong. “Our post-conference surveys confirm we met our goal.” A key component of the conference’s success is its focus on presenting a variety of thought leaders addressing a broad range of topics. This year’s program opened with a powerful, entertaining and thought-provoking presentation that created a buzz that resonated throughout the three-day event. His name is Vinh Giang and his unique ability to blend his skills as a magician with an inspiring message focused on perseverance and overcoming adversity kept attendees focused and engaged throughout his presentation.
“Vinh definitely hit it out of the park,” Fong said. “The energy in this standing room only presentation was incredible. It was very obvious that something special was taking place.” Sunday’s Opening Experience was followed by another powerful presentation at Monday’s General Session by international expert on leveraging business trends and new market opportunities, Peter Sheahan. Back by popular demand, the Conference presented three thought-provoking, TED-style presentations that explored the disruptions occurring today while challenging attendees to think outside the box. All three speakers founded their unique companies and shared their company’s business model and how they believe it will impact today’s grocery market. Speakers included Josh Domingues, CEO of Flashfood, a mobile platform that helps retailers reduce their food waste in a profitable way; Brad Oberwager, CEO of Jyve, which allows CPG brands and retailers to connect with qualitycertified talent to accomplish a variety of in-store jobs; and Mike Lee, who’s company explores what the world’s food system could look like in the year 2065. “We started this Ted-style programming last year and it was tremendously successful,” Fong said. “It really challenges our attendees to go beyond their comfort zone and explore new, and disruptive ideas.” Continued on page 36 ▶
Grocery retailers and suppliers from throughout California attended this year’s conference. CAL I FO RNIA GRO CER | 35
Attendees also enjoyed productive social events including the Opening Reception. ◀ Continued from page 35
This year the Monday morning collaborative Whiteboard Sessions added an interesting twist. Students from Cal Poly, San Luis Obispo, were invited to assist university professor Dr. Ricky Volpe in facilitating a meaningful discussion on millennials and executive level employment opportunities in the grocery industry. The well-attended session allowed CGA members and students the opportunity to identify each other’s respective interests and needs. Additional Whiteboard Sessions centered on new and creative ways to heighten the customer shopping experience. Topics ranged from uncovering new approaches to building customer loyalty to employing new technologies to heighten a customer’s sensory in-store experience. The Sessions also explored new growth opportunities in frozen food and produce. “What makes the Whiteboard Sessions so valuable to attendees is its emphasis on generating meaningful peer-to-peer
discussion that is facilitated by an industry expert,” says Fong. “It’s the sharing of ideas and best practices, along with challenges and obstacles, that makes this format so successful.” Two educational components within the conference continue to gain momentum. Introduced last year, the Loss Prevention Executive Summit again featured six hours of targeted programming, including keynote speaker Garrison Wynn. His presentation, “Influencing Safety” combined real world experience with his unique comic timing, and focused on how to develop an effective company culture of safety. Attendees heard industry experts address a number of pressing loss prevention, safety and risk management issues including enterprise risk management, Cal-OSHA, grocery fraud, workers’ compensation fraud and emerging cyber threats. The conference continued to host the Independent Grocers Forum, a one-of-akind, tailored education session targeted
Tod Marks, SUPERVALU (left), with Richie Morgan, North State Grocery, Inc.
specifically to the independent operator. This year’s keynote speaker was Christy Largent. Her presentation focused on the need for every company to develop a culture that engages employees, increases collaboration and maximizes profits. “Both these components continue to grow in interest and in depth,” Fong said. “Our goal is to provide excellent and targeted educational programming to these two components. And, we hope to expand into other store operations areas in the future.” The conference’s educational program closed with its annual Luncheon Keynote featured Kindra Hall, President and Chief Strategy Office at Steller Collective, who gave an enlightening presentation on how to transform mediocre communications into masterpieces that resonate with customers. “Once again the Conference Committee and staff looked beyond the normal to find those presenters whose concepts, ideas and
“A KEY COMPONENT OF THE CONFERENCE’S SUCCESS IS ITS FOCUS ON PRESENTING A VARIETY OF THOUGHT LEADERS ADDRESSING A BROAD RANGE OF TOPICS.”
Vinh Giang.
Premium Suite Holder sponsorships included a private Business Conference Suite. 36 | CAL I FOR N I A G R OC E R
(L to R) Conference Chair Kendra Doyel, Ralphs Grocery Co.; and Kevin Hobbs, Sandy Martinez, Food 4 Less/FoodsCo.
delivery help retailers and suppliers alike fine tune their sixth sense for retailing,” Fong said. As in years past, the conference hosted its trademark pre-scheduled retailer/vendor business meetings. More than 1,000 meetings where scheduled during two days of the conference. Each year, these meetings are ranked as the No. 1 show benefit. Along with inspiring presenters and productive business meetings, this year’s conference also included enjoyable networking events, designed to foster an environment for genuine discussion in the company of new and old acquaintances.
CGA President Ron Fong discusses the November elections with Politco reporter Carla Marinucci.
“Once again our supplier partners, the Illuminators, did a fantastic job in providing scrumptious breakfasts and lunches, while strengthening industry camaraderie,” Fong said. “I want to thank Illuminator Headlite Paul Kamholz and his fantastic team for their tremendous support. They work long hours and it’s truly appreciated.”
Valued Sponsors The engine powering the conference’s tremendous success are its many sponsoring companies. “Our valuable sponsor partners play a critical role in the success of this event,” said Ron Fong, CGA President & CEO.
“Their generous support of the conference allows us to sustain the high level of professionalism this event is known for.” This year the conference added a new level to its sponsorship package – the Pavilion Suite. This premium level suite offered a dramatically expanded meeting space and featured three separate conference rooms and extended 85-minute meeting times. “We hope sponsoring companies at this year’s show had the opportunity to visit this unique suite,” Fong said. “We hope to add additional Pavilion Suites next year.” The 2019 CGA Strategic Conference is September 29-October 1, in Palm Springs, Calif. Sponsorship material will be available in early 2019. ■ Continued on page 38 ▶
Retailer Review Illuminators Headlite Paul Kamholz.
Conference sponsorships featured face-to-face pre-scheduled meetings.
(L to R) Enjoying the Monday Reception are Denise Henderson, ItemMaster; Emanuel Gomez, Las Montanas Supermarket; and Cynthia Brazzel, Food Marketing Institute.
Whiteboard Sessions discussed current industry trends. CAL I FO RNIA GRO CER | 37
2018 CGA STRATEGIC CONFERENCE SPONSORS “Our valuable sponsor partners play a critical role in the success of this event…their generous support of the conference allows us to sustain the high level of professionalism this event is known for.” – Ron Fong SPONSORS Pavilion Suite Holder
Executive Level
Director Level
CA GROWN
Campbell Soup Company Chosen Foods Classic Wines of California The Clorox Company Daisy Intelligence DanoneWave Mondelēz International Unilever
Agilence, Inc. AppCard Inc. Aurantiaca USA LLC Baloian Farms Bunzl California, LLC Certified Federal Credit Union Civil Demand Associates Crown Poly. Inc. Earth Friendly Products F. Gavina & Sons, Inc. FMS Solutions, Inc. Front Line Safety Golden West Food Group H2rOse Henkel Laundry & Home Care InstaKey Security Systems Itasca Retail Information Systems Lotus Trolley Bag PBI Market Equipment, Inc. Re:Think Ice Cream Roplast Industries Inc. Securitas Select Systems Technology Sioux Honey Association Stratus Wine & Spirits Tony Chachere Creole Foods TruGrocer Federal Credit Union TRUNO Retail Technology Solutions Unified Protective Services, Inc. Worldwide Sourcing Group Zenith Insurance Company
Premium Suite Holders Anheuser-Busch InBev Bimbo Bakeries USA C&S Wholesale Grocers Chobani Coca-Cola North America/ Reyes Coca-Cola Bottling, LLC The Hershey Company The Jel Sert Company Jelly Belly Candy Company Kellogg Company Kimberly-Clark Corporation The Kraft Heinz Company MillerCoors Nestlé Purina PetCare Nestlé Waters North America PepsiCo Procter & Gamble Retail Marketing Services, Inc. Starbucks Coffee Company SUPERVALU Tyson Foods, Inc. United Natural Foods, Inc.
Networking Lounge Tyson Foods, Inc.
Registration Sponsor Post Consumer Brands
Media Sponsors Shelby Report Supermarket News Winsight Grocery Business
38 | CAL I FOR N I A G R OC E R
President Level Alkaline 88 LLC Applied Data Bonduelle Fresh Americas (Ready Pac) California Lottery Command Packaging DeLuscious Cookies & Milk Engage3 Ferrero USA Flowers Baking Company Frito Lay Inc. Gatekeeper Systems, LLC Harris Ranch Beef Company Houweling’s Group Idahoan Foods Kashi Company KeHE Distributors, LLC Kysor Warren Melissa’s/World Variety Produce Mettler Packaging LLC Mizkan America NuCal Foods Oberto Brands OK Produce Orchids Paper Products Papyrus Recycled Greetings Westlake Produce Zebra Retail Solutions, LLC
Mark Your Calendar! Join us for the 2019 CGA Strategic Conference Sept. 29 - Oct. 1, 2019 in Palm Springs, Calif.
BIMBO BAKERIES USA
Congratulations to
Kendra Doyel on being elected 2018 – 2019 Chair of the CGA Board of Directors BimboBakeriesUSA.com
©2017 Bimbo Bakeries USA, Inc. All rights reserved.
CAL I FO RNIA GRO CER | 41
Kendra Doyel
2018 – 2019 CGA Board Chair 42 | CAL I FOR N I A G R OC E R
By Cassandra Pye
On the day Kendra Doyel was interviewed for this profile, it was late August and she was, literally, watching the floor session of the California Legislature as the State Assembly was taking up legislation to address revisions to the state’s beverage container recycling program. “We thrive in crazy. It’s the end-of-session and we’re watching this one closely,” she shares. As we launched into our conversation, the bill had just passed the lower house. “And, along bipartisan lines,” she beamed. “So, I’m really happy about that.” Now, onto her new role as incoming Chair for the California Grocers Association: Kendra Doyel is Senior Director of Human Resources and Labor Relations for Ralphs/ Food4Less Grocery Company. She is also one of only a few women to hold the esteemed post. “We are proud to have Kendra as CGA’s third Chairwoman, a position we know she will use to influence positive and progressive change,” says Association President and CEO Ron Fong. Former CGA Chair and Albertsons-Senior Vice President and Chief Diversity Officer Jonathan Mayes calls Doyel the “consummate professional who represents her company and our industry exceptionally well.”
“I’m wickedly humbled by the opportunity to come to the role and to represent my company and an industry that really found me,” Doyel says. “I am so grateful for the opportunity to serve in this fashion. It’s powerful and sets me back often because I really believe in and have a great passion for the industry and the role we play in people’s lives.” Doyel is a trained pharmacist who credits a division president at Fry’s with steering her to create a communications department for the company in 2005, then encouraging her to take on the same role for Ralphs/ Food4Less in California. That was in 2008. Government relations was added to her portfolio at that juncture and the former scientist managed the role efficiently and effectively for nearly 10 years, according to everyone who worked with her.
Continued on page 44 ▶
43
◀ Continued from page 43
“Kendra has such natural instincts surrounding the grocery space, you would think she was born into the business,” claims Fong. “She is a pharmacist by trade and education, but her instincts for public affairs and her government relations talents extend far beyond science.” Doyel has been serving in her new human resources and labor relations role since June.
“Kendra has such natural instincts surrounding the grocery space, you would think she was born into the business.” As chair for the nation’s largest state grocery industry association, Doyel has the opportunity to impose her vision and values upon the direction and focus for its members and the industry.
“My single greatest focus will be to elevate CGA in any way possible,” Doyel asserts. “When consumers and government officials speak of the AMA (American Medical Association) or the ADA (American Dental Association) – when the ADA says, brush twice a day, everyone listens. That’s what I want for CGA.” “I want to elevate CGA in any way that I can, starting with making the Association the go-to source for consumers,” she says. “I want to elevate Ron [Fong] and his team and the work we do this year and the years beyond my service.” Doyel adds that she believes CGA should also be the go-to source on legislative issues and believes deeply in the impact the Association has on lives every day – after all, she adds, every Californian likes to eat.
Congratulations KENDRA DOYEL 2018-2019 Chair of the CGA Board of Directors
44 | CAL I FOR N I A G R OC E R
Would we have the same conversation if they were sitting there with us? I’d like to do that for CGA as well.”
The Ralphs/Food4Less executive believes that success for the Association, for industry and for her company is ultimately about people. “I drive my staff crazy because I have an empty chair set in every meeting – to represent our customers,” she reports. “I want our customers to have a seat at the table, I want us to ask ourselves if we are making every decision with them in mind.
Doyel possesses a remarkable passion about the industry, where she’s spent her entire career, and genuinely believes it’s unique. “The grocery industry is an industry that is a huge part of people’s lives,” she says. “Where else do you go that many times a week? When you think about the impact the food industry has on people’s lives, you can’t help but be honored at the opportunity to be a part of it.”
When CGA makes decisions, Doyel asserts, it’s acting on behalf of all the many customers it serves – not only the companies who sit around the Board table. “We are representing everyone whose lives we affect,” she asserts. “When a consumer is making a choice or a legislator is making a decision, I want them to ask ‘What does CGA say?’ I want them to see us as a trusted partner.” “The industry has changed in the brief time since you and I started this conversation,” Doyel claims. “There is an Amazon Prime truck driving outside my window as we’re talking. Things have never been more exciting and they’ve never been scarier. But we can define it. We can win today, or we can lose today. Our customers are driving that change and they’re powerful. We’ve got to get on and get on fast, or the change will pass us by.” Continued on page 48 ▶
Congratulations! Congrats to the new CGA Chair, Kendra Doyel. From your friends at Raley’s
CAL I FO RNIA GRO CER | 45
Congratulations Kendra Doyel Senior Director, Human Resources and Labor Relations
Acosta and its valued clients would like to congratulate Kendra Doyel on being elected as the 2018 – 2019 Chair of the CGA Board of Directors
Congratulations to incoming CGA Chair Kendra Doyel. Our entire industry can now benefit from your outstanding talent and leadership.
◀ Continued from page 45
We can be a trusted source and a strong representative.”
The Love Language of Food
How does she feel about leading the industry as a woman?
Married for nearly 20 years and mother to a teenager and one preteen, the self-described ‘science nerd’ says her family calls food her ‘love language.’ “If you’re sad, I feed you. If you’re happy, I feed you. If you’re sick, I feed you. If you’re well, I feed you.” “In the case of our customers, I want to be sure that our 32,000 associates have stability for the future, and for the next generation. It’s fascinating to watch the change and the evolution. It’s warp speed. You can’t sit back. You have to have a laser focus.” What does this rapid evolution mean for CGA? Almost the same thing it means for CGA member companies, replies Doyel. “CGA must know its customer – the industry,” she says. “What we need now more than ever is an informed and elevated association that we can trust to speak on behalf of the industry and on behalf of
consumers. And, when CGA speaks, it’s right. It’s well-informed and it’s worth listening to.” Doyel has held a number of leadership posts in trade groups on behalf of her company and will bring that experience to bear in guiding CGA. “There are associations that force you to retool, that stop you in your tracks,” she says. “The Los Angeles Chamber of Commerce, for example, represents business interests well. You want to know what they think. CGA can and should emulate that role.
“It’s an important thing to me. I am very proud and humbled and disheartened – all at the same time,” she confides. “It’s 2018 and I am where I am in my career and we still have to talk about this as a point of pride. At 10-years old, I thought this would be commonplace. Instead I have to tell my daughter that we’re celebrating this milestone today. I’m proud but I want it to not be a big deal.” Fong shares that Doyel led the charge to diversify the CGA Board and that the results of her efforts were felt almost immediately. “Kendra is a natural born motivator and mentor, a role that she takes very seriously,” he says. “She has been a tireless advocate for diversity in the leadership of our industry.”
B:7.375” T:7.375” S:7.125”
CONGRATULATIONS TO KENDRA DOYEL FOR BEING APPOINTED AS CHAIR OF THE BOARD OF DIRECTORS OF THE CALIFORNIA GROCERS ASSOCIATION!
T:4.875”
48 | CAL I FOR N I A G R OC E R
B:4.875”
S:4.625”
PROFIT FROM A WORLD OF EXPERIENCE Enjoy Our Brands Responsibly. ©2018 Imported by HEINEKEN USA Inc., White Plains, NY.
Doyel takes the compliment in stride. “We recognize that we got here because of a lot of great men and great women,” she says. “It wasn’t a village, it was a full-on city to get me to this place! I’m wickedly grateful and proud that a woman is coming to this seat again.” Doyel adds that it is her hope that a day comes when no one even notices that a woman is in a leadership role and that it’s commonplace.
Leadership always brings challenges and, though she’s a scientist by training, Doyel believes her success, and that of the industry and the Association, will be to remain focused on the human element. “The speed of technology requires us to recognize the important of connecting people,” she insists. “It’s important to keep an eye on human connection and how a place like a grocery store helps to foster that. How do we keep that? I’m worried about that.”
“Kendra is a natural born motivator and mentor…she has been a tireless advocate for diversity in the leadership of our industry.” “I hope it’s in my lifetime,” she says. “The Association’s diversity does make me proud and it’s a mark of a good association. I love the way CGA embraces this.”
She shares a compelling tale of a young reporter in Shanghai who attempts to get through her day without human interaction. “She gets up, gets on her phone, goes to the store – uses her phone – then does the
Congrats to the new CGA Chair,
Kendra Doyel.
same thing at a clothing store,” she shares. “She uses a workspace to work. She goes to McDonalds and uses a computer to order food. She slips into a karaoke booth – and uses her phone to pay and play. She uses an app on her phone to get her coffee. At the end of the day she realizes that she’s gotten through entire day without talking to a single human being. In the dark, reflects on the day. She pauses at the end and says, ‘You know what? I feel lonely in Shanghai.’” “When I go to shop with my kids, the cashier, Harriett, knows they start school next week and asks me if I have everything for the start of school,” Doyel reports. “What are our customers doing? Going to the beach. Getting laundry supplies. Cooking. Everything is about people for me and the effect we have on them. I want to ask myself everyday if I’ve made someone’s life better. CGA does that. We have to work smart and hard. I believe that as an Association we’re set to do that and will have a great impact.” ■
CONGRATULATIONS
KENDRA!
Your leadership will have a tremendous impact and we wish you a very successful tenure as Chair of the CGA Board.
CAL I FO RNIA GRO CER | 49
Congratulations C O N G R AT U L AT E S
KENDRA DOYEL
Kendra Doyel
on being named Chairperson of the CGA Board of Directors!
Ralphs Grocery Company as the next incoming Chair of the California Grocers Association Board of Directors
BRISTOLFARMS.COM
© AGC, LLC
CAL I FO RNIA GRO CER | 51
52 | CAL I FOR N I A G R OC E R
By Ken Fenyo Consumer Markets Lead, Fuel by McKinsey
The grocery industry is facing unprecedented disruption, from changing consumer behavior to new technologies to increasing competition from both online and brick and mortar retailers. In this environment, it is both harder and more critical than ever to focus on loyalty.
Loyalty is a key driver of growth across industries. According to research from McKinsey & Company, it is 5x more expensive to acquire a new customer than keep a current one. And when shoppers switch to different stores or brands, over two-thirds of them don’t come back. When done right, loyalty programs generate value by influencing consumer behavior. For example, members of top performing loyalty programs are 80 percent more likely to choose a brand over competitors, twice as likely to increase purchase frequency, and twice as likely to increase their spending.1 Grocers can unlock significant growth by building loyalty with shoppers already in their store. Indeed, a typical grocer would have to acquire up to 10 new customers to make up for the lost spending from a top shopper. And even your best customers don’t shop the whole store, providing upside opportunities to increase share of wallet (few grocer retailers capture more than 60 percent of a shopper’s grocery spending). To better compete, grocers need to up their loyalty game. Although store card programs are a great way to collect data, they do little to engage shoppers and grow share of wallet. Rather, grocers need to focus on achieving a change in consumer behavior by creating rewards and incentives tailored to the specific needs and preferences of loyalty program members. Continued on page 54 ▶
1
McKinsey & Company loyalty research 2018
CONFERENCE HIGHLIGHT Ken Fenyo was a speaker at the 2018 CGA Strategic Conference.
CAL I FO RNIA GRO CER | 53
When designing loyalty programs, grocers must steer clear of common loyalty traps that undermine program effectiveness, including:
✓ Seeing the program as tactical. Loyalty programs need to be more than a collection of discounts and deals.
✓ Copying your competitor’s program. Too often, grocers
provide the same program features and benefits as the store across the street. A run-of-the-mill shopper card program is not going to move the needle.
2
Personalize, personalize, personalize
Customers don’t want a generic experience. They want things personalized to what they buy and how they buy. In particular, grocers should leverage the vast data they collect on shopper purchase behavior to deliver highly personalized offers for the brands they buy. In addition to driving near-term sales, these offers can increase long-term loyalty. Indeed, according to McKinsey research, personalization can deliver a 10 – 30 percent uplift in revenue and retention and a 10 – 20 percent reduction in marketing costs.2
✓ Collecting (but not using) the data you collect. Data is the
“Every grocer needs a loyalty strategy, not necessarily a loyalty program.”
✓ Letting the program get stale. Over time, even a good loyalty
3
lifeblood of a modern loyalty program. Too many grocers collect data but don’t use it to improve their business, undermining the reason for creating a loyalty program in the first place.
program will become background noise if the program isn’t kept fresh and relevant.
Surprise and delight.
✓ Providing high-cost-to-deliver rewards. Grocery is a thin
Grocers frequently underestimate how much a simple thank you message resonates with customers. In the past, many grocers used to give free turkeys to their best customers at Thanksgiving as a way of thanking them for their business. There are many ways grocers can surprise and delight customers.
◀ Continued from page 53
For example, grocers could provide personalized coupons giving the shopper a favorite item for free. A number of e-commerce startups I have met have had success including handwritten notes thanking shoppers for their business. McKinsey’s loyalty research shows that although customers care first about monetary rewards within a loyalty program, it is nearly as important for consumers to feel special and recognized.
margin business – ultimately loyalty programs need to deliver positive returns.
Every grocer needs a loyalty strategy, not necessarily a loyalty program. There are two reasons to offer a loyalty program: to collect better data on your customers and to provide better incentives and rewards for loyal behavior. In most cases, brick and mortar grocers need a loyalty program of some sort to capture customer data. A loyalty program can also provide a platform to identify and engage with your shoppers across channels. There are several next generation loyalty levers grocers can pull to increase the number and spending of loyal shoppers. The following levers can be part of a revamped loyalty program or done as standalone initiatives to drive growth.
1
Create a great end-to-end experience.
One of the key goals of a loyalty program is to remove pain points in the shopping experience. Most obviously, loyalty programs provide a way to provide targeted discounts to shoppers, reducing the overall cost of buying groceries. Within the loyalty program, grocers need to make it easy to sign up for the program, track benefits, redeem offers, etc. Increasingly, loyalty programs need to work seamlessly across channels. For example, digital coupons let grocers reach shoppers before, during and after the shopping trip, whether they are in store or online. It is not enough to create a great loyalty program. Grocers also need to continually innovate to keep the program fresh, by adding new benefits, signing new partners, or making the program easier to use.
54 | CAL I FOR N I A G R OC E R
4
Create a gap between cost and perceived value.
The best rewards are highly valued by your customers but relatively inexpensive to provide. In the travel space, intangible benefits like early boarding or business-class upgrades cost almost nothing to deliver but create significant loyalty (or at least barriers to leaving) for frequent fliers. It is harder to provide intangible benefits in grocery stores. I have tested concepts like special lines or parking spaces for top shoppers but in general people say they would feel awkward getting special treatment in front of their neighbors. Fuel rewards, however, have been a very successful loyalty vehicle in grocery in part because it has high perceived value (people hate paying so much for gas) and relatively speaking is low cost (if shoppers get 10 cents off a fill up for every $100 spent, the reward is typically around $1.50 off a typical fill up).
2
McKinsey & Company
For example, subscription programs like Amazon Prime provide free shipping, discounts and other benefits in return for a recurring fee. As grocery shopping moves online, grocers could create programs that allow shoppers to subscribe to a set of frequently purchased items that are delivered monthly with free shipping.
6
iStock
Personalized coupons are another area where grocers can deliver highly valued benefits at a relatively low cost (in large part because consumer packaged goods manufacturers often fund the offers).
5
Explore special programs to your best customers.
It typically does not make sense for a grocer to offer a tiered loyalty program to provide enhanced benefits to best shoppers (as I discussed above, this is in large part because the intangible benefits customers typically receive at higher loyalty tiers are not as powerful in a grocery setting). E-commerce might open up an opportunity to craft special programs that appeal primarily to your best shoppers.
Build community.
Grocery retailers have an opportunity to build community among their top shoppers. For example, grocers could create an online forum for their best shoppers to test new private label products and provide feedback on which ones should be rolled out to stores. By actively soliciting feedback, these advocacy programs make best customers feel more bought into the brand and encourage word of mouth. As they face challenges on multiple fronts, grocery retailers should invest more heavily in building loyalty with the shoppers already in their store. By updating loyalty programs to provide a better experience with more relevant rewards and incentives, grocers can drive growth and create deeper relationships with their best customers. â–
Congratulations to the new CGA Chair,
Kendra Doyel!
CAL I FO RNIA GRO CER | 55
A 100-Yea
Lega
By Len Lewis
NeONBRAND on Unsplash
ar
acy
Historians believe 1918 was a watershed year for the U.S. and around the world: It saw the end of the World War I, the war to end all wars and the beginnings of the Soviet Union. The U.S. House of Representatives passed an amendment giving women the vote and the first pilotless drone was tested on Long Island, New York. It was also what many in the food industry see as the foundation of modern food distribution when Israel Cohen and Abraham Siegel opened a small warehouse and began making deliveries in the industrial town of Worcester, Mass. – the start of a 100year legacy that has made C&S Wholesale one of the largest privately held companies in the U.S., with sales in excess of $27 billion annually. This wholesale powerhouse now serves about 600 stores in Western, Northwest and Mountain states. “These retailers are being supported by C&S’ distribution centers in Sacramento, Stockton and Fresno with sales, procurement and merchandising teams located in Rancho Cordova, Stockton and Fresno,” said Eric Winn, Senior Vice President and General Manager for the West Coast and Hawaii. Asked about potential expansion in California, he replied, “We’re constantly reassessing our capacity and growth plans for the region with an eye on the future and whatever we can do to support and create value for our retailers,” he said. C&S’ entered the California market 14 years ago when it acquired facilities from the now-defunct Fleming Cos. and was a turning point for the company, Winn noted. “Our expansion into the West was transformational. We went from being a large regional wholesaler to a national player operating in several regions,” he said. “Our exposure in Western marketing areas gave us new and valuable insights into innovative product categories in packaged goods as well as more direct involvement in California’s vast produce industry,” he added.
“In fact, the move was influential in our path to becoming the largest produce wholesaler in the United States and enabling us to develop expertise in managing the logistics between California and Hawaii,” he said. California proved to be a far different and diverse market than C&S had experienced in the East, requiring the commitment of having local expertise, according to Winn. “Every region in which we operate has its own nuances,” he said. “And we believe that it’s important to understand individual market dynamics in order to support our retailers and their competitive requirements. As such, we’ve always been committed to putting teams in each of our regions to focus on merchandising, marketing and sales.” For example, Winn said, C&S has a team in California, as well as in Hawaii and similar ones in Texas, South Carolina, Pennsylvania and New England. “Each of those teams is focused on helping retailers in those specific marketplaces,” he said. “The competition our retailers face is different in each region, and therefore our strategy to help them win needs to be different in each area. That is partially driven by consumer trends but probably even more so by the competitive landscape.” One of the company’s most potent strategies has been the development of its private label business. “The continued development of private brands is taking place across the entire industry, and our retailers need strong private label programs to compete effectively,” Winn noted. “We leverage our own in-house brands – most notably Best Yet – as well as our partnership with Topco to offer a steadily increasing number of private label brands. Continued on page 59 ▶
CAL I FO RNIA GRO CER | 57
Select the BestÂŽ
CELEBRATING 100 YEARS 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 us today to learn how we can help make this your best year ever! Eric Pearlman, Sr. Director Independent Sales, West Coast 916.823.4586 | www.cswg.com
Proud Heritage, Compelling Future
◀ Continued from page 57
He added that C&S also recognizes that retailers need opportunities to differentiate, which is an opening for strong private labels and also an opening for market-driven assortment by store. Asked about the development of new brands, Winn quipped, “Stay tuned.” As the company assesses its assortment versus the marketplace, Wynn sees opportunities to expand private label in the natural, organic and specialty space. “I think we’ve made a good start with the Full Circle brand and we do need to do more,” he said. Meanwhile, the entire concept of wholesaling is far different than it was 100 years ago and C&S is on the leading edge of this evolution. “Our independent retailers, in particular, need us to provide market-leading services to compete with larger retailers and we’re continuing to focus on improving our offering,” Wynn said. “For example, we’re
in the midst of a national rollout of a new retail pricing capability that will significantly advance what our retailers will be able to do and how we can support them.”
our merchandising and retail services and assortment, as well as other strategic involvement.”
“The entire concept of wholesaling is far different than it was 100 years ago and C&S is on the leading edge of this evolution.” Looking ahead, Winn sees channel diversification and channel switching by consumers along with food safety issues, technology, environmental issues and demographics as major factors impacting the retail industry as the pie gets split into more pieces. “It is our responsibility to help our retail customers get as big a share of that pie as possible,” he said. “That will be accomplished through traditional means like delivering the lowest cost of goods, or by improving
Channel diversification and switching may be the big story, but certain macroeconomic trends will likely have a significant impact on the business that we have yet to understand, Winn noted. For example, he shared, further increases in California’s minimum wage will have a substantial statewide economic impact on both consumers and businesses employment, standards of living spending power, cost of operation, education choices and consumer prices. Continued on page 60 ▶
Congratulations
on your
100th Anniversary
CAL I FO RNIA GRO CER | 59
◀ Continued from page 59
“Additionally, we’re looking at how immigration will be handled in the coming years as well as issues of integration with the environment such as the impact of wildfires,” he added. “There is a multi-variable ‘soup’ that we need to consider as we continue to look for ways to help our retailers and our communities.” New technology will, as always, be a vital part of the company’s strategy. “We have always made enormous investments in the supply chain, in terms of both technology and physical infrastructure,” said Winn. “We have upgraded our truck and trailer fleet over the last two years, and we are in the midst of re-engineering our transportation management system. These things as well as other investments in the supply chain space, including heavy investment in replenishment and inbound management processes and systems, have
allowed C&S to stay ahead of challenges facing the transportation and consumer products industries, according to Wynn. He added that the company has also invested heavily in warehouse infrastructure in an effort to deliver higher quality products at market leading costs. While many industries are still debating the use of artificial intelligence, C&S is ahead of the curve. “We are already using that capability in our supply chain management practices,” he shared. “We’ve invested in this technology over the last three years and have seen some very positive results in driving in-stock performance. AI’s applications in real-time consumer marketing is something we’re now assessing.”
“We are heavily invested in our communities across the country, and California is no exception,” Winn stated. “The themes that we focus on in terms of community involvement are hunger and supporting children. We work directly with food banks in all of our communities, and we’re always searing for opportunities to engage with initiatives that support children.” One thing the company does during the holidays is its Adopt-A-Family program in all their offices. “While this is a ‘smaller’ engagement in terms of sheer financial impact,” he said, “It is something that everyone gets involved in and is a great way to support our communities.” ■
However, technological efficiency does not negate the human element, and community involvement has always been a hallmark of the company’s operations.
Congratulations C&S Wholesale on your 100 years of service.
From your friends at
60 | CAL I FOR N I A G R OC E R
Congratulations KENDRA DOYEL
We look forward to working with you as CGA’s incoming Chair of the Board of Directors.
Mak By Andrew McQuilkin, RFDI
Retail Leader, BHDP Architecture
CONFERENCE HIGHLIGHT Andrew McQuilkin lead two Whiteboard Sessions on brand loyalty at this year’s CGA Strategic Conference.
Editor’s Note: In this article, Andrew McQuilkin recaps how attendees explored retailer best practices to discover how strong immersive sensory experiences utilizing the five senses can develop strong brand loyalty.
“Target!... I smell Target!” So that’s how we ended both Whiteboard Sessions at this year’s CGA Strategic Conference in Palm Springs, with serval participants exclaiming the same result. It’s a testament to the power of our sensory perceptions and how they are an under-leveraged tool in developing in-store brand experiences. But now that you know the end of the two sessions – “that the shoe fits,” – how about starting from the beginning. For the customer, brand experiences occur at each engagement – whether online or offline. This means marketing teams are challenged with consistently delivering on brand promise – aligning the right message with the corresponding customer segment and channel.
If experiences are about the current sum-total of the memory (and feelings) about each interchange, then positive engagements build loyalty. And it’s by utilizing all five senses that brick-and-mortar retailers have the advantage of building deeper, longer-lasting, multi-layered, loyalty-building memories.
What is a Brand Promise? Going around the table, we gathered everyone’s explanation of a brand promise: “At our company we talk about it as ‘the brands you a looking for at a great value and at a convenient, easy-to-shop store,’” was the first response and we immediately debated if this one was strong enough to have an impact on the customer. “But we can all claim that. Shouldn’t a brand promise be more ownable?” We switched gears, and asked “As a retailer, …” Continued on page 64 ▶
king Sense
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Service
is best represented by people, the one-on-one engagements at the store level – something online retailers can’t touch. ◀ Continued from page 63
What is Ownable?
What are the Basics?
Before the internet, a retailer could rely on five different brand promises that could differentiate itself from their competition. The more a retailer owned these spaces, the greater the share of heart and mind of the consumer they owned.
Think of the “basics” as the minimum requirements to well-run business. Our list included the following spread across a wall of sticky notes:
Location: Location is a matter of convenience. The downtown, main-street shopfront was the original convenience, but as customers moved to the suburbs, retailers began to group themselves together in malls. Within our group discussion, We all agreed that online shopping has changed the advantage of location, and now stores are tackling this third shift in consumer behavior by offering their own online and delivery options. Brick-and-mortar retailers can own location by offering immediate in-store pick-up where Amazon does not offer two-hour delivery. Price: For years, Walmart has set the pace for competitive pricing, and new outsider Aldi has been looking to take a share of that perception. However, our group also noted that through free shipping retailers can remain competitive. The downside is that free shipping may not be sustainable. “It’s the venture capitalists funding free shipping, and at some point, the online retailer will need to be profitable without it.” Quality: We defined quality as the durability and freshness of goods. While consumable and center-store brand quality (and sourcing) are the same, quality of private label products and freshness have the potential to set brick-and-mortar retailers apart. As one leader in our group shared, “About 15 percent of center store has migrated to online, while produce remains at less than 1 percent. So, we push messaging out about owning ‘fresh.’” Selection: The superstores used to own selection, and before that it was department stores. The endless aisle of the online retailers now surpass both. “We no longer own selection, online does, but what we do own is fresh selection. More important than that, we figured out that we own our point of view, where we select and curate our offerings to match the needs of our shoppers.” Service: Our group agreed that service is best represented by people, the one-on-one engagements at the store level – something online retailers can’t touch. We debated that same-day delivery may be perceived as a service by some shoppers, but online could not match the face-to-face expertise, helpfulness, or the simple things such as a warm smile and friendly in-person “hello”. 64 | CAL I FOR N I A G R OC E R
Quality, safety, clean, helpful, friendly, freshness, easy to shop, and knowledgeable staff showed up immediately on almost every note card. We also discussed other ideas with deeper meanings in today’s digital age – personalized service, in-stock items, quality brands and products, and inspiration. “We see these as the retail-101 ‘givens’ that every guest expects from their shopping experience. If we don’t deliver these well, she going to go somewhere else or online to shop.” Then, someone jumped in with an impactful data point, “I recently saw a statistic that If a customer does not find what they are looking for in store, they will first ask an associate. If the product still can’t be found, they will then drive to another of the retailer’s stores to get the item. If still not there, they will look for it at a nearby competitor’s store, and if still can’t find it, they will out of frustration buy it on Amazon. The data indicated that 26 percent of Amazon Prime users in this scenario that end up buying online, never visit the store to buy that particular item again.” The room went silent.
Can We Get Back to Our Senses? So after discussing what a brand promise is, what makes it ownable, and how delivering on the basics are a requirement, we jumped into to our sensory exercise. “What are the retail brands that deliver an in-store experience that customers claim not just to like, but to love?” To start the conversation, we boldly wrote, SUBARU, on the wall. As an example, Subaru is one of these beloved brands that consumers have identified as worthy of their loyalty and admiration. “I have a Subaru. I love the Subaru brand because they have a ‘go-anywhere’ attitude. They are practical, safe and they last a long time. Many times, I have had other Subaru owners ask me ‘Don’t you just love your Subaru?’ It’s strange but true.” Subaru is one of the top loyalty-satisfaction brands and has some of the highest amount word-of-mouth and social media impressions.
The company gives people what they want. Here are some other brands that rise to the same level: Nordstrom, Costco Wholesale, REI, HomeGoods and Whole Foods.
to the new Wynn Casino in Las Vegas, to be used in the high roller areas. Every time someone one won big, an extra blast on the scent filled the immediate area.
To get back to where we started, to tie the session back to the goal of understanding the importance of leveraging our senses to build brand loyalty, we reviewed the five senses and how each might relate back to space: Sight – color, design, and lighting; Sound – music, voices and greetings; Touch – textures, flooring, and door handles; Taste – food, samples, and restaurants; and Smell – food, product scents and perfume.
“When the VIP guests left to return home, they received a basket of toiletries, soaps and shampoos all scented with the same perfume. The intent was that when a guest used the soaps and shampoos, they would remember how much fun they had on their last visit to the casino. It worked. VIP guest returns went up by double digits.”
What Are the Sensory Elements of Your Favorite Store? We each grabbed another index card as we began deciding how best to describe our favorite store by only using a description from each of our senses. We gathered up all the cards and tacked them to the wall. A randomly picked a card contained the following, “See: treasure, hear: people, touch: stuff as you walk in, taste: samples, smell: not a good smell, rubber. We close our eyes as it is read again “Treasurer, People, Stuff, Samples and Rubber. Which brand is it?” “Costco?” asked a vice president of merchandising. The chief operating officer sitting next to him confirms “You’re right. That was my card.” We then proceeded through a few more of the cards. Each time at least two of us shouted out the correct answer. It’s amazing how we can all get a clear picture of the store with just the five senses, in fact, a few brands we figured out with just four sense described.
Can You Identify a Store by Just its Smell? If our five senses determine how we perceive the world, brick-andmortar businesses should plan experiential moments that leverage all the power of our senses to create a brand impression. This is where physical retail has the most significant advantage over online. And since there are millions of combinations, each retailer can deliver a brand promise that is memorable — an impression beyond location, quality, price, selection and service. So now we are back to where this article started and the session ended. Close your eyes, take a deep breath, and clear your mind. Imagine the combination of two smells, the first is coffee… smell the rich aroma of a fresh, dark brew. Now slowly add to that the rich buttery smell of freshly popped popcorn. Blend the two together… “Target!... I smell Target!” ■
If our five senses determine how we perceive the world, brick-and-mortar businesses should plan experiential moments that leverage all the power of our senses to create a brand
impression.
rawpixel on Unsplash
Which Sense Gave You the Clearest Impression? It was unanimous. Smell evoked the strongest connections to brand. Everyone could instantly recall a personal story tied directly to a smell. For some this might not be surprising as smell is closely related to memory. As a powerful proof point, one of our group members shared the following anecdote: “I know a guy who’s one of the ‘noses’ (the people who create scents). He told us a story about the Wynn Casino’s effort to leverage scent to build higher brand loyalty. He developed a branded scent, exclusive
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CONGRATULATIONS KENDRA From your friends at
WELCOME
KENDRA DOYEL as the 2018 – 2019 CGA Chair of the Board
THANK YOU
BOB PARRIOTT for your dedication & service this past year
Unilever salutes
Kendra Doyel of Ralphs Grocery Company/Food 4 Less on being elected Chair of the CGA Board of Directors.
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Congratulations
Kendra Doyel Congratulations, On your new role as Chair of the CGA’s Board of Directors
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1 5 MINUTES WITH…
Brad Oberwager F O U N DER AN D CEO, JY V E
Finding the right person for a job has always been a challenge, and it’s becoming more complicated for retailers who are focusing on the in-store customer experience and making stores a destination manned by motivated people with highly developed people and problem-solving skills. Brad Oberwager is Founder and CEO of San Francisco-based Jyve, a talent marketplace that matches retailers’ needs with skilled workers. A featured speaker at this year’s CGA Strategic Conference, Brad believes technology, coupled with a perspective shift in the way we think about work, may be the key to unlocking an industry whose labor challenges and needs are rapidly shifting. California Grocer: Labor has always been a significant issue in retail. Lately, talk has turned to robotics. Where are we with that? Oberwager: Labor shortages are taking place in every industry. Retailing’s not alone. But, robotics is not the ultimate answer. Has it been overhyped? Forbes recently reported that robots will take over half of the jobs by 2025. That’s not necessarily true. Robots may have an impact on half the jobs by that time, but real skills will be more important as we go forward. The ultimate labor problem is a shortage of people with specific skill sets. Where’s the shortfall? Look at what the industry is becoming. As online behemoths like Amazon enter and sometimes decimate various industries, the retail industry is reacting by becoming
more experiential. Locations are not just real estate. They are becoming destinations that require people with problem-solving and service skills – not just the ability to stock shelves, though stocking shelves will become even more important. The problem is how to find these people and keep them. It’s true that the major issue in retail is high labor turnover and 80 to 90 percent is not unheard of. We have brands that have spent decades building a reputation for low prices, niche products, or high-quality service. Combining all three is very complicated, but nearly impossible to achieve with high turnover. So, the problem is putting your brand reputation in the hands of people who may not be around for very long? That is the issue. What’s interesting is the solution. It’s not simple, but technology can help get retailers away from things like job boards and other listings that get you people who are only willing to take the job. What’s wrong with that? There’s another way to do it. As retailers start to embrace artificial intelligence, you can create algorithms that will tell you who’s going to stick around longer. We interview people with the aid of computer programs that have an enormous amount of data and can suggest how long they will work for a company. In the past, retail needs weren’t particularly complicated. If you needed people in the back room, or at the register, you hired them,
and they got the job done for a relatively low wage. That was the business model. But the business has changed drastically and just hiring anyone isn’t enough. You need people from the service industries. As retailers move into experiential, hightouch operations you want to hire people who can interact with customers with a high-touch customer experience skill-set and have a specialized type of problemsolving ability. It’s no longer acceptable for a customer to ask an employee a question and be told ‘I don’t know. How should the industry up the bar on labor? Retail has to become a more attractive business in order to attract the right talent. That means reexamining the compensation structure, and also increasing employee demand for flexibility. It becomes a tradeoff – greater flexibility means retailers can maintain their pay structure and offer a more compelling position. Are you talking about flexibility in scheduling? Yes. That will drive the attractiveness of the industry. Additionally, technology helps in structuring payouts and matching them closer to quality. That means good people will get paid more and will want to stay with you. Turnover costs are so high that paying more to keep good people who will stay longer is financially attractive. Everyone wins. Continued on page 70 ▶
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15 MINUTES WITH…
◀ Continued from page 69
There’s also the view that labor shortages are the result of retail failing to create much of a career path for people. Again, it’s a matter of the industry deconstructing all of its views on employment. The result may be the need for fewer employees who are more serviceoriented and can build a set of skills that enable them to turn retailing into a career. One of the benefits of automation and other technologies is that you can have fewer, more highly-skilled employees. If you have fewer, but better trained, more highly-skilled frontline employees, their ability to move up the chain will actually increase. Job satisfaction will go up, and longevity should increase. So long-term labor costs could actually decline? If retailers do it right there may be an attractive tradeoff in labor costs. As stores become more experiential the need for over-aggressive pricing will also decline. The combination of these things could result in higher margins in an industry where they have been historically tight. Has this actually happened? Look at Restoration Hardware. The adoption of technology and experiential retail locations that included features like wine tasting and foods, along with highlyskilled frontline employees, led to better pricing and outsized margins. It helped create a more valuable brand. But sales of online companies like Amazon continue to rise. How do they fit into the picture? Don’t fear Amazon and run scared. In many industries their impact is overblown. Retailers should rely on the strength of their brand and physical location. But, don’t ignore technology like the purchase online/pickup in-store model. It’s one of the fastest growing areas in retail because it reflects changes in
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“If you have fewer, but better trained, more highly-skilled frontline employees, their ability to move up the chain will actually increase.” shopping preferences. It’s also a good way to get people into the store to buy highermargin items. How does that relate to the labor market? Technology has caused a shift in the labor force across the entire industry. Greater use of robotics in restaurants means more service-oriented people will be available for retail. What retailers need are platforms that track the skills of people who don’t work behind desks, coupled with a marketplace that allows people to place themselves where they are most effective and can make the most amount of money. You mentioned your company’s algorithm that determines how long someone will stay with an organization. What kind of people do retailers really need? I think we have to look at two components. One is a person’s interpersonal skills, which is going to become an increasingly important factor to consider. The other is problemsolving capability. As retailing becomes less rote or diagrammed, you need people who can think on their own. They are the ones who will also become senior leaders in your operation. Does artificial intelligence come into play? We’re heavily involved in that. It enables us to develop a highly-detailed vetting process that will bring retailers people with the best skills. It gives us the ability to capture information upfront from a large number of candidates in a short amount of time.
For example? Well, during an interview you want to find out about a candidate’s ability to converse with others. That’s hard to do, and interviewers usually take their best guess. A computer can calculate how many times a person smiles and gauge through word choice and speech patterns how well they will interact with customers. In the end, it gives retailers more information on how things will work out. Would this be effective for back office and warehouse personnel as well? Absolutely. This is going to become a solution for the entire value chain. We find that people actually have more skills than are being utilized. We’ve talked about creating a career path for people in retail. Right now, you either work the cash register, the backroom or the warehouse. As jobs change in the future this might be the same person. That’s important because it gives rise to flexibility. Someone who operates a cash register might also be good at running backroom operations. Instead of spending time developing flexible scheduling, you can utilize technology for a marketplace, presenting employees with all the opportunities and empowering them to choose which avenues to pursue. It enables retailers to break free of an old business model and focus on a future of change. ■
Congratulations Kenda Doyel!
The City of Hope Wishes to Congratulate
Kendra Doyel on her election as Chair of the CGA Board of Directors.
Relax responsibly ®. Beers Imported by Crown Imports, Chicago, IL
Congratulations
KENDRA DOYEL
Wishing you all the best from your friends at
Congratulations
Kendra Doyel
All the Best! CAL I FO RNIA GRO CER | 71
THE S
iStock
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SECRETS OF SOCIAL MARKETING SUCCESS BY BRIAN CARTER The grocery industry is in greater disruption than at any time in its history. Fragmentation, hypercompetition, emerging technologies and a rapidly evolving customer base is challenging retailers to keep up with the changes taking place. For independent operators the challenge is even greater. As the retailers adopt new technologies and grocery shopping habits shift more towards e-commerce, small grocery store owners, with limited staff and budget, are finding it hard to keep up.
Continued on page 74 â–ś
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iStock
◀ Continued from page 73
How can independent grocers protect themselves against larger competitors? How can they differentiate themselves more? How can they benefit from new marketing opportunities regardless of budget and staff sizes? How can they retain more customers and employees? Even with slim profit margins and greater competition, independent retailers can remain relevant by leveraging social media and other technology opportunities. Social media and digital marketing are affordable, effective methods for staying visible to existing customers, raising awareness with local shoppers, and acquiring and retaining superior employees. Grocery shoppers often choose independents because of convenience, according to a report from Statista, a leading provider of market and consumer data. Digital and social marketing can affordably ensure that almost no one doesn’t know about your store, or forgets it.
“Social media, like all digital marketing, represents a huge opportunity for grocers. Once understood, it’s not that different from traditional marketing, sales or in-person networking.”
A Retail Case Study In 2017, my company worked with a
furniture retailer leading up to Black Friday
and helped double its year-to-year foot traffic and revenue.
The company created a new store layout and an aggressive Facebook ad campaign for branding and engagement,
A retailer can leverage the convenience advantage and prevent competitors from appearing more attractive if they appear everywhere previous shoppers and potential customers are looking.
while eliminating radio and television advertising. This
Independent shoppers care about store and website appearance, according to the National Grocers Association’s third annual National Grocery Shoppers Survey. Social media is a very affordable way to create a more attractive brand than ever before.
internet marketing for traditional marketing channels. While
About 84 percent of customers want to buy from innovative companies and will pay 40-50 percent more for innovative products, including groceries, according to a study by the research firm, Lab42. In the 21st century, a grocery store that can’t communicate effectively through social media and doesn’t have a modern website (that looks good on mobile) appears out of date. Potential customers may wonder, “If their website’s out of date, are their groceries, too? If they don’t care about their website, is the inside of the store disorganized and dirty?” 74 | CAL I FOR N I A G R OC E R
resulted in a 100 percent improvement in revenue.
It’s not always recommended to completely substitute
every retailer knows whether TV or radio is indispensable in their local market, but some don’t fully understand the power of new digital tools and platforms.
Any business can advertise with social marketing, starting as low as just $30 a month, which can get a brand seen up to 60,000 times monthly by local shoppers. Spending more gets you more. Facebook ads are very affordable compared to traditional marketing options. They can be extremely effective, not just at branding, but also at driving foot traffic and sales.
Spending money makes money. Most top companies advertise online, and those who won’t allocate $30 a month for social ads are more in sync with the bankrupt than the winners.
WHY SOCIAL AND DIGITAL MARKETING? Retailers who cling to outdated marketing strategies become less known to potential customers, because more eyeballs are looking at newer technologies, platforms and communication devices. Roughly two-thirds of Americans own smartphones. If your store doesn’t show up on their smartphone, it doesn’t exist to them. Seeing your competitors online can make them forget your stores. If your competitors dominate shoppers’ attention and become the first store they think of, you’ve already lost the first two battles in the war for their grocery dollar. But, you can turn the tide in your favor with just a few digital and social marketing activities. It’s easy to use digital and social marketing to: • Get seen by local shoppers. • Stand out as the best choice. • Demonstrate a friendly, personal touch. • Communicate specials and new products. • Never let them forget you’re nearby. Not only that, in a time when it’s harder than ever to find and keep good employees, social media can play an important role in a chieving those goals, too. We’ve run campaigns where the cost per job application from Facebook ads was just $3-5, compared to $20 per applicant on Careerbuilder. Social media, like all digital marketing, represents a huge opportunity for grocers. Once understood, it’s not that different from traditional marketing, sales or in-person networking. It simply creates bigger reach, more accurate targeting, and more customer insight than traditional methods.
On Facebook, you can reach up to 200 million Americans who use it for 35 minutes a day. On Instagram, you can reach 120 million Americans who use it for 15 minutes a day. On average, you can reach one million local shoppers with $1,000 in social ad spend, or reach 100,000 for $100.
THE OLD AND NEW WAY TO DO FACEBOOK MARKETING In 2010, my company helped Save Mart and its Lucky Stores grow their Facebook fan bases. Facebook ads had only debuted the year before and all companies wanted from Facebook ads were branding, fans and post-engagement. Facebook ads could do that affordably and still can. But the expectation of savvy business owners and marketers has grown. While some retailers still only go to social media for branding and fans, other retailers drive leads, store visits and sales.
SOCIAL MEDIA TIPS Here are four tips for more effective social marketing to new customers, while staying visible to existing shoppers: • Create great content. • Ask for engagement. Ask questions. • Run Facebook ads. Even $1 a day is significantly better than nothing. • Utilize Facebook ads: target new shoppers and retarget previous website visitors, consumers who’ve interacted with your social posts and those who’ve watched your videos.
Continued on page 76 ▶
“While some retailers still only go to social media for branding and fans, other retailers drive leads, store visits and sales.” iStock
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◀ Continued from page 75
How can you quickly create great, original store content that achieves branding people love, Increased engagement, Increased foot traffic, and Increased sales? For still-image content, take more photos. Today’s smartphones take high quality photographs. Encourage staff to take pictures. Some suggested photos include: smiling cashiers and staff, store interior/ exterior, and new or on-sale products. Edit the photos before posting to increase saturation, brightness and contrast. Any iPhone can edit photos for quality. For Android smartphones, download the free apps Photoshop Express, SnapSeed or ToolWiz.
Additional tips for image and video content • HEALTHY GUIDANCE: Nearly 65 percent of independent shoppers expect their grocery stores to support them with a healthier lifestyle. Suggested topics include cooking instructions for certain ingredients, assistance with reading and deciphering labels, and general guidance on nutritional food. Social media is the perfect vehicle to disseminate this information, and allows greater visibility and “likes” on platforms like Facebook and Instagram.
For video content, create short videos that are positive and make a good first impression. Facebook and Instagram videos should be 30 seconds or less. Interview your most positive employees and ask questions regarding what makes the store or it customers great. Encourage staff to create their own videos.
“Independent grocers need to develop a strong social media and digital marketing program to remain competitive in today’s market.”
iStock
How Are You Doing? Do your stores show up in Google when people search for groceries? Do they
show in local map results? Is your website attached to Google MyBusiness profile? Are there a lot of positive reviews? If not, shoppers may choose a competitor.
How many people are your Facebook posts reaching? Each time you post, do you reach at least 1,000 or 2,000 people? For many, this is hard to achieve without at least a small
Facebook ad budget. Until they advertise, their Facebook posts are invisible.
We recommend every business spends at least $30 a month on Facebook ads. Some retailers spend thousands, tens of thousands or even more per month, once they understand the return.
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• APPEARANCE & VALUES/CUSTOMER SATISFACTION: Independent shoppers place the greatest value on low prices, quality meats and produce, friendly staff, cleanliness and availability of locally grown produce and packaged goods. Utilize social media to tell your company’s story. • QUESTIONS: Customers’ tastes and preferences frequently change. Social media can be a great tool to discover what local shoppers want by surveying them. In these rapidly changing times a it’s easy to lose touch or move forward on outdated information. Plus, frequent surveys help in stocking the new items shoppers want.
GETTING HELP WITH SOCIAL MEDIA Marketing agencies with experience driving bottom-line results with social media are often expensive. One alternative is employing social media-savvy Millennials – the ones glued to their smartphones, Googling everything and constantly taking Instagram selfies. Millennials are your present and future shoppers and employees, so listen to them.
Your social media associate may need direct response training. Just using social media doesn’t make someone good at selling or driving customer response through social media. Even many collegetrained marketers don’t know how to create a bottom-line difference. Only specialized training, diligence and experience create those kinds of results. Many social media marketers with less than a year of business marketing experience may be strong at social posting or engagement, but are weak at driving leads and foot traffic, writing posts to drive shopper behavior, creating ads and testing landing pages, then finally analyzing the metrics to get better results in the future.
SUMMARY
Preview Editor’s Note: Brian Carter is a bestselling author, IBM futurist and one of LinkedIn’s top 25 social media experts and combining his extensive hands-on business experience, cutting-edge insights, and background in stand-up comedy, will present a high-energy, entertaining, motivational social media program to the 2019 Independent Operators Symposium.
Independent grocers need to develop a strong social media and digital marketing program to remain competitive in today’s market. Start-up costs may appear as a significant barrier, but a dedicated social media and digital marketing strategy in the long run will position a small store operation to succeed and thrive in today’s disruptive e-commerce world. ■
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ADVERTISER INDEX PAGE 46 77 15 & 61 51 41 51 58 67 BC 71 71 50 71 51 71 10 48 51 39 6 23 67 11 IBC 59 29 33 45 21 & 47 77 4 40 55 49 19 49 12 IFC 66 55 44 66 66
COMPANY ACOSTA Advanced Fresh Concepts Albertsons American Greetings Corp. Bimbo Bakeries USA Bristol Farms C & S Wholesale Grocers California Strategies Certified Federal Credit Union City of Hope Constellation Brands DPI Specialty Foods Empire Marketing Strategies Frieda’s Specialty Produce Gallo Wine Company Gelson’s Markets Heineken USA High Brew Coffee Illuminators Kimberly-Clark Corp. Miller Coors Mission Foods Corp. National Grocers Association Nestle Purina PetCare North State Grocery, Inc. NuCal Foods PepsiCo Inc. Raley’s Ralphs Grocery Company Renaissance Food Group, LLC RMS, Inc. Southern Glazer’s Wine & Spirits Sprouts Farmers Market Star Fisheries, Inc. Stater Bros. Markets Super A Foods SUPERVALU Inc. TruGrocer Federal Credit Union Unilever Valassis Viable Retail Solutions West Coast Roofing Co. Young’s Market Co.
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CAL I FO RNIA GRO CER | 79
MOMMY BLOGGER
The Little Things that Keep Moms Coming Back K I M B ER LY M I L L ER WR IT E R , ACT R E S S
When I was growing up, my parents had two rules when it came to groceries: No sugary cereal, and, if it’s not on sale it’s not for us. Grocery shopping was always a full day event. We’d start by scouring the circulars, noting what was on sale and where, then spend the rest of the day hunting down the items. I’m not above bargain hunting, but my priorities generally aren’t about prices as much as the overall shopping experience; nice staff, in-store eats, and easy checkout. I surveyed 3,000 moms about what keeps them coming back to certain stores. Like me, most juggle a career and the majority of their family’s shopping and cooking needs. Here are their top five responses:
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Samples Above all else. Overwhelmingly, the most common reason moms say they keep coming back to a store is for the free bananas/cheese/ cookies. Not for them – to keep the kids happily munching while they shop. “One of the store chains here has fruit samples for kids,” Melissa from Seattle told me. “It’s great and keeps my son happy eating his apple while I shop. All stores need this.” More Cart Corrals Turns out, moms love these and wish there were more. Lugging multiple kids (and the pile of stuffed animals/screens/toys required to keep them happy) in and out of a store is easier when you can get them into a cart ASAP. Carts that seat more than one child were also a popular answer. Claire, from Brookfield, Wis., says that “making the march across the parking lot with a toddler who runs and a heavy baby is like a death trap. If there are no carts outside I want to cry.”
Cool it With the Candy A large number of the women I surveyed avoided certain grocery stores because of the candy displays next to the registers, and the inevitable begging and meltdown of their kids that follows. “I rarely shop in more conventional stores with my kids,” Erin from Santa Monica, Calif. says, because of “all the damn candy up front.” Kid-Friendly Carts These are a huge draw for moms shopping with young children. “I specifically go to the store with the cart with the kid’s car attachment on the front. It’s how I can get my toddler excited to go,” shares Dawn from Spokane, Wash. Delivery and Curbside Pickup These are increasingly popular options for moms with busy schedules and who just want to spare themselves, and others, the particular brand of joy that comes from shopping with a tired/bored/hungry/ cranky child. Trust us, we enjoy these public meltdowns just as much as you do. Erica from Richmond, Va., speaks from experience. “Nothing can save us. That’s why I do delivery,” she says. ■
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