2013, ISSUE 5
CALIFORNIA GROCERS ASSOCIATION
Think Two Moves Ahead...
IN THIS ISSUE
For the latest industry news visit www.cagrocers.com
The New Consumer Millennials — Your Most Influential Shopper Omni-Channel Retail — The Future is Here Reality Check
CGA
| Board of Directors
EXECUTIVE COMMITTEE
Chairman of the Board Kevin Davis Bristol Farms First Vice Chair Mary Kasper Fresh & Easy Neighborhood Market Inc.
Second Vice Chair Joe Falvey Unified Grocers, Inc. Treasurer Kevin Konkel Raley’s
Dave Jones Kellogg Company
Dora Wong Coca-Cola Refreshments
DIRECTORS
Raul Aguilar Anheuser-Busch InBev Jon Alden Jelly Belly Candy Co. Renee Amen Super A Foods, Inc. Teresa Anaya Northgate Gonzalez Markets Joe Angulo El Super (Bodega Latina Corp.) Dennis Belcastro Hillshire Brands Company Paul Cooke Nestlé Purina PetCare Brent Cotten The Hershey Company Robert Digrigoli Procter & Gamble
Kendra Doyel Ralphs Grocery Company John Eagan Costco Wholesale Phil Gentile, Jr. K.V. Mart Co. Jon Giannini Nutricion Fundamental, Inc. Diana Godfrey Smart & Final Stores Bill Jordan Whole Foods Market Michel LeClerc North State Grocery, Inc. Eric Lindberg, Jr. Grocery Outlet, Inc. Dave Madden MillerCoors
Casey McQuaid E & J Gallo Winery Dan Meyer Stater Bros. Markets Omar Milbis Rio Ranch Markets Phil Miller C&S Wholesale Grocers Eric Nadworny Save Mart Supermarkets Hee-Sook Nelson Gelson’s Markets Vinit Patel Unilever Bob Richardson The Clorox Company Brian Schmidt Acosta Sales & Marketing
Harish Solanki Big Saver Foods, Inc. Naresh Solanki Bestway/Gardena Supermarkets Mike Stamper Nestlé 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
SUPPLIER EXECUTIVE COUNCIL
Veronica Rendon, Dave Thatcher Alta Dena Certified Dairy, LLC Rick Van Nieuwburg Altria Corp. Services Raul Aguilar Anheuser-Busch InBev Rick DuCharme, Perry Sanders BBUSA, Rainbo Baking Co., Nature's Harvest Dan Atkins Berkeley Farms, Inc. Gilbert de Cardenas, Bob Cashen Cacique USA Victoria Horton California Beer & Beverage Distributors Cindy Plummer California Table Grape Commission Keith Olscamp Campbell Soup Company Mark Cassanego Carr, McClellan, Ingersoll, Thompson & Horn Pat Huston, Robert Hilliard Cash Register Services
Damon Franzia Classic Wines of California Nancy Limon, Dora Wong Coca-Cola Refreshments Vic Chiono Coca-Cola Refreshments Minute Maid Business Unit Ron Bloes Coffee Bean & Tea Leaf Stephenie Shah Diageo Andres Jaramillo Don Pedro’s Kitchen Scott Johnson, Shannon Nadasdy Financial Supermarkets, Inc. Bruce Wyatt, Thomas Wilson Flowers Baking of California Brian Rosen, Ann Wilson Gleason Inc. Fernando Gallego Golden Gate Paper Company John Hewitt Grocery Manufacturers Association
David Van Winkle Hansen Beverage Company Elizabeth Alvarez-Sell, Greg Bailey The Hershey Company Tim Cohen Hidden Villa Ranch Dennis Belcastro Hillshire Brands Company Kristina Crystal-McVay The J.M. Smucker Co. Dave Jones Kellogg Company Richard Bell LOC Software Dave Madden MillerCoors Kevin Arceneaux, Rick Brindle Mondelez International Steven Schultz Moss Adams LLP Paul Cooke, Karen Doggendorf Nestlé Purina PetCare Jim Van Gorkom NuCal Foods
Lauren Ziminsky Patriot Risk and Insurance Services Inc. 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 Phyllis Adkins TruGrocer Federal Credit Union Vinit Patel Unilever Jennifer Ward World Pay US, Inc.
|
C A L I F OR N IA G R OC ER
CHAIRMAN APPOINTMENTS
2
Secretary Michael Read WinCo Foods, Inc. Immediate Past Chair Jonathan Mayes Safeway Inc.
CONTENTS
F E AT U R ES
COLU M NS
The New Consumer
38
One of the world’s top trendspotters explains how the Great Recession and the incredible ascension of digital technology has had a significant seismic impact on how consumers now shop. Meet the new consumer.
Millennials — Your Most Influential Shopper
46
54
66
| Issue 5
The M-generation is now 80 million strong, according to a recent study, and responsible for $600 billion in annual spending — a figure that is expected to double by the year 2020. But what makes Millennials tick and shop, and are they really different from past generations?
Omni-Channel Retail… The Future of Retailing is Here The journey of creating a seamless integrated selling experience for shoppers across in-store, online and mobile is just beginning. But what is omni-channel retailing and why must retailers embrace it?
Reality Check: 3 Realities the Grocery Industry is Facing With the Rise of Millennials The president of a top creatively-driven, consumer-centric advertising agency shares three realities grocers need to know to connect with the rising influence of Millennials.
President’s Message More of the Same................................................ 5 From The Chair Game Changers!.................................................. 7 Viewpoint — Kevin Coupe Travel Dispatches & Business Lessons................. 14 Capitol Insider — Louie Brown Musical Chairs in the Legislature........................ 20 Perspective New Economic Development Incentives Replace Enterprise Zone Tax Credits.................. 23
DEPA RT M EN TS CGA News........................................................ 12 Government Relations...................................... 27 Washington Report ..................................... 30, 32 Q & A — George Runner....................................35 Know the Law................................................... 72 Wealth Management..........................................77 Advertiser Index ............................................... 80
CALIFORNIA GROCERS ASSOCIATION President/CEO Ronald Fong
Vice President, Communications Dave Heylen Vice President, Business Development & Marketing Doug Scholz
Director, Events & Sponsorship Beth Wright Director, CGA Educational Foundation Brianne Page Director, Local Government Relations Sarah Paulson Sheehy
For association members, subscription is included in membership dues. Subscription rate for non-members is $100 and does not include CGA Buyers’ Guide. © 2013 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
|
California Grocer is the official publication of the California Grocers Association.
1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com
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
3
The Independent Strategy
Unified Grocers
is dedicated to keeping our retailers ahead of the game with products, programs and services tailored to their unique needs.
|
C A L I F OR N IA G R OC ER
Shouldn't you make the move to Unified?
4
Ph: 800-724-7762 | unifiedgrocers.com
PRESIDENT’S MESSAGE
More of the Same
The more things change, the more they stay the same it seems.
The California Legislature wrapped up the first year of its current two-year session with a flurry of activity, yet was unable to address several issues critical to California’s business community. Late-breaking efforts by Governor Jerry Brown to broker deals on Proposition 65 and Unemployment Insurance Fund solvency never materialized. A grand proposal by Senate President Pro Tem Darrell Steinberg to reform CEQA fizzled.
Major victories for labor in particular included doing away with much of California’s controversial Enterprise Zone program and a late-session success in significantly increasing the minimum wage. They also scored several victories in the “worker rights” arena sending bills to the Governor that seek to expand leave rights and create additional opportunities to sue employers. While the Governor has committed to signing the wage bill, it is unclear what he will do with other labor asks.
RO NALD FONG President/CEO
As we move through the interim recess and into the second year of the Legislative session, additional threats remain. Senate leadership has already indicated 2014 will be the year tax issues are addressed — and that is seldom a good thing for California’s business community. Having received a temporary infusion of cash via Proposition 30, Democrats must now look to additional revenue sources before those funds dry up in 2016. This particularly true if they want to restore prior spending cuts and create new entitlements. Opportunities exist as well, though.
|
By most accounts, it was a mixed bag. As with any group, not all Democrats are the same and the job of managing so many different agendas and political priorities is certainly a challenge, especially with both of the Legislature’s top Democrats set to term out at the end of 2014.
C A L I FO RN I A G RO C E R
Political pundits spent much of the year wondering whether the Democrats’ new supermajority strength could be managed effectively, or whether traditional constituencies like organized labor, trial lawyers, and environmental activists would rule the day.
The 2014 election cycle is not expected to be as “friendly” to Democrats as 2012 was. Redistricting that took place in 2012 did provide a few rays of hope for Republicans on the Senate side. If the Republican party, under new leadership, can capitalize on enough of them to cut Democrats’ control back to a simple majority, it would certainly help dampen attempts to raise taxes. n
5
Retailer collaboration as you know it is just the tip of the iceberg.
RSi introduces a new concept in accelerating retailer data across the enterprise. It’s the whole picture. Learn more... WWW.RETAILERCOLLABORATION.COM
Retailer Collaboration
Program
FROM THE CHAIR
Game Changers!
The Game is on! The CGA Strategic Conference in Palm Springs brings retailers, wholesalers and suppliers. The CGA Strategic Conference is underway this week in Palm Springs, Calif., and just as promised, it’s jam packed with California retailers, wholesalers and suppliers all seeking to gain an advantage from the insights of the high powered speakers and presenters; as well as the connections and relationships that are available
from “convenience” to “price” to “quality” to “trend” can be evaluated, rated, commented on and/or purchased — digitally or electronically, remotely, and instantaneously — by our consumers as they so choose! Talk about Game Changers!
from the more than 900 pre-scheduled business meetings taking place.
were targeted to white women, 18 to 49 years old; not men, women, singles, empty nesters, Millennials, “X’s” or “Y’s,” and Latino’s or Tai’s?
The program has been finely tuned to focus on the key topics most important to all of us in the grocery industry who are “In The Game” of driving sales and customer traffic. While we are constantly looking for the next great store location or new product to offer our customers; the speed of the Game (and the Change!) seems to have revved up even more, if that’s possible. Nowadays, in addition to maintaining our services, product offerings and locations, it seems we also have to watch more closely than ever before the changing expectations and demands of our ever evolving customer base. Demographics are changing like never before, in part due to generational maturity of the Baby Boomers and Millennials, and in part because of rapid assimilation of new ethnic groups into mainstream shopping patterns across our statewide landscape.
The result?
It seems like only yesterday when all of our ads
I remember when customers didn’t know the new products that were becoming available until we, as grocers, stocked them on our shelves. Today, they bring their smartphone to you with a YouTube commercial of the product they want you to carry, with five reviews of how it tastes, the product attributes, and where else they can buy it and at what price they’ll pay! It wasn’t that long ago that Hispanic and Asian foods were imported products in special sections in a back aisle somewhere in the store. Today they are so mainstream you need to know what Latin speaking country your customer is from to make sure you have the right items to serve their needs, and what kind of rice, noodle or sauce is homestyle to your customer from Japan, Korea, Thailand, China, or Vietnam. Sure, everybody used to cut coupons to save money now and then, but since the shoppers didn’t know the regular retail price to start with, it seemed like we were just directing them to products we wanted to sell, rather than the customer saving money on the items they really wanted. Continued on p. 8
|
Perhaps the fastest evolving customer base we have ever seen, in an economy where everything
CGA Chairman of the Board President/CEO Bristol Farms
C A L I FO RN I A G RO C E R
These demographic changes, coupled with the ever present economic aftermath of the recession, and the way it has forever altered the consumer mindset regarding value, seem somehow at odds with the technological explosion of the digital, mobile and social media based innovations that provide a never ending torrent of information to our shoppers!
KEVIN DAVIS
7
FROM THE CHAIR
Continued from p. 7
New technology meant scanners and credit cards, not digital coupons, QR codes, mobile payment apps, and Twitter messages. Whether we want to admit it or not, we are no longer in charge of the “Game.” Information technology and digital capability have changed the rules. The Game is now in the hands of our consumers and we, as retailers, wholesalers and suppliers, have a short window of opportunity to re-learn the rules… adapt or perish.
We do believe, however, that this program and the speakers that have been brought together will stimulate your thinking, define new concepts and trends, and help give you the tools to develop your own roadmap to determine which customers you want to serve, how best to provide for their needs and expectations, and how to prepare your company to change with the game. There is of course “luck” involved in every “game,” but I am reminded of a famous quote from Samuel Goldwyn: “The harder I work, the luckier I get.”
The CGA Strategic Conference can’t possibly give you every answer to the wide-ranging questions and issues facing our industry; especially in the rapidly changing areas of demographic trends, the economy, and new technology.
We will all be working at getting lucky at this year’s CGA Strategic Conference. Changing the game is up to you. See you at the Conference! n
Brands
Innovation in Value, Convenience and Health that meet your shopper’s needs.
Capabilities Actionable Insights that drive traffic, loyalty and profit.
|
C A L I F OR N IA G R OC ER
Solutions
8
Customized Event Solutions that bring shoppers to your store and grow basket ring.
©2013 General Mills