California Grocer, 2013, Issue 4 by Digital Gear

CALIFORNIA GROCERS ASSOCIATION

2013, ISSUE 4

IN THIS ISSUE Seeking the Next Game Changers Learning the Rules of the Game Foundation Honors Two Industry Execs Learn By Doing

For the latest industry news visit www.cagrocers.com

CGA Educational Foundation: PRODUCING THE NEXT GENERATION OF INDUSTRY LEADERS

September 29 — October 1, 2013 | Palm Springs Convention Center | Palm Springs, California

California’s competitive grocery marketplace is experiencing evolutionary changes. These changes — some subtle, some more disruptive — are transforming the way the retailing game is played. Robust demographic movements, emerging technologies and fragmented shopping options are rewriting the rules of the game. The core customers of the Baby Boom Generation continue to influence strategies, however the new customer, Millennials, are dictating different moves for players that want to win. Constantly conversational, loyally agile and lifestyle conscious, this new breed of grocery shopper requires game changing approaches that are personal, transparent and uniquely relevant. Plot your next move. Join the retailers of the Golden State and discover ways to capture the new consumer with breakout strategies and collaborative partnerships that will grow your business in this new environment.

REGISTER NOW For complete information and to register, contact CGA at (800) 794-3545 or visit www.CGASTRATEGICCONFERNCE.com

Top Industry Speakers Marian Salzman

Jason Ryan Dorsey

David Selinger

Leading Trendspotter

Author & Millennials General Expert

CEO/Co-Founder, RichRelevance

Marian has been named one of the world’s top five trendspotters. She is one of Business Insider’s 25 Most Powerful People in Public Relations. She blogs for the Huffington Post, Forbes.com and CNBC.

Jason is recognized as The Gen Y Guy and has been featured as a generational expert on 60 Minutes, 20/20, The Today Show, The View, and in Fortune magazine and The Wall Street Journal.

David first garnered international recognition as an expert in e-commerce data analytics with his work while with Amazon’s Data Mining and Personalization team.

Share Group Discussions The Future of Coupon Steven Boal, President & CEO, Coupons.com

Reaching For Their Hearts Before Their Wallets: Five Ways to Grow Consumer Loyalty Amber Williams, President, Glass Agency

E-Commerce Impact on Retail Craig Rosenblum, Partner, Willard Bishop

Connecting With The “New” Boomers - A Case Study Lisa Hill, Vice President, Buxton

Legislating Healthy Eating Choices Keri Askew Bailey, SVP Government Relations & Public Policy, California Grocers Association

Morning Super Sessions Retailer Spotlight Save Mart Supermarkets

The New Face of Hispanic Consumers — Are You Ready? Juan Carlos Davilia, SVP & General Manager, Hispanic Market-Center of Excellence

Meetings Make the Difference The CGA Strategic Conference offers a unique opportunity to step away from your office, conduct meetings with your top business partners while gaining insights into the fast-changing retail landscape. Make the most of your time out of the office by participating in the customized one-onone business meetings.

CGA understands that your time out of the office needs to be productive. More than 800 pre-scheduled business meetings, engaging exhibits and various networking events provide a productive and efficient way to build your connections and optimize your time at the conference.

W W W. C G A S T R AT E G I C C O N F E R E N C E . C O M

Think Two Moves Ahead...

The 2013 CGA Strategic Conference offers attendees an uncompromising blend of top-notch educational sessions, productive face-to-face business meetings and engaging social opportunities. This year, we have packed the CGA Strategic Conference with breakout sessions & keynote presentations from industry thought-leaders to make your attendance more beneficial.

Many thanks to The Illuminators for their continued, generous support of the CGA Strategic Conference by providing the outstanding conference meal functions and entertaining social events.

Conference Golf Tournament Hosted by The Illuminators Sunday, September 29, 2013 7:00 AM Registration 8:00 AM Shotgun Start

Don’t miss this opportunity to tee it up with California retailers. Space is limited. Sign up early! Mission Hills Golf Club

34-600 Mission Hills Drive Rancho Mirage, CA 92270 www.illuminators.org

Join your peers at this annual convention kick-off event.

CGA Would Like To Thank This Year’s Top Sponsors Anheuser-Busch InBev Bimbo Bakeries USA C&S Wholesale Grocers California Table Grape Commission Coca-Cola Refreshments Coca-Cola Refreshments – Minute Maid The Hershey Company Hillshire Brands The Jel Sert Company Jelly Belly Candy Co. Kellogg Company Kraft Foods Group, Inc. MillerCoors Mondelez International Nestle Purina PetCare Nestle Waters North America PepsiCo Procter & Gamble Snyder’s-Lance, Inc. Unified Grocers, Inc. Unilever

Participating Retailers Albertsons, LLC Bestway/Gardena Supermarkets Big Saver Foods, Inc. Bristol Farms Cardenas Markets Costco Wholesale El Super (Bodega Latina Corp.) Food 4 Less Stockton/ Rancho San Miguel Food 4 Less/Foods Co. Food 4 Less/Gongco Gelson’s Markets Holiday/Sav-Mor Foods Mar-Val Food Stores Northgate Gonzalez Nutricion Fundamental, Inc. “R” Ranch Markets Raley’s Ralphs Grocery Company Safeway Inc. Save Mart Supermarkets Smart & Final Stores Stater Bros. Markets Super A Foods Superior Grocers Times Supermarkets (HI) Vallarta Supermarkets Whole Foods Markets

W W W. C G A S T R AT E G I C C O N F E R E N C E . C O M

CONTENTS

F E AT U R ES

COLU M NS

Seeking the Next Game Changers

Game changers — We hear the word a lot in political, business and social circles. But what are they and how will they impact the industry’s future?

Learning the Rules of the Game

The heads of three of the leading food industry programs in the country discuss their students, curriculums and their relationships with retailers and manufacturers. These programs are nurturing the future leaders of the retail and CPG industries.

Learn By Doing

44 48

| Issue 4

President’s Message Foundation Helps Offset Spiraling Educational Costs................................................. 5 From The Chair The CGA Strategic Conference Is Fast Approaching and It’s Your Move!.......................... 7 Viewpoint — Kevin Coupe The Most Significant Thing I Do Each Week....... 10 CGA Educational Foundation — Jim Van Gorkom The True Measure of Success............................. 13

Cal Poly’s educational strategy can be summed up in just one phrase: “Learn by Doing.” Yet, university officials know that neither is possible without forging strong links to the supermarket industry.

Capitol Insider — Louie Brown Musical Chairs in the Legislature........................ 22

Foundation Honors Two Industry Execs

CGA News........................................................ 16

Jim Lee, Stater Bros. Markets, and Vic Chiono, Coca-Cola Refreshments, are the latest food industry executives to be inducted into the CGA Educational Foundation Hall of Achievement. They join an elite group of professionals that have been recognized for their industry and civic leadership.

DEPA RT M EN TS Government Relations...................................... 20 Washington Report ..................................... 24, 26 Q & A.................................................................28 Member Profile: 99 Ranch Market..................... 54 Hometown Heroes............................................ 58 Know the Law................................................... 60 Supply Lines ..................................................... 62 Wealth Management..........................................63 Advertiser Index ............................................... 64

CALIFORNIA GROCERS ASSOCIATION President/CEO Ronald Fong

Vice President, Communications Dave Heylen

Director, CGA Educational Foundation Brianne Page Director, Local Government Relations Sarah Paulson Sheehy California Grocer is the official publication of the California Grocers Association.

Publisher Ronald Fong E-mail: rfong@cagrocers.com Editor Dave Heylen E-mail: dheylen@cagrocers.com For advertising information contact: Tony Ortega E-mail: aortega@cagrocers.com

Vice President, Business Development & Marketing Doug Scholz

Director, Events & Sponsorship Beth Wright

1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com

C A L I FO RN I A G RO C E R

Senior Vice President, Government Relations and Public Policy Keri Askew Bailey

Executive Director, CGA Educational Foundation Shiloh London

CGA

| Board of Directors

EXECUTIVE COMMITTEE

CHAIRMAN APPOINTMENTS DIRECTORS

Chairman of the Board Kevin Davis Bristol Farms

Second Vice Chair Joe Falvey Unified Grocers, Inc.

Secretary Michael Read WinCo Foods, Inc.

First Vice Chair Mary Kasper Fresh & Easy Neighborhood Market Inc.

Treasurer Kevin Konkel Raley’s

Immediate Past Chair Jonathan Mayes Safeway Inc.

Dave Jones Kellogg Company

Dora Wong Coca-Cola Refreshments

Raul Aguilar Anheuser-Busch InBev

Kendra Doyel Ralphs Grocery Company

Casey McQuaid E & J Gallo Winery

Harish Solanki Big Saver Foods, Inc.

Jon Alden Jelly Belly Candy Co.

John Eagan Costco Wholesale

Dan Meyer Stater Bros. Markets

Renee Amen Super A Foods, Inc.

Phil Gentile, Jr. K.V. Mart Co.

Omar Milbis Rio Ranch Markets

Naresh Solanki Bestway/Gardena Supermarkets

Teresa Anaya Northgate Gonzalez Markets

Jon Giannini Nutricion Fundamental, Inc.

Phil Miller C&S Wholesale Grocers

Joe Angulo El Super (Bodega Latina Corp.)

Diana Godfrey Smart & Final Stores

Eric Nadworny Save Mart Supermarkets

Bill Jordan Whole Foods Market

Hee-Sook Nelson Gelson’s Markets

Michel LeClerc North State Grocery, Inc.

Vinit Patel Unilever

Eric Lindberg, Jr. Grocery Outlet, Inc.

Bob Richardson The Clorox Company

Dave Madden MillerCoors

Brian Schmidt Acosta Sales & Marketing

Damon Franzia Classic Wines of California

John Hewitt Grocery Manufacturers Association

Dennis Belcastro Hillshire Brands Company Paul Cooke Nestle Purina PetCare Brent Cotten The Hershey Company Robert Digrigoli Procter & Gamble

SUPPLIER EXECUTIVE COUNCIL

Veronica Rendon, Dave Thatcher Alta Dena Certified Dairy, LLC Rick Van Nieuwburg Altria Corp. Services Raul Aguilar Anheuser-Busch InBev

Elizabeth Alvarez-Sell, Greg Bailey The Hershey Company

Ron Bloes Coffee Bean & Tea Leaf

Tim Cohen Hidden Villa Ranch

Dan Atkins Berkeley Farms, Inc.

Stephenie Shah Diageo

Dennis Belcastro Hillshire Brands Company

Gilbert de Cardenas, Bob Cashen Cacique USA

Andres Jaramillo Don Pedro’s Kitchen

Kristina Crystal-McVay The J.M. Smucker Co.

Scott Johnson, Shannon Nadasdy Financial Supermarkets, Inc.

Dave Jones Kellogg Company

C A L I F OR N IA G R OC ER

Victoria Horton California Beer & Beverage Distributors

David Van Winkle Hansen Beverage Company

Vic Chiono Coca-Cola Refreshments Minute Maid Business Unit

Rick DuCharme BBUSA, Rainbo Baking Co., Nature's Harvest

Nancy Limon, Dora Wong Coca-Cola Refreshments

Cindy Plummer California Table Grape Commission Mark Cassanego Carr, McClellan, Ingersoll, Thompson & Horn Pat Huston, Robert Hilliard Cash Register Services

Bruce Wyatt Thomas Wilson Flowers Baking of California Brian Rosen, Ann Wilson Gleason Inc. Fernando Gallego Golden Gate Paper Company

Richard Bell LOC Software Dave Madden MillerCoors Rick Brindle Mondelez International

Mike Stamper Nestle Sales Division Dirk Stump Stump’s Markets Tiernan Summins Kraft Foods Group, Inc. John Swindell Food 4 Less/Foods Co. (A Kroger Company) Paul Turcotte Pepsi Beverages Company — WBU Jim Wallace Albertsons/Sav-On Pharmacy Jim Van Gorkom NuCal Foods Laurie Stone PBI Market Equipment, Inc. Paul Turcotte Pepsi Beverages Company — WBU Vince Delgado Procter & Gamble Melanie Zitting, Sue Sharp Pure Water Technologies Renee Wasserman Rogers Joseph O’Donnell Darrell Costello Roplast Industries, Inc. Tom H. Daniel Sterilox Food Safety Karen Grierson TC Transcontinental Northern California

Steven Schultz Moss Adams LLP

Phyllis Adkins TruGrocer Federal Credit Union

Paul Cooke, Karen Doggendorf Nestle Purina PetCare

Vinit Patel Unilever

PRESIDENT’S MESSAGE

Foundation Helps Offset Spiraling Educational Costs In a 2012 speech, Secretary of Education Arne Duncan summed up the public sentiment regarding U.S. higher education: “The price of college is too high.” If you have a son or daughter in college, or attending yourself, you probably agree; and by what I hear and read, most likely with good reason. As costs for higher education have spiraled out of control, today’s generation of college bound students has been forced to rely on student loans to meet rising tuition and living expenses. Since 1978, tuition has increased 1,120 percent nationally, and is rising faster than the rate of inflation. State and local funding for higher education declined seven percent in 2012, and in 2011, students graduated with an average of $26,500 in student loans. That increased to $27,253 just one year later. In fact, total student loan debt has grown more than 56 percent in the last five years. One economic think tank that focuses on state and federal budgets found that states are spending, on average, 28 percent less per student in fiscal year 2013 than they were in 2008. Consequently, tuition at four-year public colleges has grown 27 percent since the 2007-08 year. In the cases of Arizona and California, tuition at public universities has gone up by more than 70 percent over the same period.

after seeing deep cuts during the recession.

The Foundation has grown exponentially over the last 21 years to bestow more than 2,600 worthy college students with scholarships totaling more than $3 million, in addition to $1 million in tuition reimbursement. We are extremely proud of the Foundation’s accomplishments, but more so, we are grateful to our donors for their generous financial support. This past year, the Foundation has embarked on an aggressive monthly webinar program. Participation has been great and I urge you to visit the Foundation’s website to see the upcoming educational sessions available to you and your employees. If your company isn’t utilizing the Foundation’s educational programs, it is missing out on one of its most valuable membership benefits. The Foundation looks forward to working with you in a joint effort to provide financial assistance to advance the educational goals of your employees and their dependents and offer educational programs to our great industry. n

As school and government funding continues to decrease, and tuition continues to rise, students are turning more and more to non-profit organizations and Foundations for financial support.

President/CEO

C A L I FO RN I A G RO C E R

While some reform has occurred — Governor Jerry Brown signed significant education reform this past summer — community colleges and public universities were hoping for more funding

Our very own CGA Educational Foundation is a perfect example. Created 21 years ago, the Foundation continues to provide life-changing financial assistance to CGA member employees and their dependents through scholarships and tuition reimbursement.

RO NALD FONG

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FROM THE CHAIR

The CGA Strategic Conference Is Fast Approaching and It’s Your Move! The theme of this year’s CGA Strategic Conference is California Game Changers, and in today’s hyper competitive retail environment, who doesn’t want to change the game, or at least improve their chances of success? In my more than 40 years in grocery retailing in California, I have never seen the landscape, the economy, the competition and the legislation that impacts our business change faster and with less predictability. Recently I received a CGA Strategic Conference mailer which included a big die-cut map of California that reminded me of a giant puzzle piece. It occurred to me that this is exactly what we’re facing this year as we head into the most important part of our year and the busy holiday selling season for food and beverages — it’s one giant puzzle!

The high-powered speakers we have lined up will address the rapidly changing and evolving demographic make-up of our customer base. Will the holidays bring the sales we expect? Or, will lingering unemployment rates dampen consumer spirits and spending? Will new competition start up to capture holiday sales? Or, will other competitors close stores due to poor performance? Will new legislation be enacted that will handcuff our ability to grow? Or, will past legislation not cost as much as we fear when finally put into effect?

The high-powered speakers we have lined up will address the rapidly changing and evolving demographic make-up of our customer base. They will give us a glimpse into the transformation of our stores and the way we do business as technological advances materialize right in our customers’ hands in the form of more proficient smart phones. And they’ll look at how these new trends will change the way our customers think and how we go to market in almost no time at all. My past experience was that it was acceptable to go to a major trade association conference, or convention every other year, and maybe sometimes even once every three years, and you wouldn’t miss that much. There would be a few new ideas kicked around, a few new products, and a few new people to meet, but generally it was okay to miss the conferences once in a while with no great impact or loss of competitive advantage. Continued on p. 8

This year’s CGA Strategic Conference will be September 29 to October 1, at the Palm Springs Convention Center and has been designed to stimulate your thinking about the evolutionary

CGA Chairman of the Board President and CEO Bristol Farms

C A L I FO RN I A G RO C E R

All of these questions and many more go through retailers’ minds this time of year as we get ready for the holidays, and especially as we plan for the future of our companies in California.

changes transforming how the retailing game is played.

KEVIN DAVIS

FROM THE CHAIR

Continued from p. 7

My thinking has changed. Over the past few years, the changes have come so fast, the landscape has changed so quickly, and product innovation and consumer expectations are evolving so rapidly, that I really don’t think we can miss one year and expect to be as informed, up to date, and as competitive as we would otherwise be. In addition to the world class experts and speakers who will educate us, the professionally moderated share groups have become an extremely popular component of the CGA Strategic Conference and one in which we match notes and learn from the experts, as well as our industry peers, on a wide array of important and timely topics. Perhaps the most important business development aspect of the conference for our company and our people are the business sessions with our key suppliers. These business meetings used to seem redundant with

other trade shows and formats, but I can honestly say that we look forward to the opportunity to quickly catch up on what each company is seeing in the industry, what changes they are planning, and how they plan to execute for maximum performance and sales in the months ahead. Once a year is no longer enough. We need to keep our finger on the pulse of all of our trade partners all the time to improve, to change, and to efficiently compete in the new world of business in California. We are excited about the 2013 CGA Strategic Conference. We look forward to improving our chances of success in the coming year. I encourage you to consider your options as the game changes in California retailing. As in all games, there will be winners and there will be losers too. It’s time to “Think Two Moves Ahead.” I hope to see you in Palm Springs. n

CONGRATULATIONS TO THIS YEAR’S INDUCTEES INTO THE CGA EDUCATIONAL

FOUNDATION

HALL OF ACHIEVEMENT JIM LEE

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VIEWPOINT

“ The Most Significant Thing I Do Each Week” KEVIN C OU P E

As a company executive, the most important thing you do each week may be one of the easiest — if you understand the importance. This summer, looking for a way to do something different on my website, MorningNewsBeat.com, during the weeks when I was simultaneously on vacation and beginning my summer gig as an adjunct teacher at Portland State University in Oregon, I hit on an idea: Pose the same dozen or so questions to people I a.) like, and b.) see as being industry thought leaders, and see what they say. Some of the questions were serious, while a few were whimsical. The folks I posed the questions to were encouraged to be as serious or whimsical as they wanted, and it was fine if the answers to the serious questions were whimsical and the answers to the whimsical questions were serious. My goal was just to get a sense of people — how they think, feel and act — that would go beyond the standard business profile. I didn’t edit a word, because I thought “how” they said certain things was as important as “what” they said. I tell you all this because I’ve been fascinated by the answers to one of the questions: “What is the most significant thing you do each week, and why?”

C A L I F OR N IA G R OC ER

The answers were filled with both style and substance, and because they made me think about the most significant thing I do each week, I thought I’d share four of them with you, because they have something in common worth considering.

“I found the most important thing I can do in the organization is to talk to our associates one-on-one, or in groups. I regularly look for the opportunity to talk to any of our gathered meetings to help connect the purpose of the meeting and the purpose of individual jobs to the purpose of the company and indeed the

purpose of each of us as individuals.” - Dave Dillon, Chairman/CEO, Kroger “The most significant thing I do each week, in fact each day, is put a smile on my face and go to work looking forward to the day. Those of us who are fortunate enough to have a career that we enjoy can find that enthusiasm can be contagious and that smile can enthuse those with whom we come into contact. “In recent years I have had my own TV show ‘Feargal Quinn’s Retail Therapy’ on Irish National Television. I visit stores all around Ireland, big and small shops, garden centres, etc. and the most important message that I can give to the merchants is the influence each person has on the people they work with and the people they do business with. That’s where the smile comes in!” - Senator Feargal Quinn, founder of the iconic Irish supermarket chain Superquinn

I regularly look for the opportunity to talk to any of our gathered meetings to help connect the purpose of the meeting and the purpose of individual jobs to the purpose of the company and indeed the purpose of each of us as individuals. “Spend time with the front line performers in our business, at any level. Typically, the closer to the action they are, the better. “The front line performers in our business are those interacting with our guests on the one hand; and our suppliers on the other. Sourcing product from roughly two dozen major suppliers, we serve 200 million people a year in 335 buildings coast to coast. It takes 18,000+

VIEWPOINT

people to take care of them. We start nearly 9 million movies a year, or about 24,000 each and every day. There’s a lot of action going on, and it is not hard to find, if one is paying attention. “Spending time with these folks is critical because in an almost 30-year career, I am hard pressed to come up with more than one or two examples where a good idea came from a brainstorming session or a meeting or some exercise sitting in the office or some offsite. “Instead, for me, good ideas seem to flow much better, much easier, when out in the field, interacting with our people who interact with customers, or interacting with customers themselves. There are few things more beautiful that a big theatre under load, with 20 or 24 or 30 screens all firing off within minutes of each other, and thousands of people coming and going, anxious to get to ‘their’ movie. “If you cannot get excited about your business when your people and your customers are in front of each other, when systems are at the maximum capacity they were designed for, when processes are working, when people are performing… do yourself a favor and quit. No wait ... maybe you’re doing us a favor when you quit.” - Gerry Lopez, CEO, AMC Entertainment “Catching people doing something right. Why that is important is self-explanatory.” - Norman Mayne, CEO, Dorothy Lane Markets

them both well enough to know that their egos are well in check, and that they are more impressed with their employees than they are with themselves. That’s important. In fact, I think it is critical. Especially in an industry where there can be an enormous disconnect between what is happening in the executive suite and what is happening at the front end and in the aisles and departments of stores that people visit day in and day out. The three questions that retailers — no matter how big or small — need to ask themselves are: n

Are the people on the front lines representing our company to customers in the best possible way, with maximum enthusiasm and sincerity?

If not, why not?

What am I doing on a daily basis to make sure they realize how important they are to our overall success?

See the commonality? In each case, these four executives understand the importance of people on the front lines. They “get” that innovative ideas, execution and implementation of strategies and tactics, and the sustainability of a business model all depend on the people who have considerable and constant contact with customers and business partners.

That’s more than just a metaphor. It strikes me as a vivid example of connecting the top with the people on the front lines in a fundamental way. n

Here’s the truth. Most people who shop at Kroger have no idea who Dave Dillon is. Almost nobody who goes to the movies at an AMC Theater has the slightest notion who Gerry Lopez is. And while both Feargal Quinn and Norman Mayne have outsized personalities that have made them familiar to customers, I know

C A L I FO RN I A G RO C E R

And, they share a kind of essential modesty — not because they don’t appreciate their own considerable achievements, but because they know that their success has been achieved through the hard work of others.

One executives participating in our series of interviews was Laurie Demeritt, CEO of the Hartman Group, and I thought part of her answer was instructive: One of the most important things she does each week, she said, “would be my weekly cleaning of the fish tank. I think it highlights one of my favorite things about working at a small company — no job is too big, or too small, for any member of our team.”

Cheers

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C G A E D U C AT I O N A L F O U N D AT I O N

The True Measure of Success Over the past 21 years, the CGA Educational Foundation has awarded $3 million in scholarships and another $1 million in tuition reimbursement. As impressive as the dollars awarded are, the number of lives that have been affected is the true measure of success. The recipients number in the thousands. They have been employees, or their family members, of CGA member companies. In each case, that student had a need that we were able to fill.

cannot be thanked enough for their generosity, both financially and with their time. If you have attended one of our Hall of Achievement dinners, or played in one of our annual golf

It should be exciting to us that together we are able to help our associates and their family members fulfill their education goals and better position themselves to excel in their personal lives and careers.

tournaments, you have helped make a difference in someone’s life.

The Foundation’s Trustees are well aware of the financial challenges of both our educational institutions and students. In this time of tight budgets and increasing fees for classes and books, we continue to look for ways to increase the amount of assistance and the number of people we can help. To do so, we have added significant funds to the reimbursement program in the past few years. We have also added new scholarships, including some for graduate students.

JIM VAN GORKOM Chairman, CGA Educational Foundation Senior VP, Sales and Marketing NuCal Foods, Inc.

While the Foundation may be best recognized for its scholarship and career development programs, we also continue to expand our industry education program. Over the past year, we have offered numerous webinars on a wide range of topics. These have included shopper insights, regulatory issues such as the Food Safety Modernization Act, and rest and meal break compliance, also crisis management and data security, just to name a few. We encourage you to tell the appropriate people in your organization about this program and to participate in these learning opportunities. n

Our industry has continually shown tremendous support for the Foundation’s programs, and they

California Grocers Association has a Facebook page we hope you “Like”!

To “Like” our Facebook page, log-on to Facebook and search “California Grocers Association”

For more information, or questions, contact Dave Heylen, CGA, at (916) 448-3545.

C A L I FO RN I A G RO C E R

We hope you “Like” us!

When you “Like” CGA’s Facebook page you’ll stay on top of the latest news and events in California’s robust grocery industry. News, trends, updates, and more are in-store when you join CGA’s Facebook community.

GUEST EDITORIAL

CGA: All That and a Bag of Groceries

I SA BEL LA M INOLI

From the moment I started with the California Grocers Association (CGA), I knew that I had landed a unique opportunity. The staff at CGA immediately stressed to me the importance of learning the “legislative process”- something that at the time I had only learned in school, but have now experienced first hand. To be honest, I was pretty nervous about being CGA’s first intern, but on my first day I was immediately exposed to the realities of working in government relations. I sat in on a legislative strategy meeting, a stakeholder meeting in the Governor’s Office, and attended a hearing at City Hall. Since then, every day was exciting as I learn new things and take on new challenges. With time I was even given a polo shirt from the CGA Educational Foundation! Jokes aside, knowing that CGA is just as excited to have me as I am to be here has been essential to what I have been learning. From what I have gained thus far, what I appreciate most about the Association is how it has helped open my eyes to a whole new perspective. Before CGA, I never knew how many different trade associations existed and how each could influence public policy.

C A L I F OR N IA G R OC ER

Like most people, I took grocery stores for granted. Being here has taught me just how fundamentally important grocery stores are to every community and how challenging it is to keep them up and running given California’s difficult regulatory environment.

Also, the relationships that develop between grocers and the communities they serve truly provide a feeling of familiarity and comfort within a neighborhood. With this new awareness, I have found myself growing more and more attached to the issues that affect our local grocery stores. The Women, Infant and Children (WIC) program, pharmaceutical concerns, the rising cost of healthcare and carryout bag ordinances are a few of the topics that I have been exposed to this summer.

Bag ordinances stand out to me most because they were the first subject I learned CGA concerned itself with. Senate Bill 405 (PadillaPacoima) in layman’s terms would provide a statewide solution to the current patch-work of ordinances by implementing a ban on single use plastic bags, and a charge on paper bags with no cost to the consumer if they bring reusable bags for their items.As a student in San Francisco, this kind of regulation is already second nature to me. San Francisco was the first California city to pass a plastic bag ban. Taking notes I thought, “Well, this is going to pass. What a no-brainer.” It was only a few days later when SB 405 was presented on the Senate floor and did not pass. It was this same day when I learned a hard truth about policy vs. politics: that sometimes no matter how great the policy, politics can be and often is a significant factor.

GUEST EDITORIAL

Thankfully, the effort to find a statewide solution to this growing problem is still alive and I know CGA will continue to work until it is passed. Aside from working on single-use bag legislation, I have had the opportunity to draft floor alerts, attend meetings with legislators both in-district and at the Capitol, do legislative research, as well as work with the CGA Educational Foundation as it grants scholarships, conducts fundraising events, hosts webinars, and much more. I have experienced legislative victory and defeat and have emerged more knowledgeable, grounded, and with a better understanding that it takes patience and determination to be successful in this business. My experience with CGA has allowed me to develop a holistic view of the legislative process, while also giving much more meaning to my future. My time with CGA is now winding down but already I have come to appreciate the many people I have met and worked with and the experiences I have gathered.

This August I will be a senior at the University of San Francisco. I am more confident than ever that politics is the correct major for me and to have that sort of confidence amidst the loans and low hiring rates right now feels wonderful â&#x20AC;&#x201D; I have the folks at CGA to thank for that. Thank you California Grocers Association for what has turned out to be an amazing experience and to Keri Askew-Bailey, Tim James, and Dane Hutchings in particular, thank you for your constant advice, perspectives, and encouragement. CGA, I know I am your first intern but I sincerely hope that I am not your last. What interning for you offers to a young and eager mind is priceless. n Editorâ&#x20AC;&#x2122;s Note: Isabella Minoli is a senior at the University of San Francisco, majoring in Political Science. She served an internship for CGA this past summer and was asked to share her experience.

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C GA N EWS

Foundation Hosts Two Winning Tournaments THE CGA EDUCATIONAL FOUNDATION CONTINUED ITS WINNING TRADITION OF HOSTING SUCCESSFUL GOLF TOURNAMENTS WHILE SUPPORTING THE FOUNDATION’S COLLEGE SCHOLARSHIP AND TUITION REIMBURSEMENT PROGRAMS. “Once again the grocery industry stepped up in a tremendous way to financially support the Foundation’s educational efforts,” said CGAEF Executive Director Shiloh London. The two annual fundraising events raised over $250,000. More than 230 players enjoyed a full day of golf stretched over both the “Ike” and “Babe” courses at the challenging Pacific Palms Resort in Industry, Calif. The Northern California tournament, played at the exclusive Blackhawk Country Club in Danville, Calif., sold out prior to the event. Damien Payne, professional long driver and trick shot artist, was on hand to help golfers with their long ball. In addition to excellent golf conditions and cooler temperatures at both courses, the tournament provided great networking opportunities both before and after the event. “This is a great opportunity to develop and strengthen industry relationships while enjoying a round of golf

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The Illuminators provided breakfast for golfers at both events.

(l to r) Art Shields, Leslie Astle, ConAgra Foods; Paul Gianetto, Kevin Konkel, Raley’s.

and supporting a very worthy cause,” London added. “The Foundation thanks everyone, from the players to the many sponsors, who made these two tournaments so successful.” In addition to golf, attendees at both events heard from football legends who provided insight into professional football and the role education played in helping both achieve successful sports careers. In Southern California attendees heard from football legend and ESPN College Game Day Analyst Desmond Howard who shared his unique perspective on the game. His presentation was sponsored by Kellogg Company. At the Northern California event, 13-year professional football veteran Willie Roaf shared stories of his time in the NFL and how a single scholarship was key in making his dreams come true. His presentation was sponsored by MillerCoors and C & S Wholesale. n

(l to r) Kevin Davis, Bristol Farms, Jerry Whitmore, Nestle Dreyer’s Ice Cream, Lawrence Johnson, Agee-Johnson, Adam Caldecott, Bristol Farms.

(l to r) Troy Kalus, Scott Beijer, PepsiCo; Karl Schroeder, Safeway Inc; Paul Turcotte, PepsiCo.

(l to r) Jeff Millard, Hae Carberry, Cathy Fromson, James Vu, The Hillshire Brands Co.

Damien Payne, professional long driver and trick shot artist.

CGA NEWS

(l to r) Dale Brazdis, Jacquie Slobom, Tim Redmond, Eric Hendry, Gelson’s Makets.

(l to r) Dennis Spiller, Jon Alden, Steve Warne, Jerry Pierson, The Jelly Belly Co.

(l to r) Ed Hepler, The Hain Celestial

(l to r) Dean Billings, Ed Billings, Tropical Preserving Co.; Jim Amen & Renee Amen, Super A Foods.

Former football star Willie Roaf (center) poses with golf attendees.

(l to r) John Bonicatto, Specialty Food Sales, Nick Van Hoogmoed, Alta Dena Certified Dairy, Diana Godfrey, Smart & Final Stores, Skip Moran, Wilmar Meats.

Group; Richie Morgan, Holiday/SavMor Foods; Tyler Demetral, Gatekeeper Systems; Barry Page, Gallo Sales Co.

T H A N K YO U S P O N S O R S The CGA Educational Foundation wishes to thank the following sponsors:

The Illuminators (both events)

Alliance Managed Sales Alta Dena Certified Dairy Anheuser-Busch InBev APIO Inc. Big Saver Foods Bunzl Distribution C & S Wholesale Grocers Cardenas Markets Coca-Cola Refreshments ConAgra Foods Corrigo Incorporated Co-Sales So Cal Dr. Pepper Snapple Group Fisher Printing, Inc. Food 4 Less/Foods Co. Food 4 Less/Rancho San Miguel Frito-Lay, Inc. Gelson’s Markets Heineken USA Jelly Belly Candy Co. LaLa Foods Mike’s Hard Lemonade

Lunch  Bimbo Bakeries USA Bristol Farms  Cardenas Markets  El Super La Tortilla Factory Master Sponsors  (both events) Anheuser-Busch InBev  The Hershey Company  Kellogg Company  Kraft Foods Group Mondelez International  Synder’s-Lance, Inc.  Unified Grocers, Inc.

MillerCoors Milton’s Baking Company Mission Foods MOM Brands Moss Adams LLP Nestle Purina PetCare NuCal Foods Nutricion Fundamental, Inc. PepsiCo. Procter & Gamble Progressive Produce Corp. Rockstar Energy Drink Sanderson Farms Select Trade Sales Sugar Bowl Bakery Supervalu Wholesale Unilever Hole Sponsors  Key Refrigeration  PECO Pallet, Inc.  RSi Retail Solutions

Package Sponsors

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Breakfast

CGA NEWS

NFL great Desmond Howard was the Southern California tournament speaker.

Dirk Stump, Stump’s Market.

Golfers bid on silent auction items with proceeds benefiting the Foundation’s scholarship program.

F O U N DAT I O N C O N G R AT U L AT E S T H E W I N N E R S ! Northern California

Southern California Ike Course

Babe Course

Jeff Hamilton  Ron Link

FIRST PLACE

Cliff Barton  Richie Morgan

SECOND PLACE

FIRST PLACE

Scott Alcalde  Len Rochon  SECOND PLACE

Tyler Demetral  Ed Hepler  THIRD PLACE

Matt Myers  Greg Pantages

John Cianciarulo

CLOSEST TO THE PIN

Phil Costello

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John Bonicatto Diana Godfrey

Mary Park Sara Yi

Mike White CLOSEST TO PIN

Leslie Astle

LONG DRIVE

Dale Dougall Sam Guerra

Rene Amen Jim Amen

Ed Billings Dean Billings

SECOND PLACE

Skip Moran Nick Van Hoogmoed

THIRD PLACE

Tracy Lape″

LONG DRIVE

Tyler Demetral

Fernando Hong Patrick Park

Dale Dougall Sara Yi Silvia Quiroz

David Grosse Gary Lofgren

Bob Reeves

THIRD PLACE

Hank Mayhew George Galanos

Donna Tyndall Jack Polakow

CLOSEST TO PIN

Ron Bloes

Sandra Jimenez

LONG DRIVE

Rob Klein

Mary Armstrong

GOVERNMEN T R EL AT IO N S

Assembly Freshmen Set Tone for This Session THE FIRST YEAR OF A LEGISLATIVE CYCLE SETS THE TONE FOR THE TWO-YEAR SESSION. THIS HAS PROVEN ESPECIALLY TRUE WITH 38 FRESHMAN MEMBERS OF THE CALIFORNIA ASSEMBLY — THE LARGEST INFLUX OF MEMBERSHIP IN THE LOWER HOUSE SINCE 1934. This year has provided ample opportunity to introduce this new legislative body to the California Grocers Association and the direct impacts our member-companies have in every legislative district statewide. The Association’s annual Grocers Day at the Capitol provided a perfect introduction to legislators and their staff as we discussed issues including Women, Infant and Children (WIC) access, single-use plastic bags and the business impact of a proposed sugarsweetened beverages tax. As we roll through the legislative summer recess, it is a good time to take a look back and outline CGA’s challenges, successes and everything in between. In spite of a difficult political climate, CGA has had moderate success in stopping specific pieces of legislation that would have significantly increased operational costs and the likelihood of frivolous litigation. For example, SB 622 (Monning) would have placed a 1-cent per ounce excise tax on any beverage containing a caloric sweetener. It was estimated this targeted tax would have cost California businesses $1.8 billion annually. The bill was held in the Senate Appropriations Committee.

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By Dane Hutchings, Manager, Government Relations, CGA

Assembly Bill 880 authored by freshman Assemblymember Jimmy Gomez (D-Los Angeles) would have imposed significant fines on employers when employees opted into the State’s Medi-Cal system — even if the employer offered quality and affordable health coverage. Touted in the press as a loop-hole bill, it was designed to target one specific “mega-employer.” Unfortunately, the measure would have hurt many of the state’s good-actors who are still working to implement the Federal Affordable Care Act. Additionally, the bill would have made employees who chose Medi-Cal a protected worker class, enabling them to file drive-by discrimination lawsuits. This bill was stopped on the Assembly floor

and has been moved to the inactive file. It is unlikely to be up for vote again this year. Senate Majority Leader Ellen Corbett (D-East Bay) is authoring a bill that would mandate pharmacies to partially translate prescription labels in the state’s five most commonly used languages. While CGA promotes language access for its member customers who utilize in-store pharmacies, this bill is not the solution.

As we roll through the legislative summer recess, it’s a good time to take a look back and outline CGA’s challenges, successes and everything in between. In retrospect, a 2010 study published in Pediatric Journal found that there was a translation error rate of 50 percent on prescription labels. Pharmacies are already mandated to provide live interpreter services to every patient who requests translations, which is often accomplished through telephonic translation. This practice allows non-English speaking patients to speak directly to a pharmacist via a licensed translator. CGA believes this provides both the highest quality of patient safety and protection for in-store health care professionals. This bill failed passage in the Assembly Health Committee. The business community did have some setbacks as well. As an attempt to use the power of the democratic super-majority, the Assembly Committee on Budget introduced AB 93 which redirects utilization of Enterprise Zones (EZs), a program that provides tax incentives and hiring credits to businesses, such as grocers and other retailers, to develop in designated areas. A bill that was originally a one-page “spot bill” was amended into a comprehensive 177-page bill. The amended version of the bill went from its first policy committee to the Governor’s desk in five

days, giving little time for industries that develop and employ those in under served areas a chance to weigh in. In the end, the bill’s proponents did not secure the democratic votes needed and worked with four Republicans to move the bill. Although the two-thirds bills are likely done for the year, it does not mean things are slowing down for CGA’s government relations team. In fact there are several pieces of legislation that pose significant problems for California businesses whose fate won’t be decided until mid-October, the bill signing deadline. One bill, AB 10, authored by Luis Alejo (D-Salinas), would raise the minimum wage incrementally to $10 per hour by January 2018. Assemblymember Roger Hernández (D-West Covina) has a labor-backed bill designed to increase the likelihood of unfavorable judgments against California employers.

Assembly Bill 729 would allow for evidentiary privilege between union employees and their representatives, similar to attorney, client or doctor, patient privilege. Not only is this one-sided in favor of labor unions, it also would not allow a unionized employee who wished to disclose a communication with their union agent, as the labor union has the right to enforce that privilege. The first year of the two-year legislative cycle is nearing the end and the CGA government relations team continues to identify and focus on industry specific legislation. We will continue to work with lawmakers to stress the importance of our issues and how they impact their constituents. Whether a person works for a member company or is a customer, our members are the community anchors — and we take great pride in telling that story. n

THE CALIFORNIA GROCERS ASSOCIATION WELCOMES THE FOLLOWING NEW MEMBERS: Orca Bay Seafoods 900 Powell Ave SW Renton, WA 98057-2907 Contact: Greg Treat, Regional Sales Manager E-mail: gtreat@ocrabayfoods.com Tel: (425) 204-9100 Website: www.orcabayseafoods.com

Grace Foods (USA) Inc. 3350 SW 148th Ave Ste 110 Miramar, FL 33027 Contact: Desiree Sorensen, Beverage Development Manager E-mail: Desiree.Sorensen@gkco.com Tel: (310) 745-9260 Website: www.gracefoods.com

WorldPay US, Inc. 600 Morgan Falls Rd. Atlanta, GA 30350 Contact: Jennifer Ward, Director of Sales E-mail: jennifer.ward@worldpay.us Tel: (602) 788-3501 Website: worldpay.us

The Fresh Market 628 Green Valley Rd Ste 500 Greensboro, NC 27408-7791 Contact: Jeff Jordan, Director, Regional Operation Email: jeffjordan@thefreshmarket.com Tel: (336) 601-5676 Website: www.thefreshmarket.com

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Andronico’s Community Markets 14234 Catalina Street San Leandro, CA 94577 Contact: John Clougher, Chief Executive Officer E-mail: jclougher@andronicos.com Tel: (510) 667-1800 Website: www.andronicos.com

CGA NEWS

CGA Welcomes New Members

CAPITOL INSIDER

Musical Chairs in the Legislature In November of 2012, a chill came across the Capitol when the results of the election ended with one party obtaining a super majority in both houses. The Senate democrats won every contested race and ended with 29, two more than needed to obtain the super-majority. Assembly democrats not only won every contested race, they also unseated an incumbent republican. The final tally was 55 seats, one more than needed for the super-majority. While most thought it was possible for the Senate to obtain the all-powerful two-thirds vote threshold, the idea of both houses getting there in 2012 didn’t seem plausible to many. Supermajority control means the ability to pass urgency matters, tax increases, confirm gubernatorial appointees and override vetoes without the need for any votes from the minority party. However, since November, the power of the super-majority has been mostly on paper. As soon as the super-majority was obtained, it was also in jeopardy of being lost. On election night, two sitting Senators not up for reelection were elected to Congress. They would resign their Senate seats in January just prior to being sworn in to their new jobs in Washington DC. The Governor called a special election for both seats.

Gonzalez

Nine Candidates

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(July Primary)

Unknown Candidates (September Primary)

Unknown Candidates

(Likely November Primary)

Two members from the Assembly immediately announced their intentions to run for the open Senate seats. (Senate — 27; Assembly — 55 with members running for Senate) Out of the blue in February, Senator Michael Rubio announced his immediate resignation from the State Senate for professional and personal reasons. This announcement resulted in the Senate democrats losing the super-majority because they now had only 26 votes. Assembly Member Ben Hueso ran almost uncontested to succeed Senator Juan Vargas, one of the two members that left for Congress. He was sworn in to the Senate in March. His victory created a vacancy in the Assembly. (Senate — 27; Assembly — 54) In May, Assembly Member Torres won her election to succeed Gloria McLeod, the other Senator elected to Congress, and created yet another vacancy in the Assembly. Later that month, Assembly Member Lorena Gonzalez was elected to fill the vacancy made by Hueso’s departure. (Senate — 28; Assembly — 54)

A S S M E B LY

S E N AT E

Hueso

Vargas CO NGRE SS

Torres

Negrete-McLeod

Blumenfield

Rubio

Mitchell

(Candidate: September Primary)

Price

Vidak v. Perez

L.A. CITY COUNCIL

(July General)

RESIGNE D

CAPITOL INSIDER

Elections for Los Angeles City Council were in March. Assembly Member Bob Blumenfield and Senator Curren Price both ran for council seats. Blumenfield was elected on election night with more than 51 percent of the vote, meaning he had enough votes to avoid a runoff in May. Price, while winning on election night, was forced to a runoff, which he later won. Blumenfield and Price left the Legislature to take their seats on the Council in July. (Senate — 27; Assembly — 53) In July, the race to succeed Senator Rubio will come to a close. It’s a special election in a district with a wide margin favoring democrats, but could result in a republican victory due to low voter turnout and the conservative nature of this Valley district.

enough to allow the republican and NPP candidate to move on to a runoff. The new top two primary system continues to make elections very interesting! Also in September, the primary elections to replace Assembly Member Blumenfield and Senator Price will occur. Assembly Member Holly Mitchell has already announced her candidacy for Senator Price’s vacated seat, so the chairs may keep moving! Both houses had a true super-majority for only a month of this year’s legislative session when votes were taking place as a result of the various elections. Meanwhile, the musical chairs in Sacramento have created nothing but confusion. n

On the same day, the primary election will be held to replace Senator Torres’ Assembly seat — with nine candidates, this is likely to move on to a general election in September. This is also a very democratic seat but with 7 democrats, 1 republican and 1 no party preference, there is a chance the democrats could split the vote

This article was authored by Louie Brown, a partner in the Sacramento office of Kahn, Soares and Conway, LLP.

ngratulations vic&jim,

Congratulations from your friends at fresh&easy for your induction into the California Grocers Association Educational Foundation Hall of Achievement. We sincerely appreciate your contributions to the grocery industry and the communities you serve.

Jim Lee

Vice President Sales West U.S.

President & Chief Operating Officer

Coca-Cola Refreshments

Stater Bros. Markets

Neighborhood Market

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Vic Chiono

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WASHIN GT O N R EP O RT

37 and Holding! THERE IS NO UNCERTAINTY IN THE GOP-LED HOUSE’S POSITION ON OBAMACARE AS THEY HAVE NOW VOTED 37 TIMES TO REPEAL OR AMEND THE LAW. Unfortunately, the only vote that could actually change the implementation of the law doesn’t come until the November 2014 Senate elections when the tough implementation decisions for the business community will have already been made. The Food Marketing Institute has been working with the federal agencies writing the implementation rules to tell our story and get rules that are as favorable as possible within the framework of the law and when the law needs to be amended — working to get it changed. Toward that goal, there are a couple of issues in the Affordable Care Act that need to be improved but will require legislative action to make a change. One priority issue is the law’s definition of a full-time associate. Another is the requirement that employers automatically enroll associates in a plan if they do not affirmatively opt-out. We had two great victories on working toward improvements in the law. First, the recent introduction of bipartisan legislation by Senators Susan Collins (R-ME) and Joe Donnelly (D-IN), the Forty Hours is Full Time Act (S. 1188), which would change the Affordable Care Act’s fulltime employee (FTE) definition from 30 hours/week to 40 hours/week.

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Jennifer Hatcher Senior Vice President Government and Public Affairs, Food Marketing Institute

We saw another big legislative step forward with the introduction of H.R. 2575 on June 28 to repeal the 30-hour threshold for classification as a full-time employee under the Affordable Care Act. Reps. Todd Young (R-IN), Mike Kelly (R-PA) and Pete Olson (RTX) already have 109 additional co-sponsors to their bill. The legislation is similar (but not a companion) to S. 1188. FMI, through its leadership on the Employers for Flexibility in Health Care Coalition (E-Flex), which includes retailer, restaurant, staffing, building contractors and other business organizations, has been meeting with Administration, Leadership and Committee staff of both parties to raise the need to address specific employer-related issues, such as the

ACA 30-hour/week FTE definition, before the law’s employer mandates take effect in 2014. It is also seeking FMI members to host tours and meetings at your stores and/or corporate headquarters with congressional members regarding the FTE issue. Congress leaves Washington for the month of August with the goal of learning from constituents. This would be an ideal time to host a member of Congress, or a Senator at your store or facility. Contact FMI’s government relations department if interested. In the meantime, write a letter to your Member of Congress by logging on to www.foodaction.net/default.aspx. Please note that the letter will require you to include some information and potentially some examples that are specific to your company.

We saw another big legislative step forward with the introduction of H.R. 2575 on June 28 to repeal the 30-hour threshold for classification as a full-time employee under the Affordable Care Act. FMI has also created a Health Care Resources page (www.fmi.org/healthcare-resources) that provides materials and useful links to the top consultants to help with operations and benefits analysis. Encourage your company personnel to take advantage of these resources. FMI Health Care Webinars? Do you or your benefits manager know the answer to these questions? For information on the presentation slides and webinar recordings for the following webinars, contact FMI at (202) 452-8444. Need a checklist for 2014? How do Public Exchanges impact my company’s health plan? Find out from Tracy Watts, of Mercer Consulting, who outlined how public exchanges will impact what your company’s health coverage and provided some tools including a 2014 checklist.

WA S H I N G T O N R E P O R T

What strategies can my company use for employees who currently work more than 30 hours/week, but are not currently eligible for my company’s health coverage? Find out from Richard Stover of Buck Consultants (a Xerox Company), who outlined a number of options for employers to consider, as well as some necessary changes that some employers may not be aware of. For example, does your company plan offer coverage to foster children?

Looking to a

bright

future! Congratulations to this year’s scholarship winners!

What are the rules that I need to make sure my company and my benefit plan is following in order to not be penalized under the Affordable Care Act in 2014? Find out from Heather Meade of Ernst & Young, who outlined the rules of the road for employers to follow when making sure their workforce management and health coverage plans are in compliance with the many new rules and regulations from the ACA.

™

As always, do not hesitate to ask if you need an answer to a particular question. n

Brenda Armenta Oscar Chavez

Jessica Contreras Megan Ewbank

Alejandra Gallegos Joseph Garfield Wendy Hernandez

Hunter Stone Miguel Tapia Tirado Edgar Tracy

myfood4less.com • ranchosanmiguelmarkets.com

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WASHIN GT O N R EP O RT

Numbers Don’t Lie: Independents Play A Vital Role INDEPENDENT RETAIL SUPERMARKETS AND THE WHOLESALERS THAT SUPPLY THEM PL AY A VITAL ROLE AND ARE MAJOR CONTRIBUTORS TO CALIFORNIA AND THE COMMUNITIES THEY SERVE. On April 23, the National Grocers Association released the results of its economic impact study “Independent Grocers Impact America.” The study was conducted by John Dunham and Associates and was guided by an advisory committee of seasoned industry professionals. The purpose of the research, which was financially supported by Mondelez International, The Shelby Report, Nielsen and the NGA Research and Education Foundation, was to measure the size and scope of the independent grocery retailing and wholesaling industry. Previously, NGA had no reliable data of the independent channel’s positive impact on sales, jobs, wages, taxes and their ripple effect on other industries. Since releasing the study, I’ve had the opportunity to share the results on Capitol Hill and at various industry meetings around the country. The feedback has been extremely positive which is not surprising when you look at the numbers and realize the tremendous impact independent grocers and wholesalers have on the nation’s economy. We now know that the independent grocery channel:

Peter Larkin President/CEO National Grocers Association

Generates $129.48 billion in sales and accounts for 1 percent of America’s overall economic output.

Creates over 944,000 full-time equivalent jobs. With the ripple effect on other related industries the job number jumps to 1.5 million.

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Pays over $30 billion in wages to our employees each year, and over $27 billion in federal and local taxes.

While the national numbers are important, NGA also wanted the ability to drill down on the industry’s impact at the local level. By working closely with our partners at Dunham and Associates we were able to design the study to provide data on sales, jobs, wages, and taxes for every state, congressional district and state legislative district in the country.

I’m sure it will come as no surprise that the California numbers are impressive. Independent retail supermarkets and the wholesalers that supply them play a vital role and are major contributors to the state and the communities they serve. The independent grocery channel in California: n

Generates $19.67 billion in annual sales through 2,691 stores.

Creates over 105,000 jobs…..and over 180,00 with the ripple effect.

Pays $3.89 billion in wages, $1.94 billion in state and local taxes (1.7% of the state total) and $1.84 billion in Federal taxes.

Your legislators, the media and your trading partners all need to know our contribution to a strong and vital economy in the United States. All of the national, state and local level data is available at no charge on our website www.grocersimpactamerica.com I encourage you to visit the site, review the numbers for your own community and use it to help tell the story of our industry. Your legislators, the media and your trading partners all need to know our contribution to a strong and vital economy in the United States. If you have questions about the report of the data, please let me know. It was a long time coming, but we wanted to make sure it fairly represented our industry. We are proud of it, and you should be too. It shows that independent grocers are a valuable piece of America’s economy, as well as your dedication to your customers and your communities. n

Congratulations

Safeway is a proud supporter of the

California Grocers Association Educational Foundation.

Congratulations to The Safeway Foundation Scholarship Recipients! Charlene R. Asuncion

Ashley Moylan

Jason Cabbiness, Jr.

Ashlin Oglesby-Neal

Venessa Diaz

Deanna Okada

Jesus Flores

Marissa Peralta

Kenneth Gott, III

Henry Qiu

Caleb Hoogland

Jeremy Ratto

Blake Husserl

Megan Ratto

Arin Ledesma

Alexis Thompson

Bryn Lindley

Amanda Wells

Jared Logier

Jennifer Wilson

Aaron McGee

Justine Young

Graham Moore

Your accomplishments inspire us all.

Q&A

Q & A: California Insurance Commissioner Dave Jones DAVE JONES WAS ELECTED AS CALIFORNIA INSURANCE COMMISSIONER IN 2010 AND LEADS THE CALIFORNIA DEPARTMENT OF INSURANCE, THE LARGEST CONSUMER PROTECTION AGENCY IN THE STATE. THE COMMISSIONER SERVED IN THE CALIFORNIA STATE ASSEMBLY FROM 2004 TO 2010. IN 2011, HE WAS NAMED ONE OF CALIFORNIA’S TOP 100 LAWYERS.

Dave Jones

As California Insurance Commissioner, you are responsible for implementing the Patient Protection and Affordable Care Act (ACA) in the nation’s most populous and diverse state. What have your top priorities been as you move toward 2014?

In California, we already had coverage mandates before the Affordable Care Act, such that new coverage mandates under the Act are only adding marginally to cost.

Division of Measurement Standards (DMS) A. The is responsible A. The product offerings for large businesses are for ensuring a fair and equitable likely to remain the same. marketplace, one that protects consumers and also allows for competing businesses to have an even playing field. State and county weights and measures officials serve as the “third person” in commercial transactions.

MS has been severely affected by a reduction D in general funds which represents 68 percent of the total program budget for price verification, package inspection, and the high precision measurement lab (metrology). This reduction will have a serious impact on our ability to sustain program services.

C A L I F OR N IA G R OC ER

ducation, training and coordination of county E personnel, a core responsibility of DMS, will no longer be possible on a regular basis. Addressing these shortcomings by working with industry to determine appropriate services and find corresponding funding alternatives is my main goal in 2013.

concern among many in the Q. There businessis great community over what impact the ACA may have on the cost of insurance as the market adjusts to the ACA. What do you think businesses can expect in terms of product offerings and rates outside the exchanges?

Rates for individuals, small businesses, and large businesses have been rising year after year in California. Before healthcare reform and the mandate that everyone purchase health insurance, health insurers were imposing double-digit rate increases annually. ealth insurers argue they are just keeping H pace with medical costs; but the fact is, medical inflation has only been running at about four percent, well below the average annual health insurance rate increases. I n California, we already had coverage mandates before the Affordable Care Act, such that new coverage mandates under the Act are only adding marginally to cost. Rate increases have been occurring for years before the Affordable Care Act, and they are not sustainable for individuals or businesses.

The Affordable Care Act in 2014 will move more of the uninsured into health insurance. It’s estimated today that every family with health insurance in California, including health insurance provided by their employer, pays $1,400 more in premiums because the cost of caring for the uninsured is shifted to those with health insurance.

Q&A

s many of the uninsured are moved into A health insurance, there is an opportunity to reduce the cost shifting that occurs when medical providers shift the cost of care for the uninsured to those with insurance. Whether the reduction in cost shifting will result in lower rates depends on whether the medical providers actually reduce the cost shifting and whether health insurers decide to reduce rates or moderate rate increases. There is concern in the business community that rates for the individual market will somehow be driven down and costs shifted to the large employer community. We don’t anticipate, however, reduced rates in the individual market or the small group market for 2014. And, in any event, each market segment is rated separately by the health insurers so this kind of cost shifting between market segments is not happening. I believe that rates will continue to go up in all three market segments after 2104 because there are no controls on what health insurers can charge. The major driver of rate increases is significant profit taking by the health insurers. or example, United HealthCare made an over F 50 percent return on equity each year of the last four years, and are on track to do so again this year. Anthem Blue Cross of California made an approximately 25 percent return on equity or profit last year and is on track to do so again this year. hese are very different levels of profit T than what takes place in many California industries, including the grocery industry. Who pays for this? California businesses and California consumers.

ddly, California law does provide for the O Insurance Commissioner to reject excessive auto, homeowners, and other property and casualty insurance rate increases, which has saved consumers and business tens of billions of dollars in premiums. Until the law is changed, I don’t have the authority to help consumers and businesses with regard to rising health insurance rates.

Q. What should California’s grocery industry leaders know about the exchange in California and how it will operate?

A. Covered California’s internet-based health insurance exchange or marketplace will go “live” on October 1, 2013, for families and small businesses to shop for health insurance. Families and small businesses will be able to purchase health insurance policies that will go into effect January 1, 2014. alifornia’s exchange will offer individual and C small group market health insurance and HMO policies. Policies sold in the exchange have to meet a minimum benefits level, called the essential health benefits. There are 13 health insurers and HMOs who have decided to participate in the individual market exchange, such that in most regions there are at least 3-4 different health insurers or HMOs offering exchange product. Covered California will also announce the health insurers selling in the small group exchange. I ndividuals and small businesses will be able to go to the Exchange website and purchase health insurance through the exchange.

Continued on p. 30

here are about 2 million California families T that are expected to qualify for federal premium

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I believe that rates will continue to go up in all three market segments after 2104 because there are no controls on what health insurers can charge. The major driver of rate increases is significant profit taking by the health insurers.

I n California, even after the Affordable Care Act, health insurers and HMOs are free to set rates as they please. Unlike 35 other states which have given their insurance commissioner the authority to reject excessive health insurance rate increases, California’s Insurance Commissioner does not have this authority for health insurance.

Q&A

Continued from p. 29

subsidies if they buy through Covered California; and many small businesses with fewer than 25 employees will be eligible for a tax credit. eople will be able to shop for different levels P of cost sharing (catastrophic, bronze, silver, gold, and platinum levels), compare premiums between health insurers, learn which doctors are in the networks for each plan, and what their cost-sharing will look like when they visit a doctor. Information about what each plan covers Your legislators, the media and your trading partners all need to know our contribution to a strong and vital economy in the United States.

Q. What are some of the most important things employers should be prepared to share with their employees about the ACA? How can employers serve as a resource and be of assistance as individuals begin to navigate the new health care landscape?

online exchange marketplace is A: The being designed to help consumers make straightforward comparisons among the various plans that will be offered, so consumers can make educated choices about which coverage is right for them and their family. I t is important to note that the cost of health insurance through the Exchange will vary widely depending on a consumer’s age, where they live and how many members are in their

family. We know some consumers will see their monthly premiums increase, while others are likely to experience a decrease if they are eligible for a subsidy. I t is important that consumers shop carefully and make use of all the resources available to them to help them make the best decision for themselves and their families. Health agents licensed by the Department of Insurance will still be available to assist consumers as will the enrollment counselors certified by Covered California. mployers should share this information and E encourage employees to go to www.coveredca.com to shop for health insurance through the Exchange. If an employee has a dispute with their health insurer, they can contact the Department of Insurance at (800) 927-4357, or www.insurance.ca.gov.

Q. There has been some attention paid to the need for “tweaks” or “corrections” to discrete pieces of the ACA. Do you think there is a realistic opportunity in the coming years to address any known (or yet-to-be-identified) deficiencies in the new law?

A. Yes. It’s important to remember that the Affordable Care Act is a complicated law with many moving parts. Implementing something this big and complex is no easy task; and there are bound to be a few bumps in the road and improvements that can be made.

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I intend to continue to look out for California’s business owners and consumers to ensure we are doing all we can to implement the law while protecting Californians.

or example, I think it’s important to change F the law here in California so that the Insurance Commissioner can protect businesses and families from excessive rate increases. nother example is the President’s suspension A of the mandate that large employers provide health insurance for one year in recognition of the complex challenge employers were facing in complying with the law. n

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SEEKING THE NEXT

GAME CHANGER Game changers — We hear the word a lot in political, business and social circles. But what are they and how will they impact the grocery industry’s future? Over the decades, supermarkets have had their share — everything from the ubiquitous shopping cart and the advent of self-service, to scanning and supercenters. But what’s next? Most industry observers point to three interrelated factors — the economy, demographics and technology. Together, they are changing the competitive landscape, as well as where and how consumers shop. After four years of bucking economic headwinds and the worst downturn since the Great Depression, a solid, albeit slow, recovery is underway. But the world is a different place. Consumers are part of what’s been called the “new normal” an unparalleled sensitivity to price and value. A demographic shift has seen the rise of the Millennials, a generation that has never known life without a computer and kick-started a revolution in online and mobile shopping. At the same time, the baby boom generation’s purchasing power remains a formidable challenge for retailers trying to satisfy multi-generational needs.

Both these factors have also given rise to an unprecedented number of new formats like value-oriented dollar stores, ethnic stores catering to the increasing number of Hispanic and Asian shoppers, smaller, convenience-oriented stores that can expand more easily in urban and suburban markets, and discount and drug stores that are taking a chunk of the grocery business from traditional channels — the latter also prompting a new wave of mergers, acquisitions and a new breed of independent operators. Bringing it all together is game changing technology that not only sparked online shopping, but an explosion in social networking sites that are giving progressive retailers valuable consumer insights. Opinions vary, though, on which factors will have the most impact. “I’m not sure technology alone is the game changer,” said Don Wen, Assurance partner for PwC, San Francisco. “Retailers have a lower risk appetite for technology investment — probably due to the need to invest in store formats and other improvements.”

SEEKING THE NEXT GAME CHANGER

BY LEN LEW IS

Yet, he says, PwC is conducting an increasingly larger number of workshops for senior management on subjects like analyzing big data and driving social media. John Rand, Senior Vice President, Kantar Retail, noted that data analytics has become so ubiquitous that it is simply the “price of entry” into the business. “If you want to play, you gotta know,” he said. Art Turock, author and Seattle-based consultant, believes companies must push the envelope much further than some executives think of as a reasonable risk. “No one wants to be the first,” he said. “They end up waiting until a practice is well-established then play catch-up. Unfortunately, duplicating best practices or leveling the playing field — another phrase you hear all the time — is not a game-changing activity.” As noted, the real game changer means addressing what’s been called the “new normal” which is usually associated with value-shopping, and generally frugal behavior among consumers.

The report noted that there is still a great deal of uncertainty about whether consumers will revert to their more profligate ways when economic times improve. “You have to look at the economy, technology and demographics being intertwined,” said Jeff Holmes, Managing Director, Retail and Consumer Sector for PwC in Washington DC, and a member of the firm’s advisory management consulting practice. “When it comes to the economy you have to look at the share of retail sales across different formats,” he said. “For instance, non-store channels like online, direct-toconsumer environment, now about five percent, is on track to increase to a 20 percent share of sales over the next few years.” He added that this has deep roots in the state of the economy. “People are looking at how to get better value by looking for better formats,” he said. “Value is not just about price, but how to get the best value for their money.” Being able to research online and have those goods delivered to their house has saved consumers the expense of going to different outlets and is very much driven by the economy,” Holmes noted. “It’s of course, influenced by technology and ties directly into customer demographics,” he added. Even when the country moves further away from recession, consumers will remain more value conscious. “They will be increasingly segmented and grocery chains have to take a good look at their formats — especially the lower performing stores — in order to free up capital,” Wen said. “You can no longer jump into remodeling and new store formats without first Continued on p. 34

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A report entitled “Forces Shaping Competition in the Grocery Industry,” by Booz & Co., noted: “As consumers try out new value seeking behaviors they find that in most categories, the trade-offs they had perceived before, (lower quality, inconvenient, time consuming) are not necessarily trade-offs at all. For example, product quality is as high as ever and slight adjustments to travel patterns can make one store just as convenient as one closer to home. As a result the

recession has very likely driven a permanent change in behavior.”

| 33

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figuring out your customer segmentation and what type of customer you want.” According to Wen, retailers need to know whether their customers want things like more prepared foods, faster checkouts, faster service and more technology. Customer segmentation goes beyond low price. “The trend is to devote more floor space to things like prepared foods, organic, fresh and local product,” he said. “How you communicate that value to the client in this economy is the game changer. Grocers have to do it well in order to get the return on investment they want.” Kantar’s Rand agrees, but emphasized that on a macro-economic level, price is still very much a key issue for retailers establishing their brand. “You have this huge divide between the haves and the have-nots,” he said. “In fact, 60 percent of the U.S. population has not had an effective raise in 10 years and have been losing ground to inflation on things like fuel, medical costs, housing and education.” The result is that consumer spending power is restrained and they are incredibly price oriented. “Then, you have 40 percent of people who are more affluent who don’t have to worry about where lunch is coming from,” he added. “They have a modified version of value. “On the one hand you have consumers looking for the absolute lowest price and on the other those looking for the best deal. These are not exactly the same things,” he said.

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Meanwhile, some retailers are learning how to exploit this difference. Some are opening stores that service two buckets of behavior like dollar stores.

“We’re starting to see relatively affluent people going in these stores for some purchases because they’re comfortable with shopping to control costs even though they could spend more,” Rand said. One of the more obvious expressions of this is Dollar General and Family Dollar’s expansion into California — moves that may not be game changers but certainly disruptive forces in the market. At the other extreme is Amazon Fresh, a fresh grocery delivery service that expanded into Los Angeles in June.

“Both (Amazon and dollar stores) are responses to two very different kinds of shoppers,” Rand said. “Both will pull business away from retailers who haven’t established a firm direction in value one way or another.”

To many consumers, value can mean their access to, and a retailer’s use of online technolog y, which has already changed the retail landscape and is poised to become an even greater force. To many consumers, value can mean their access to, and a retailer’s use of online technology, which has already changed the retail landscape and is poised to become an even greater force. A “2013 Grocery Shopping Habits Study’” by KSC Kreate, a Florida-based production studio specializing in visual content, found that before going to a store, 36 percent of consumers research grocery purchases online, most often searching for coupons, competitors’ prices and recipes. Additionally, a little more than half of consumers — 52 percent — have visited a retailer’s web or mobile site. The recipes and meals section is usually the most popular destination and they are more likely to buy a product that’s included in a recipe, the study found. However, to most observers, consumer usage of websites is a given. The real game changers is the more advanced digital technology, which is increasingly pervasive but still in its infancy, according to some industry observers. For instance, an estimated 31 percent of consumers use mobile technology while shopping, according to the Booz & Company report. But there’s little doubt this will increase significantly as smartphone penetration increases and consumers become more sophisticated in their use of the technology. As to online grocery shopping, the outlook remains somewhat uncertain. Low-value, low-margin bulky goods will always struggle to justify the shipping costs, according to the report. Although it didn’t take into account the expansion of Amazon Fresh, it was noted that in

SEEKING THE NEXT GAME CHANGER

Europe, full-assortment home delivery grocers like Ocado and Tesco in the UK were quickly growing. The present and digital future of the grocery industry was also outlined in a recent study by McKinsey & Company. Among the potential game changers:

Walmart and Target are also reportedly testing innovative, new self-checkout systems. n

Samsung launched E-Mart, an e-commerce enabled refrigerator that enables consumers to order groceries through a built-in LCD display.

Home Plus, the Korea-based chain co-owned by Tesco and Samsung offers a virtual grocery store on the walls of subway stations where riders can scan product codes with their smartphones.

Fashion retailer Urban Outfitters is eliminating cash registers in favor of iPads and sales associates with iPod Touches, making point-ofpurchase available throughout the stores.

Walmart’s experiment with a same-day delivery service called Walmart-to-Go, that includes a limited number of items purchased online in categories like grocery, electronics, home goods.

In France, drive-through groceries, while less profitable than conventional stores, are becoming increasingly popular, now accounting for 2.6 percent of the country’s retail food market.

The use of iPads and iPod Touches has given rise to the “digital dashboard” connecting sales associates with headquarters to get the latest product information, market trends, recalls, employee training and specifics on price points.

In Japan, the Walmart-owned Seiyu chain launched a Twitter campaign that enabled customers to vote on which items should have lowered prices. The company then decreased prices on 100 of the most voted items for four weeks.

REAL Supermarkets in Germany is using its loyalty program to allow those users to browse online coupons on their mobile phones while in the store.

Mobile-based payment systems are helping retailers to significantly reduce expenses while speeding up the checkout process for customers. “Mobile wallets” or NFC (near field communications) technology enables two wireless devices in close proximity to exchange data. Sainsbury in the UK is testing Mobile Scan & Go, which enables shoppers to scan items as they shop and checkout without unloading their carts.

All of these are game changers for retailers. As McKinsey noted: “Customers will come to expect a different type of shopping experience — one that stretches seamlessly across various channels and that can be accessed whenever and however they choose. Retailers that do not meet these expectations will lose traffic.” On the other hand, this technology is a doubleedged sword for retailers since it will create greater transparency and may ramp up price competition even further, the study said. This was underscored by Kantar’s John Rand. “Visibility of price is definitely a game changer in technology,” he said. “As a consumer, it enables me to see pricing in a market far more easily, and that’s already having a leveling effect. Years ago people had to spread out the circulars, write down prices in each store and divide ounces by dollars. Now you can hit a button on your smartphone and figure it out in seconds.” Or, according to Rand, consumers also have an aggregator like mysupermarket.com “which will do it for you and come back with a route list of which stores to cherry pick.”

But as he also points out, “It’s not just shoppers that have smartphones — its other retailers and suppliers. If a program is being run by a supplier at one retailer

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It’s so much easier for shoppers that it’s becoming unsustainable for retailers to be out of line with vendors on price,” he said.

Continued on p. 36

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and there’s a big price disparity over another retailer — well, that’s a bad day for any supplier.” PwC’s Holmes believes game changing technology will continue to have an impact on both the retail and consumer side of the equation. “Retailers and manufacturers have to come up with an optimum operating model,” he said. “By 2016, 80 percent of sales will be influenced by online visits. There’s going to be a 60 percent increase in smartphone users between now and 2020, growing to about 200 million users.” Additionally, consumers are increasingly using not one, but multiple devices including smartphones, tablets and PCs. “Grocery retailers and suppliers have to start collaborating to make sure they are getting maximum penetration among consumers who are shopping all these formats,” Holmes said. As noted earlier, demographics on their own are not necessarily game changers, but have to be viewed in concert with the state of the economy and technology. “I think we’re going to end up with a bifurcated market,” said Holmes. “On the one hand, roughly 60 percent of purchasing power is in the hands of people in the 18-to-34 age bracket. The remaining 40 percent is between seniors and boomers. How they shop, use technology and how much buying power they have, has to be factored into a retailer’s strategy.” With respect to demographics, the biggest challenge for grocers will be to monitor social media where younger customers are posting their feedback, said Wen.

When asked about the potential power of Millennials, Wen replied: “The indication is that baby boomers spend more time doing research online than Millennials, although the latter has a tendency to go and execute more quickly. “However, remember that Millennials are not only customers, they are our employees.” To John Rand, Millennials are an important group but in some ways no more so than those that came before.

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“You have to find a way to bring that back to you faster and manage it,” he said.

“It’s the most predictable thing in the world,” Rand

said. “Old people die and younger ones show up to take the place. Let’s not forget we’ve done this for thousands of generations and about every 40 years or so you get a game changing behavior. The baby boomers did that in the 1950s and 1960s and still do. Gen X was demographically irrelevant and weren’t much different.” But Gen Y — the category into which Millennials fit — is different and retailers have to respond.

“Grocery retailers and suppliers have to start collaborating to make sure they are getting maximum penetration among consumers who are shopping all these formats,” Holmes said. “They’re maturing and slowly entering household formation,” he said. “They’re getting married, buying houses and having children. We all want the mom with kids. But for the first time, mom may be older then she was before. However, it’s all good for retailing.” What some retailers are missing about younger people is that they are interested in the experience of retailing. They are not online that much more than others and they don’t mind experimenting with physical stores. They just want a store worth shopping. “They want to be romanced and we can win them over if we focus on making stores a more exciting, positive experience rather then continuing to build stores that are just supply chain and efficiency oriented,” Rand said. “They have to be merchandising and presentation oriented. Right now, all the theater is on the perimeter in departments like deli, floral and bakery. Retailers have to start working on the center store to make it just as beautiful and experiential.” However, industry observers also noted that the potential power of Millennials should now overshadow other segments of the business — specifically, aging consumers. n

Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.

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Learning the RULES OF THE GAME ALBERT EINSTEIN ONCE SAID THAT SUCCESS MEANS LEARNING THE RULES OF THE GAME AND THEN PL AYING BET TER THAN ANYONE ELSE.

RULES OF THE GAME

BY LEN LEW IS

Nothing proves Einsteinâ&#x20AC;&#x2122;s theory better than food industry programs at colleges and universities around the country, which are nurturing the future leaders of the retail and CPG industries. The idea that academia exists in a vacuum, inhabited by self-directed intellectuals who know little about the world outside their ivy-covered walls, is considered archaic if not a complete myth.

The reality is that these institutions have a highly symbiotic relationship with the industry, each increasingly dependent on the other for ideas, funding, jobs and educational diversity that will immerse students in every facet of a complex business. In this issue, California Grocer sat down with the heads of three of the leading food industry programs in the country to discuss their students, curriculums and their relationships with retailers and manufacturers. Continued on p. 40

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Bob Hermanns, Director, Food Industry Program at USC Marshall School of Business, Los Angeles. “Our partnerships with the industry have become extremely important and that will continue as people strive to improve their education and careers. “For over 50 years, all of the students that attend our 14-week program have their tuition paid by scholarships that are donated by manufacturers, foundations and private individuals — all of which is administered by the Western Association of Food Chains. “Additionally, our programs include high potential people who take time out from their jobs to go into the classroom. That’s also a significant expense for sponsoring companies. It’s clear they recognize the importance of our program by being consistent in their support. Some scholarship donors have been with us 40 and 50 years. “However, we have not yet expanded the student population. We can take 30-35 students per year and that’s remained fairly steady. There are simply some size limitations with a 14-week program because there is a dedicated classroom with a fixed number of seats.

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“We’ve expanded our four-day food industry executive education program. It’s a career development step for high potential people from retail and CPG companies. We’re now doing sessions outside of California, too.

Last year we held one in Plano, Texas and this October it will be in Chicago. We’ve also considered holding them in Northern California, Washington or Oregon. “When it comes to the curriculum, we offer the same core courses no matter where classes are held — communications, leadership, marketing and strategy. We take feedback from our students very seriously, and we are in a constant dialogue with the WAFC board. We want to know what’s important to them and our students so we can emphasize areas that better relate to the food industry while complying with university requirements.

The wide variety of classes also attracts multigenerational students which makes for a very interesting classroom dynamic. “The wide variety of classes also attracts multigenerational students which makes for a very interesting classroom dynamic. We have babyboomers alongside Millennials. It’s a great opportunity for them to learn from each other. Plus, more companies are emphasizing the importance of this education to their younger associates who represent our future. “This has never been an easy business and there are so many more types of retailers vying for the consumer dollar then there were 10 or even five years ago. You have to be far more nimble and versatile. Education is a big part of understanding these competitive forces.”

Robert Higgins Executive Director, Academy of Food Marketing, Haub School of Business, St. Joseph’s University, Philadelphia. “The food marketing program has 525 students and is the largest one in the Haub School of Business. About 120 students are enrolling this fall, which will probably set a record. “We’ve been at this since 1962, and the curriculum is always modified to meet the needs of the industry. We work with about 100 CPG and retail companies who recruit our students and tell us what skills they’re looking for. Right now, it’s everything around analytics

SEEKING THE NEXT GAME CHANGER

“The increase in internships and scholarships has helped. Our goal is for every freshman, sophomore and junior to have an internship in each of those three years. It’s an ambitious goal and takes a lot of companies to offer those positions. About 25 percent of our enrollment is in a five-year co-op program which allows for three, full-time work experiences over six months. This allows them to spend five years here instead of four in order to get industry experience during their college years. “We’ve also done a robust food industry survey which could modify our curriculum over the next five years. We want to make sure our students have the experience and skills the industry needs. “For example, marketing majors might not have great financial skills, or know as much as they should about supply chain issues. That’s a critical component because too much money is still being lost to inefficiencies. — the ability to look at information differently and make judgments based on that information. “Communications is also a skillset in demand. Millennials are communicating electronically. We’re trying to improve their ability to articulate their position in order to do more effective presentations. “Another area companies focus on is leadership and showing initiative around new ideas and concepts. We are making sure our students are willing to think strategically, to create a vision for a mission statement, and have the ability to lead groups of people as well as work well in teams. This has meant mixing classes so that marketing students are in the same classes with accounting and finance majors. They work in teams on cross-functional areas.

“Our registrations are looking very good for the fall. We have between 80 and 90 students in our program and graduate about 35 to 40 per year. This includes business students who are actually getting different degrees like accounting or marketing. They take 20 credits, or five of our courses, focusing on the retail food industry. These include retailing, food marketing, purchasing, supply chain and sales. “We do get a handful of students who are already working in the industry. The average age of our undergraduates is 27. But, we have the full spectrum this term, including some that are over 40. We’d love to get more people from the industry into our courses and we’re working on an initiative by partnering with Continued on p. 42

“We’re trying to get our students to understand the opportunities available to them in retail. I think retailers have done a better job of painting a more positive picture and making sure salaries and fringe benefits are as attractive as those of CPG companies.

Tom Gillpatrick, Juan Young Professor of Marketing and Executive Director of the Center for Retail Leadership, Portland State University, Portland, Ore.

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“Over the years our board of governors, which is made up of presidents and CEOs of large retailers and CPG companies, said we need more students going into retail so we shifted the paradigm. Once 90 percent of our students went into CPG companies. Last year, it was 70 percent with 30 percent going into retail, or wholesale.

“We also use a lot of online sources like Nielsen and IRI that really immerse our students in data. By knowing these and other data sources, and how to use it to make better decisions, they can hit the ground running when they take a job after graduation.”

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WAFC to provide a two-year certificate program. “As such, we’ve looked at making some changes to the curriculum. Our focus is to be embedded in business education, and requiring our students to do one internship is a way to do that. Many students already take multiple internships and 80 percent of our students are working at least part time while they go to school. “About 50 percent of our students go to work in retail after graduation. It’s always a battle to get them to understand retail. Their initial thought is that if you go into foodservice, you’re flipping burgers, and if you go into retail you’re at the register. We’re giving them an idea of what opportunities are really available.

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“For one thing, we have an active industry advisory board. We make a concerted effort to bring executives into the classroom as guest speakers. We also make an

effort to visit distribution centers to give our students greater exposure to supply chain issues and arrange visits to retail stores with senior executives. “There are other areas growing in importance — customer touch points like technology — and companies are looking for young people to help them figure that out. “Furthermore, there’s less of the command and control environment in the industry that was predominant 20 years ago. Now companies want to see people who are more adaptable and flexible. Retailers know they have to up their game in a more flexible and marketingoriented world.” n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.

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Learn By Doing CAL POLY’S EDUCATIONAL STRATEGY CAN BE SUMMED UP IN JUST ONE PHRASE: “LEARN BY DOING.” YET, UNIVERSITY PRESIDENT JEFFREY ARMSTRONG KNOWS THAT NEITHER IS POSSIBLE WITHOUT FORGING STRONG LINKS TO THE SUPERMARKET INDUSTRY.

“We’ve talked to the food industry about what kind of graduates they want,” said Jeffrey Armstrong, President, California Polytechnic State University, San Luis Obispo. “The focus is clearly on creative and critical thinking, communication skills, teamwork and specialized knowledge. Those are the areas we’re developing and why a public-private partnership with the industry is imperative.” Cal Poly has long been an incubator of talent in areas like agribusiness, technology, engineering and retail through its six colleges. But increased demand for new skill sets has sparked the development of an expanded and more flexible Food Retail Management Program designed to provide students with courses and internships that will be the foundation for a career in the supermarket industry.

Additionally, plans are in the works for a certificate program aimed at industry professionals, which could include executive forums, custom programs, conferences and forums. However, the future success of all programs is closely tied to industry support, according to Armstrong. “Public-private partnerships are necessary to maintain the public nature of Cal Poly, he said. “We can’t offer these types of experiences without the industry’s assistance in scholarships, tuition programs, classroom presentations, field trips and internships. The major goal is the success of our students and to increase graduation rates. We’re very good at it and this will help make us better.” Armstrong is no stranger to developing public-private partnerships, having successfully done so in his

LEARN BY DOING

BY LEN LEW IS

previous post as Dean of The College of Agriculture and Natural Resources at Michigan State University. He has also served on numerous university and government agriculture committees including the United Egg Producers and as an advisor to McDonald’s Corp. He made his vision for Cal Poly clear in a speech to the faculty and staff after joining the university in 2011 when he called for a dramatic increase in private fundraising to ensure that Cal Poly’s Learn by Doing programs would not only survive tough economic times, but also thrive in the years to come. The goal, he said, is to cement Cal Poly’s reputation “as a nationally recognized beacon of excellence.” As he said at the time: “Our students cannot be truly successful in an increasingly diverse society and in an increasingly complex global economy unless they experience, as students, what it takes to function in the real world.

“The major goal is the success of our students and to increase graduation rates. We’re very good at it and this will help make us better.” “That means students need to be exposed to multiple economic disciplines in their Learn by Doing Projects and they need to be exposed to multiple cultures and be made more globally aware.” Sitting down recently with CGA, he noted: “Basically, I’ve been involved with public- private partnerships my entire career.” The university’s latest effort is being spearheaded by Jay Noel, chairman of the Agribusiness department and head of the Retail Food Management Program.

First is a set of core classes like economics, finance, accounting, marketing, sales, data analysis, agriculture and food, and food policy and human resource management. The second consists of electives including food supply management, logistics, food retail management and field studies like a food retail internship. The program’s third part involves Cal Poly’s College of Agriculture Food and Environmental Sciences (CAFES) farm store where industry professionals, students and faculty work together. “We already have a retail campus market where we sell meat, dairy, produce, honey and even chocolate that the students make and process,” he said. “The farm store is part of Learn by Doing.” Armstrong said new ideas for a larger operation are being evaluated. “Every year during our Open House for prospective new students and their parents, we showcase all of our Learn by Doing activities, including offering a retail venue where everyone can buy Cal Poly studentmade products,” he said. “The proposal on the table is for a Cal Poly retail farm store. I can very easily see students getting that internship experience without even leaving campus.” It’s also been noted that the CAFES farm store could serve as a small-scale food retail research facility that might include testing new marketing and promotional ideas and consumer test marketing of new products. Data collection at the point of purchase could be analyzed in terms of prices and consumer purchasing Continued on p. 46

One of the reasons for Cal Poly’s successful placement rate is its philosophy of “Learn by Doing.” This is underscored by a requirement that all students do a senior project, something that fits right into the Food Retail Management Program.

The Food Retail Management Program is consistent with that theme and is broken down into three basic parts, all developed with input from retailers and associations, according to Armstrong.

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“We have a strong history of being connected with industry,” Armstrong said. “We have advisory boards in every department, so we are very focused on practical, applied studies. Our students are ready to go once they graduate and, six months after graduation, our placement rate is almost 90 percent.”

“We are also different from UC Davis, Purdue or Michigan State in that we are primarily a teaching university with our predominant focus on undergraduates and their success,” he said. “Although we don’t have PhD programs, we do extensive research projects. We are at our best when students are engaged with faculty in their research. That is optimal for our students.”

LEARN BY DOING

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Continued from p. 45

habits, and would be an additional educational benefit for students in developing creative thinking skills. But these and other initiatives will require strong public/private partnerships, Armstrong reiterated. “This is one of our main goals and because of that Jay Noel and his faculty are working on the curriculum,” he said. In the past few years, we’ve adopted a more flexible curriculum.“ Students can select courses in general agricultural business, then go into electives specifically related to the Food Retail Management Program, he said, noting that the course is averaging 38 students per year and demand will continue to grow in the future. These programs will also impact the university’s ability to enhance diversity, said Armstrong. “This isn’t just about what’s best for Latino or AfricanAmerican students,” he said. “This is about what’s best for all students. Look at California’s changing demographics and the people who shop in CGA member stores.”

“That’s what the industry wants because they are concerned about what the workforce is going to look like — whether those managing stores and providing leadership are reflective of the customers they serve,” he said. “We need partners to help us develop that.”

Armstrong said the university wants more young people entering into science, technology, engineering and math.

Armstrong believes Cal Poly brings excellence to the table.

But, Armstrong said, the university needs scholarship support for first generation college and partner high school students. There are approximately 200 partner high schools in California and the number is growing.

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“The program is called Cal Poly Scholars and it started in engineering,” said Armstrong. “We’d like to expand it into food and agriculture if we can get more fourand five-year scholarships.”

“There is a shortage of talent out there and we want people to know there are huge opportunities in the food industry.” The supply chain management course is being revised and updated and the category management course is in the process of being developed. The transportation and logistics course will be developed this fall and winter.

“Agriculture also plays a big part and fits into our goal of getting more underrepresented first generation students into the food sector,” he said. “Our graduates are the heartbeat of California’s economy.”

retailing, consumer behavior, customer relationship management, pricing, buying, store layout and design, visual merchandising, customer service, logistics and transportation, category management and development, and human resource management,” he said.

Asked what feedback the retail program is getting from the private sector, he said the school is adjusting its curriculum into areas of greater industry interest. He wants the university to be a learning lab where professionals and faculty work together on industry projects. “In our syllabus, we talk about the overall world of retailing, types of retailers, multi channel

“Employers have regularly told me that our students take six to 12 months less training,” he said. “They are a ready-to-go workforce. When universities are rated for the return on investment, Cal Poly is always in the top echelon of all schools in the country. It’s another reason we’re excited about building these new programs and partnerships.” But, he said, the university wants students to be able to spend the quarter (10 weeks), or summer getting to know a retailer’s operation. “There is a shortage of talent out there and we want people to know there are huge opportunities in the food industry,” he concludes. n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.

Jim Lee

President & COO Stater Bros. Markets

Vic Chiono

Area Vice President, West US Coca-Cola Refreshments We congratulate you on your induction to the California Grocers Association Educational Foundation’s Hall of Achievement.

FO U N DAT I O N H O N O R S

Grocery Executives More than 550 friends, family and industry peers celebrated the induction of two industry executives into the CGA Educational Foundation Hall of Achievement on April 11.

F O U N A D AT I OA NDH VO ON CO AC RY S

Jim Lee, former President and Chief Operating Officer, Stater Bros. Markets and Vic Chiono, Vice President Sales, West U.S., Coca-Cola Refreshments, join a prestigious group of Hall of Achievement recipients who have been recognized for their many contributions to not only the grocery industry, but the communities they serve. “We were very excited to welcome these two deserving individuals into our prestigious Hall of Achievement,” said CGAEF Executive Director Shiloh London. “Both have served the grocery industry their entire professional careers and, like their Hall of Achievement peers, have given back generously to the communities and industry they serve.” Led by this year’s event chairs Paul Christianson, Christianson West; Ryan Heberger, Coca-Cola Refreshments; Dennis McIntyre, Stater Bros. Markets; Bob Paul, DSD Solutions; and Jerry Whitmore, Nestle

“It is very gratifying to see the strong industry support for this very important event,” London said. “With California’s higher education system in serious financial trouble, it’s more important than ever that we do all we can to help deserving students reach their academic goals. The Foundation’s programs do just that.” The evening featured an inspiring speech by Gelson’s Market employee Heather Nakamura, a CGAEF scholarship recipient. After her presentation, guests bid on live auction items and participated in a FundA-Need supporting CGAEF’s college scholarship and tuition reimbursement programs. The CGA Educational Foundation was created under the direction of the California Grocers Association Board of Directors in 1992. Beginning with a single scholarship, the Foundation has grown exponentially over the last 21 years to bestow more than 2,600 scholarships on worthy college students with awards totaling more than $3 million—ensuring that California’s grocery employees and their dependents have the resources necessary to start or complete their higher education.

Continued on p. 50

C A L I FO RN I A G RO C E R

“With California’s higher education system in serious financial trouble, it’s more important than ever that we do all we can to help deserving students reach their academic goals. The Foundation’s programs do just that.

DSD, the event raised more than $500,000 — funds that support the Foundation’s college.

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Continued from p. 49

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JIM LEE

Jim joined Stater Bros. Markets as Group Senior Vice President of Retail Operations in 2002, bringing to the company more than 30 years of experience in the supermarket industry. Lee began his grocery career with Ralphs Grocery Company in Southern California in 1972 as a clerk’s helper. Later he was promoted to various positions during his 25 years at the company including: Store Manager, District Manager, Vice President of Store Operations Administration, and Vice President of Store Operations Northern Division and Southern Division. His last position with Ralphs was Group Vice President of the Central Division, where he had responsibility for the company’s highest sales volume division. Prior to joining Stater Bros., Jim was the President and Chief Operating Officer, from 1996 to 2001, of Wild Oats Markets, Inc., based in Boulder, Colo.; which at the time, was the second largest chain of natural foods supermarkets in North America, with annual sales of over $1 billion. During Lee’s time with Wild Oats, he helped the company “go public” and oversaw a 600 percent increase in sales. Lee has a Bachelor of Arts Degree (in History) from Azusa Pacific University where he played basketball on scholarship, a Food Industry Management Certificate (full scholarship from the Western Association of Food Chains) and a Masters of Business Administration from the University of Southern California, which he earned while attending night school. He also was graduated, and served as Class President, from the Executive program in the Graduate School of Business at UCLA. In 2008, Lee was honored by Azusa Pacific University with the Academic Hall of Honor Award. The USC Marshall School of Business, Food Industry Management (FIM) Program named Jim the Food Industry Executive of the Year for 2010. Most recently, Jim received the 2011 Humanitarian Award from The California Conference for Equality and Justice (CCEJ) for his longtime dedication and service to the Food Industry. Lee is on the Executive Committee of the Western Association of Food Chains and served as President in 2007/2008. He is on the Advisory Board for the City of Hope Food Industries Circle, a past board member of the Food Marketing Institute, former trustee for the California Grocers Association Educational Foundation, and is a Vice President on the Board of Directors for Topco Associates, LLC. n

Ed Segru, Stater Bros. Markets, and Sue Klug, Unified Grocers, Inc.

CGAEF Chairman Jim Van Gorkom, NuCal Foods, and Trustee Jacquie Slobom, Gelson’s Markets. Mary Kasper, Fresh & Easy Neighborhood Markets with John Schroeder, Ralphs Grocery Co.

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VIC CHIONO C O C A - C O L A R E FR E S H M E N T S

Chuck Eckman, Kraft Foods Group, Inc. (retired), and Foundation Trustee Joe Falvey, Unified Grocers, Inc.

CGA Educational Foundation President Ron Fong.

Vic Chiono is Area Vice President of Sales for Coca-Cola Refreshments, with responsibilities for the Central and West U.S. Vic has been in sales and sales marketing for over thirty-six years, just completing over twenty-six years within Coca-Cola holding numerous sales and management positions. Vic got started in the grocery industry at the age of 10 sorting bottles and sweeping the parking lots of his father’s Safeway store. Vic worked through high school and college as a checker and shelf stocker. After graduating from San Jose State University with a bachelor’s degree in Business Administration, Vic started his career by joining Unilever as a sales representative selling food, health, and beauty products to 135 retail stores. In 1987, after obtaining several management positions within Unilever Vic joined Coca-Cola where he has enjoyed a successful career selling all Minute Maid, Gold Peak, Simply Beverages, and juice drink products. Most of his sales background has been working with our retail partners throughout the United States. From 1996 to 1999, he shifted his focus to the Food Service division within Coca-Cola establishing Minute Maid products as a staple in restaurants, theme parks, and hotel chains. “It was a wonderful experience,” he said. “We called on everyone from Legoland to Hilton Hotels.” n

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CGA Educational Foundation Chair Jim Van Gorkom, NuCal Foods,Inc.

Grandchildren Ally, Daren, Jillian and Emily Martinez introduced their grandfather Jim Lee.

Continued on p. 52

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C O N TI NU E D

Continued from p. 51

The CGA Educational Foundation wishes to thank the following companies for their generous support of the 2013 Hall of Achievement Dinner. Platinum Dinner Sponsors Alta Dena Certified Dairy, LLC Anheuser-Busch InBev Bristol Farms

Stater Bros Markets employee Mario Bryant performing the national anthem.

Coca-Cola Refreshments The Kellogg Company MillerCoors PepsiCo Procter & Gamble Stater Bros. Markets TW Services Unified Grocers, Inc.

Gold Reception Sponsors

CGAEF Executive Director and dinner emcee Shiloh London.

Kraft Foods Group, Inc.

C A L I F OR N IA G R OC ER

The Safeway Foundation

Heather Nakamura, a Foundation College Scholarship recipient and Gelsonâ&#x20AC;&#x2122;s Market employee, addressed the audience. David Sobon, David Sobon Auctions.

CongratulationsTo All CGA Scholarship Recipients!

Karina Alvarado

Alejandro Alvarez

Alejandra Bacilio

Adiline Bravo

Karina Barajas

Liliana Delaguila

Anaines Enriquez

Alondra Hurtado

Ruben Hurtado

Yessica Iturbide

Miguel Limon

Susana Lopez

Ernesto Magana

Jesus Mathus

Anselma MendezAguilar

Diana Morales

Stacy Navarro

Sydney Nishida

Julianna Oropesa

Brianna Rivas

Hector Rivas

Alejandra Valle

MEM B ER P R O FILE

99 Ranch Market IN THE CHINESE CULTURE, THE NUMBER NINE IS CONSIDERED ONE OF THE LUCKIEST NUMBERS AND THE CHINESE WORD FOR NINE — JUI — SOUNDS VERY MUCH LIKE THE CHINESE WORD FOR LONGEVITY, LONG LIFE, LONG LASTING AND CONTINUOUS GROWTH.

Put two nines together and you couldn’t find a better metaphor for 99 Ranch Market, whose name certainly speaks to its longevity in the market and its uninterrupted growth into the leading Asian retailers on the West Coast.

“Our Las Vegas store was featured in two episodes of the show’s fourth season last year and our Arcadia store in Los Angeles just appeared in a recent episode in season five,” says Iris Leong, Assistant Vice President for marketing and public relations.

In fact, the company’s reputation is becoming nationally known thanks to Bravo TV’s Top Chef Masters.

“It is very exciting to be part of the show,” she added. “They used our stores for the Chef’s Elimination Challenge where the chef contestants had 45 minutes to purchase ingredients and then use them to make classic American dishes with an Asian twist.”

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According to Leong, the store promoted the event with banners in their stores and on their website, weekly flyers and weekend newspapers ad. She added the company is still in constant contact with the show’s producers to enhance its branding.

However, the chain’s reputation comes as no surprise to its loyal and expanding customer based — Asian and non-Asian — who have been shopping 99 Ranch for nearly three decades. The company, owned by Tawa Supermarket, Inc., opened its doors in 1984 in Westminster, Calif. in an area known as “Little Saigon” and populated primarily by Vietnamese immigrants.

MEMBER PROFILE

“We are always expanding in California and exploring further opportunities outside the state,” she notes. Most stores average about 30,000 sq. ft., which is a little smaller than most conventional supermarkets. However, size is not a determining factor in 99 Ranch’s success. The key is merchandising. In addition to mainstream grocery products, the stores are deeply rooted in the Asian food culture with an extensive variety of fresh — and live — fish, diverse meat and poultry where you can get such delicacies as dry cured duck, duck wings, duck legs, duck feet and salted duck eggs. Additionally, the extensive produce departments carry everything from lotus root and Daikon radishes to Taiwan honey peaches, lychees and pitaya, also called dragon fruit, and Korean kimchi. This has made the stores a popular stop for its historical customer base, as well as non-Asians who are attracted to the freshness of the products, unique flavors and simplicity of this cuisine. That store has since closed, but it was an important first step in a journey that has transformed 99 Ranch into the largest Asian supermarket chain in the U.S. Today the chain operates about 35 stores in Northern and Southern California; Las Vegas, Nev.; Plano, Sugarland and Houston, Texas; and Seattle, Wash. While expansion plans for the next year or so have yet to be finalized, the chain will continue to grow in various marketing areas.

“One of our other major strengths is seafood,” Leong says. “In conventional supermarkets the seafood is already packaged and prepared for the customers. But when you come to our store we have tanks with live lobsters, crabs and fish for customers to choose from. This makes the seafood, that we served to the customers, ultra-fresh. This, along with our specialty produce items, sets us apart from other supermarkets.“ Continued on p. 56

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| 55

MEMBER PROFILE

Continued from p. 55

The chain has also built a reputation for preparing high quality and varied party platters for customers celebrating special occasions like the Lunar New Year, birthdays, graduations, Christmas and Thanksgiving. “These have become very popular among our customers for any holiday or event that brings families together,” she says. When it comes to a holiday like the Lunar New Year, the chain starts preparing for it right after Thanksgiving with displays at the front of the store featuring traditional decorations like lanterns and red envelopes that contain coins for luck and specialty items like sticky rice cakes and Chinese candies. However, the term “Asian” is too narrow a description of the products 99 Ranch stocks. “The variety of products we carry includes items from Taiwan, Japan, China, the Philippines, Thailand and other Southeast Asian countries as well as local goods,” Leong says. “Basically, we have products from everywhere.” This diversity is apparent in the chain’s mission statement. “We want Asian-American consumers to feel they are back ‘home’ when they come into our stores,” she notes. “But, we also want our other customers to know what Asian foods are all about.” Overall, the goal is to welcome every customer with high quality products and services. This has meant

special training for personnel who are encouraged to get feedback from customers on how to improve the stores. As the company notes: “Our merchandise managers work with local suppliers to bring our customers the freshest and highest quality products.

Overall, the goal is to welcome every customer with high quality products and services. This has meant special training for personnel who are encouraged to get feedback from customers on how to improve the stores. “Our store managers are key personnel who effectively lead a large group of talented employees in departments throughout the store. Team building and leadership development are essential skills that we push our employees to excel in.”

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Meanwhile, the company remains very active in community affairs wherever it operates.

“We constantly stay connected to the neighborhoods and collaborate with people in the community that share our vision and commitment to building a safer stronger and better educated community,” Leong adds. n By Len Lewis

HOMETO WN HER O ES

Veterans Program Provides Retail Training WHAT IF YOU HAD TO GO THROUGH BOOT CAMP A SECOND TIME? — BUT IN A GOOD WAY! Basically, this is what happened to Steve Carhart, an eight-year U.S. Marine Corps veteran, Naval reservist and a national category manager in produce for Safeway Inc. The vehicle was the chain’s JMO Program, an intensive 41-week course designed to give veterans experience in every facet of retailing — an experience he is now helping to pass along to fellow vets. After the training he spent a year as store manager, then moved to the corporate office in early 2013 as part of the company’s produce team, all the while utilizing the leadership skills he’d learned in the military. Carhart, who is married and has a 10-month-old baby girl, enlisted in the Marines when he was 18, just a couple of weeks after graduating from high school. He spent the next eight years stationed everywhere from Camp Pendleton, Calif. to Okinawa, Japan. He was discharged in 2008 as a staff sergeant. But he wasn’t finished with the military. “When I got out I found I missed it,” Carhart says. “The Navy had a program for prior enlisted with a college education. I applied for it in 2008 and was commissioned a year later in the Navy reserve. I’ve been doing that ever since and now I’m a lieutenant.”

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Carhart feels fortunate he was able to earn college credits while he was still in the service. He felt well equipped to be successful in the civilian sector.

No doubt he was. But as he left the service, the economy hit a wall and Carhart, like many qualified, aspiring vets, was faced with a bleak employment picture. “It was horrible,” he recalls. “I finished my degree and I was a staff sergeant. I thought I was on top of the world, but I couldn’t find a job. I just kept asking myself what else could I have done.” That question was answered when he was going to school at the University of San Francisco for a second masters in project management.

HOMETOWN HEROES

“I found out about Safeway from a recruiting firm,” Carhart says. “I came in for an interview and heard about the Junior Military Officers Program. I was very excited about it giving me the opportunity to use my skills in a new area. “Throughout high school I had worked in a grocery store as a courtesy clerk. So, I knew what retail was all about. But this program gave me the opportunity to learn about the entire organization. His experience in the military was in telecommunications and the job description didn’t seem to be an exact fit. “Fortunately, Safeway was looking for the traits I had acquired in the Marines — leadership abilities, integrity and discipline,” he says. “They said they would teach me everything else.” That’s exactly what the JMO program did.

Carhart said the program gave him a lot of respect for the different roles people play in the store — things a person doesn’t understand until they do it.

“As such, the JMO has been a big help in my career. The experiences I acquire and the networking I’ve done with people in human resources, labor relations and produce has really set me up for success and I expect it will do the same for thousands of other service members.” Safeway, which recently received the 2013 Freedom Award from the Defense Department for its programs and policies supporting military reserve employees, is a source of pride for Carhart, and he wants to make sure it helps other vets. “We’re in the process of creating a Veterans Employee Resource Group and we hope to launch it by the end of this year,” he says. “It’s been amazing. A lot of vets come up to me and tell me they served in the Marines or another branch of the military, and want to be a part of the program. We have about 13 people in the group and it’s getting bigger every day. “I consider myself fortunate to be part of something bigger then myself. It’s what drew me to the Marine Corps, and what drew me into working with Safeway,” he concludes. n

“I think my military background helped tremendously,” he says. “At 18, I was exposed to people all over the world and learned to collaborate with others as a team.”

“Grocery stores serve people from every community,” he says. “In the military, or retail, you’re faced with that every day and I got a clear understanding of how every decision I make will affect the store and those working in it.”

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“For 41 weeks they put me in every position inside the store, from making sandwiches in the deli department to produce, receiving, file maintenance and working as second and first assistant manager,” said Carhart, noting that he eventually became a store manager at the American Canyon store before moving to corporate. “It was like going to boot camp all over again.”

According to Carhart, that’s the same kind of atmosphere found in the grocery industry.

KN O W T HE L AW

The Grocery Worker Retention Ordinance — 18 Months Later THIS ARTICLE PROVIDES A BRIEF SUMMARY OF THE REQUIREMENTS, KEY TIMELINES AND REL ATED ISSUES REGARDING THE LOS ANGELES GROCERY WORKER RETENTION ORDINANCE (GWRO), WHICH SERVES AS THE MODEL FOR THE ORDINANCES ENACTED IN THE OTHER JURISDICTIONS. Nearly 18 months have passed since the U.S. Supreme Court denied review of the California Supreme Court’s decision upholding the Los Angeles ordinance. Now, grocers who transfer or acquire grocery establishments located in Los Angeles and other jurisdictions with similar ordinances — San Francisco, Santa Monica, and Gardena — must learn to implement the obligations that these new laws impose. Summary of GWRO Requirements The ordinance requirements are triggered when a grocery establishment larger than 15,000 square feet in size undergoes a “Change in Control.” In simplified terms, a Change in Control is the sale, assignment, transfer or other disposition of all or substantially all of the interests in the grocery establishment by an Incumbent Grocery Employer (“Incumbent”) to a Successor Grocery Employer (“Successor”).

C A L I F OR N IA G R OC ER

Graham St. Michel is an associate in the Environmental Law and Food & Agriculture Practices at Downey Brand, LLP.

Within five business days following execution of the transfer document that effectuates the Change in Control, the Incumbent must post public notice of the Change in Control at the affected grocery establishment(s). The notice must remain posted until the grocery establishment is fully operational and open to the public under the control of the Successor. Within 15 days following execution of the transfer document, the Incumbent must also provide the Successor with the name, address, date of hire and occupation classification of each non-managerial employee whose primary place of employment is at the grocery establishment subject to the Change in Control and who has worked for the Incumbent for at least six months prior to execution of the transfer document. The Successor must preferentially hire from this list of “Eligible Grocery Workers” for a period beginning upon execution of the transfer document and continuing for 90 days after the grocery establishment is fully operational and open to

the public. The Successor must retain written verification of employment offers made to eligible grocery workers for at least three years from the date the offer was made. All eligible grocery workers retained by the Successor are subject to a 90-day “transition employment period,” beginning on the date the worker commences employment with the Successor. During this period the Successor may not discharge the employee “without cause.” The Successor must perform a written performance evaluation for each retained eligible grocery worker at the end of that employee’s transition period, and must retain the evaluation records for at least three years. The Successor is not required to employ eligible grocery workers beyond the 90-day period. Rather, the Successor “shall consider” offering continued employment if the employee’s performance during the transition is “satisfactory.” Other Considerations The ordinance authorizes eligible grocery workers to bring enforcement actions in California Superior Court, and grocers found to have violated the ordinance face stiff penalties. For instance, courts may award front and back pay and the value of the benefits the worker would have received, and grant the employee reinstatement rights. Most troublesome for its propensity to encourage litigation is a provision enabling recovery of attorney’s fees by any eligible grocery worker who prevails in a civil action to enforce the ordinance. While drafted as a simplistic one-size-fits-all approach, the ordinance may be ambiguous in some practical applications. For example, because the ordinance presumes a direct transfer from one grocer to another, uncertainty may arise when the transaction is structured differently, such as when an

K N O W T H E L AW

Incumbent transfers its interests to an intermediary non-grocer — perhaps a real estate developer — who then leases the premises to another grocer. In this scenario, the original grocer may presume (rightly or wrongly) that its sale to a non-grocer relieves it of the public notice requirement and the duty to create a list of eligible grocery workers. The subsequent grocer who intends to lease the space from the developer may be forced to decide between tracking down the employee information from the original grocer, or risking the possibility of an enforcement action.

Grocery worker retention ordinances look to behere to stay, and grocers interested in selling or acquiring grocery establishments in Los Angeles,San Francisco, Santa Monica, and Gardena should be aware of their obligations. Other issues arise over the degree by which the ordinance controls a Successor’s preferential hiring decisions, particularly when employee job classifications designated by the Incumbent differ from the needs of the Successor. The ordinance does not define the types of classifications that the Incumbent should identify, or how the Successor should treat employees classified for positions that it does not need. For instance, if the Incumbent designates five produce clerks, but the Successor needs only three, must the Successor consider the remaining produce clerks for other open positions? May the Successor offer the remaining produce clerks employment in other positions even if they have less seniority than other “non-classified” workers?

Conclusion Grocery worker retention ordinances look to be here to stay, and grocers interested in selling or acquiring grocery establishments in Los Angeles, San Francisco, Santa Monica, and Gardena should be aware of their obligations. n

Quik Stop Markets, Inc.

Wishes to Congratulate Our 2013-2014 Scholarship Recipient Larry Kranich Memorial Scholarship Azin Mobin Son of Ed Mobin Quik Stop in Fremont, CA

A final issue to note is the meaning of “cause,” which Successors need in order to legally terminate

The most common valid reasons include failure to substantially perform job duties, failure to substantially follow orders and employee misconduct. Decisions to terminate for cause should be documented, following an adequate investigation and an opportunity for the employee to respond. In some instances, Successors are encouraged to carefully review the circumstances they believe may support termination for cause.

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The many permutations of imaginable questions and lack of concrete direction in the Ordinance create a danger that disappointed, non-retained individuals may attempt to challenge the Successors’ specific hiring decisions. To minimize the risk of liability, Successors should make reasoned, case-by-case hiring decisions based on a sensible interpretation of the ordinance.

eligible grocery workers during the 90-day transition employment period. While the ordinance does not define the term, cause for termination generally exists where the employer’s decision is made in good faith based on substantial evidence of a fair and honest, not trivial or arbitrary, reason.

S UP P LIER N EWS

Demystifying the Meat Case THINK YOUR CUSTOMERS UNDERSTAND ALL THE INFORMATION ON A MEAT L ABEL? THINK AGAIN. Extensive research conducted by the National Cattlemenâ&#x20AC;&#x2122;s Beef Association on behalf of the Beef Checkoff concludes that consumers want to see simplified fresh meat cut names and cooking instructions on pack at the meat case and seek consistency between retail and foodservice channels. The Uniform Retail Meat Identity Standards (URMIS) program was established in 1973 by the Industry-wide Cooperative Meat Identification Standards Committee. The consumer-oriented identification system was developed to simplify and standardize the perplexing array of fresh meat cuts and their names. The URMIS program, adopted by retailers, was anticipated as a way that consumers would see the same cut of meat would have the same name in every store, in every city across the country.

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The URMIS system is updated periodically to add new cut names and reduce redundancies and outdated or unappealing cut names. When the last update was made in 2005, the Beef Checkoff wanted to talk to consumers to see if anything else should be changed to make it easier for them to understand cut names. This led to the initial focus group study that took place in 2011. It was during these focus groups that the industry realized that significant changes were needed to fresh meat nomenclature and on-pack labeling to build consumer confidence in buying and preparing fresh meat.

Research showed that consumers responded most favorably when the common name was presented on the first line of the label, and characteristics were indicated on the second line. Consumers liked the addition of preparation suggestions so a third line is suggested for use to display a recommended preparation method and cooking tips. Subsequently, in April 2013, an updated URMIS system was introduced to the retail industry. The changes were based on the consumer research findings, and used a two-pronged solution to address shoppersâ&#x20AC;&#x2122; confusion on how to shop for and prepare beef: simplified cut names that eliminated unappealing terms and redundancies, and the inclusion of basic preparation information on pack. Although the URMIS system is voluntary, the standards benefit the entire meat industry because they are consumer-focused and help shoppers become more confident in their knowledge about beef cuts to buy at the fresh meat case in stores. And we know that increased confidence in cut selection and preparation can stimulate meat case sales and lead to more consumer enjoyment of our product, BEEF! To learn more about the new URMIS nomenclature and see an example of an updated beef label, visit www.beefretail.org/urmis.aspx online. n By Christie Van Egmond Manager, Channel Marketing, California Beef Council

CELEBRATING INDEPENDENCE DAY L AST MONTH REMINDED ME OF HOW GRATEFUL I AM TO BE AN AMERICAN; ENJOYING THE FRUITS OF OUR L ABOR AND THE SACRIFICES MADE BY OUR BROTHERS AND SISTERS IN THE MILITARY AROUND THE WORLD. My wife and I had a rare opportunity to enjoy a rerun of the Beach Boys story (I’m showing my age; happy to explain who they are to our younger friends). I always thought they had it easy, but, theirs was a journey that is hard to fathom. Unlike some of the challenges we all face in growing and maintaining our businesses and families, it also reminded me to be careful what you wish for. Although many of us grew up wanting to be beach dudes during the 60s, I wouldn’t trade my “keys” for anyone else. So, summer finally arrived and it came in with a bang. Statewide, temperatures stayed over 100 degrees for a week.

How do we make the “Endless Summer” work for us? I got a chuckle from a quote by Ralph Lauren who said, ”beyond the world of things, I enjoy the luxury of personal time to create, to be with family, to exercise, to learn, to travel, to grow my own food, to cook a good meal, to read, to reflect, to give back.” What a blessed life. I couldn’t agree more. But, today I am only able to deal with the subject of reading. With that in mind, let me suggest a few books that have served me well and would recommend for you to read. n

Advisor for Life, Stephen D Gresham. Coaching successful families to tackle life’s challenges and achieve their goals. I am reminded of how happy it makes me to visit my grocer on a daily basis and select from fresh fruits and vegetables, prime beef, poultry and fresh fish and a wealth of products from around the world.

25 Ways to Win with People, John C. Maxwell. How to make other people feel like a million bucks. Compliment them in front of others, create a memory and visit it often, encourage dreams. When I conduct workshops on succession and transition, I am impressed by the natural skill of store owners and employees around the state who already have this talent.

While hiding out from the extreme heat, I rediscovered the art of reading for pleasure.

The Articulate Executive, Granville N. Toogood. The art of looking, sounding and acting like a leader. I see this not only in store owners, but, the skill sets mirrored by the staff at California Grocers Association. Their commitment and tenacious work has made our industry a strong force in California and beyond.

First Things First, Stephen Covey. Focus on relationships, results and effectiveness vs. time and change. Greg Norman, the highly successful golfer and entrepreneur, says the one rule he

John B. Kelly

C A L I FO RN I A G RO C E R

WEA LT H M A N AGEMENT

Endless Summer: Who Has It Better Than We Do?

Continued on p. 64

W E A LT H M A N A G E M E N T

Continued from p. 63

Built to Last, Jim Collins. Again, Greg Norman suggests you need to build a living brand. He describes Michael Jordan as an example of someone who does it well and people want to be part of whatever he may be associated with.

The Art of Mingling, Jeanne Martinet. Overcoming the fear of the mixer and cocktail reception. By the way, this works well for that family gathering you weren’t necessarily looking forward to.

Five Minds for the Future, Howard Gardner. The mindset needed to succeed in the future. Again, I would suggest CGA has the formula and is a wonderful pivot point for our industry moving forward.

“The War of Art”, Steven Pressfield. Break through the blocks and win your inner creative battles. You are not alone, but you can choose to manifest greatness.

Well the list is certainly long enough. Hopefully you will have time to enjoy at least a few, if not all during your “Endless Summer.”

follows is “over deliver on quality and under deliver on price.” n

AD VERTISER INDEX

Y Size Your Business, Jason Ryan Dorsey. How do we reach multiple generations?

Nudge, Richard H. Thaler. Improving the decisions we make about health, wealth and happiness.

I look forward to your feedback and please find time to enjoy your summer! n John B. Kelly, MPA, CFP is a friend of the grocer’s industry with decades of service dedicated to the business and its members. He speaks and consults on a variety of financial and succession issues. John can be reached at investorscaddie@gmail.com or (916) 296-9019.

PAGE COMPANY

PHONE

FAX

WEBSITE

Anheuser-Busch InBev

909-597-0460

raul.aguilar@anheuser-busch.com

www.anheuser-busch.com

C&S Wholesale Grocers, Inc.

916-373-4396

916-373-4296

pmiller@cswg.com

www.cswg.com

6 California Shopping Cart Retrieval Corp.

818-563-3070 800-252-4613

818-563-3041

www.cscrc.net

Coca-Cola Refreshments

213-746-5555

213-744-8765

www.cokecce.com

El Super (Bodega Latina Corp.)

562-616-8800

562-616-8647

www.elsupermarkets.com

Food 4 Less (Stockton) Rancho San Miguel Markets

209-957-4917

209-956-8550

www.food-4-less.com

Fresh & Easy Neighborhood Market Inc.

310-341-1200

310-341-1501

www.freshandeasy.com

18,42

Gelson’s Markets

818-906-5709

818-990-7877 www.gelsons.com

Green Smoke Inc.

888-636-2618

866-214-3154

info@greensmoke.com

www.greensmoke.com

Kraft Foods Global, Inc.

847-646-2000

847-646-2800

tiernan.summins@kraftfoods.com

www.kraftfoods.com

Mondelez International Inc.

973-503-4955

973-503-2336

pat.m.smith@mdlz.com

www.mondelezinternational.com

Pepsi Beverages Company – WBU

925-416-2573

925-416-2600

paul.turcotte@pepsico.com

www.pepsi.com

Quik Stop Markets, Inc.

510-657-8500

510-657-1544

www.quikstop.com

25 Raley’s

916-373-3333

916-444-3733

www.raleys.com

Ralphs Grocery Company Food 4 Less/Foods Co.

310-884-9000

310-884-2600

www.ralphs.com

Safeway Inc.

925-467-3000

925-467-3323

www.safeway.com

Superior Grocers

562-345-9000

562-345-9054

www.superiorgrocers.com

IBC

Unified Grocers, Inc.

323-264-5200

323-262-0658

www.unifiedgrocers.com

mikanderson@coca-cola.com

customercare@unifiedgrocers.com

INTRODUCING THE BUD LIGHT PLATINUM ALUMINUM BOTTLE

triple filtered smooth finish top shelf taste