California Grocer, 2012, Issue 6

2012, ISSUE 6

CALIFORNIA GROCERS ASSOCIATION

Reviving the Center Store

For the latest industry news visit www.cagrocers.com

PRSRT STD US Postage Paid Permit No. 1401 Sacramento, CA

LIVE FOR N

W PEPSI PROUDLY SUPPORTS THE

CALIFORNIA GROCERS ASSOCIATION PEPSI, the Pepsi Globe and LIVE FOR NOW are trademarks of PepsiCo, Inc. YWB159009

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The Spirit of Independents

To mark our 90th anniversary this year, we took the opportunity to salute our members. Our member retailers show their independent spirit with the innovations they have made to the grocery industry over the decades. Unified Grocers endures on the strength of our member retailers.

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Unified Grocers celebrates 90 years of independent spirit.

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Ph: 800-724-7762 | unifiedgrocers.com

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CGA

| Board of Directors

E X E CU T I V E CO M M I T T E E

Chairman of the Board Jonathan Mayes Safeway Inc. First Vice Chair Kevin Davis Bristol Farms

CH A I RM A N A PPO I N T M E N T S D I RE CT O RS

SUPPLIER E X E CU T I V E COUNCIL

Dora Wong Coca-Cola Refreshments

Raul Aguilar Anheuser-Busch InBev

Diana Godfrey Smart & Final Stores

Vinit Patel Unilever

Paul Cooke Nestle Purina PetCare

Frank Jimenez The Hershey Company

Richard Draeger Draeger’s Supermarkets, Inc.

Bill Jordan Whole Foods Market

John Pellington Focus Brands West/ Niche Foods

John Eagan Costco Wholesale

Dave Madden MillerCoors

Chuck Eckman, II Kraft Foods Inc.

Dan Meyer Stater Bros. Markets

Joe Falvey Unified Grocers, Inc.

Omar Milbis Rio Ranch Markets

Phil Gentile K.V. Mart Co.

Phil Miller C&S Wholesale Grocers

Jon Giannini Nutricion Fundamental, Inc. Warehouse

John Parke E & J Gallo Winery

Rick Van Nieuwburg Altria Corp. Services

Robert Phillips, Dora Wong Coca-Cola Refreshments

Mickie Sharp-Villanueva Hansen Beverage Company

Vince Delgado Procter & Gamble

Raul Aguilar Anheuser-Busch InBev

Vic Chiono Coca-Cola North America – Minute Maid Business Unit

Elizabeth Alvarez-Sell, Brennan Bateman, Thomas Joyce The Hershey Company

Melanie Zitting, Sue Sharp Pure Water Technologies

Tom Driscoll Bunzl Distribution, Inc. Gilbert de Cardenas, Bob Cashen Cacique USA Victoria Horton California Beer & Beverage Distributors C A LI F O RN IA G RO CE R

Immediate Past Chair Jim Amen Super A Foods, Inc.

Michael Read WinCo Foods, Inc.

Rickey Hamacher Bimbo Bakeries USA

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Treasurer Mary Kasper Fresh & Easy Neighborhood Market Inc.

Secretary Kevin Konkel Raley’s

Dave Jones Kellogg Company

Mike Myers Berkeley Farms, Inc.

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Second Vice Chair John Quinn Food 4 Less (Stockton) – Times Supermarkets

Cindy Plummer California Table Grape Commission Mark Cassanego Carr, McClellan, Ingersoll, Thompson & Horn Damon Franzia Classic Wines of California

Stephenie Shah Diageo David Cucuk ER Jones Management, Inc. Veronica Rendon Fresh Dairy Direct of So. Cal. Scott Johnson, Shannon Nadasdy Financial Supermarkets, Inc. Brian Rosen, Ann Wilson Gleason Inc. John Hewitt Grocery Manufacturers Association Derek Brewart, Cris Nunez Hamilton Brewart Insurance Agency

Brian Schmidt Acosta Sales & Marketing Jim Schulz International Paper Harish Solanki Big Saver Foods, Inc.

Paul Turcotte Pepsi Beverages Company – WBU Donna Tyndall Gelson’s Markets Jim Wallace Albertsons/Sav-On Pharmacy Tammy Wilson Jax Markets

Mike Stamper Nestle DSD Dirk Stump Stump’s Markets Sam Tibbitts Holiday/Sav-Mor Foods

Tim Cohen Hidden Villa Ranch Kristina Crystal-McVay The J.M. Smucker Co. Dave Jones Kellogg Company

Renee Wasserman Rogers Joseph O’Donnell Darrell Costello Roplast Industries Inc. Perry Sanders Sara Lee Fresh Bakery, California

Jamie Gray LOC Software

Greg Romero Stericycle ExpertSOLUTIONS

Dave Madden MillerCoors

Tom H. Daniel Sterilox Food Safety

Steven Schultz Moss Adams LLP

Phyllis Adkins TruGrocer Federal Credit Union

Paul Cooke, Karen Doggendorf Nestle Purina PetCare Jim Van Gorkom NuCal Foods

Vinit Patel Unilever

CONTENTS

F E AT UR E S

CGA Hosts A Grocery Retail Renaissance

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The CGA Strategic Conference returned to California in 2012 and hosted a grocery retail renaissance that featured an educational program aimed at the transformation taking place in the food industry.

Hall of Achievement Inducts Two Industry Executives

43 49

President’s Message Lessons Learned....................................... 5 From the Chair Attitude of Gratitude.................................. 7 Viewpoint – Kevin Coupe Nine Miles Of Bad Road............................ 8 Foundation News – Shiloh London Leaving a Legacy....................................... 11

Incoming CGA Chair: Kevin Davis

Perspective – Chris Micheli A Review of 2012 California Labor and Employment Legislation.......................... 16

If there is one word to describe Kevin Davis’ agenda for the California Grocers Association it would be education.

Capitol Insider One For The History Books.. ......................... 14

D E PARTM E N TS

For the past 60 years, Save Mart Supermarkets has lived and thrived in one of the toughest neighborhoods in the country – California.

CGA News.................................................... 12 Government Relations...................................... 20 Washington Report......................................... 24 Member Profile .............................................. 36

The World’s Biggest Salad Bowl

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COL UM N S

Bruce Everette, Safeway Inc., and Dave Jones, The Kellogg Company, were inducted into the CGA Educational Foundation Hall of Achievement at a gala event in October.

Save Mart Supermarkets Turns 60

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| Issue 6

For years Monterey County has been called “America’s Biggest Salad Bowl” noted for its “cornucopia” of nutritious green products.

Sunset Fresh Market News................................ 39 Know the Law................................................. 40 Advertiser Index............................................. 80

Reviving Center Store

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Retailers are never tired of hearing about the center store, but they are tired of losing it. That’s the assessment of longtime industry veteran Craig Rosenblum, Willard Bishop Consulting.

C AL IFO R NI A G R O CE R S A S S O CI AT I O N

President/CEO Ronald Fong

Director, Events & Sponsorship Beth Wright

Vice President, Government Relations Keri Askew Bailey

Director, CGA Educational Foundation Brianne Page

Vice President, Business Development & Marketing Doug Scholz

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. © 2012 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: tortega@cagrocers.com

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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 AL I F O RN IA GR O CE R

Vice President, Communications Dave Heylen

Executive Director, CGA Educational Foundation Shiloh London

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President’s Message |

RONALD FONG President/CEO

Lessons Learned On November 6 Californians went to the polls and soundly rejected Proposition 37. It was a major victory for the grocery industry due in part to the efforts of the California Grocers Association and many of its member companies.

The debate over genetically engineered food has been decades in the making. In 2012, the debate came here to California in the form of Proposition 37 – a poorly written, self-serving attempt by trial lawyers and organic farmers to make millions of dollars at the expense of consumers, grocers, manufacturers and farmers. Keri Askew Bailey, CGA Vice President, Government Relations, provides an excellent summary of Prop. 37 on Page 20.

information than where their food comes from, the nutritional value and what ingredients are used. While much of that information is already available, there may be more we as an industry can do for our consumers. In moving forward in this debate, it’s critical that all segments of the food distribution chain understand the role they play in responding to the changing wants and needs of consumers.

The fight to defeat Prop. 37 was intense and required considerable resources both in time and money. But in the end it was worth it. Had the initiative passed, the cost would have been astronomical. The Grocery Manufacturers Association is to be commended for its tremendous fundraising effort and for rallying a diverse No on 37 coalition.

We also learned a great deal from consumers about what information they want from grocers specifically. What we discovered, quite frankly, surprised us and will assist CGA greatly as we continue to utilize our membership in disseminating important information to consumers.

In the wake of its defeat, I have had time to consider the lessons learned from waging our fight against Proposition 37.

It is clear the issue of GMO product labeling is not going away. Already GMO proponents are working to capitalize on the worldwide exposure the proposition debate created. The question is where should this debate occur? It’s obvious this must take place at the national level. Passage of Proposition 37 would have been a disaster for our industry from farm to fork, including those retailers operating in multiple states and carrying their own private label line. A state-by-state approach is unmanageable and unrealistic.

And lastly, our ability to overcome incredible odds to defeat this proposition strengthens my belief that our industry must be united in its efforts.

That it speak in unison whether here in California through CGA or through our national counterparts.

While successful in defeating Prop. 37, California businesses suffered a major setback when Democrats gained a supermajority in both the Assembly and Senate. For CGA to have success in the Capitol, it’s crucial our industry is united in its messaging.

We learned a great deal from Proposition 37. My hope is that it will make us a stronger industry. n

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Our experience in this recent campaign makes clear that some consumers want more product

Consequently we focused our messaging on facts, not rhetoric. The result? After hearing information on Proposition 37 presented fairly, 70 percent of consumers said they would vote no on the issue.

C AL I F O RN IA GR O CE R

The proposition debate also reinforced the message that grocery retailers want to be as transparent as possible in providing information to their customers. Our members were clear: retailers believe consumers have a right to know what is in the food they purchase and how it is produced.

Among other things, we discovered consumers prefer an informative approach from retailers.

Consumers want the facts of an issue, and expect grocery aisles and checkstands to stay clear of heated political arguments and rhetoric.

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Kraft proudly congratulates Save Mart Supermarkets.

We at Kraft wish you a happy 60th Anniversary and we look forward to many more years of making great things happen together.

For more than a century, Kraft has made the foods that America brings home to its tables. Our success would not have been possible if not for our relationships with companies such as Save Mart Supermarkets.

Š2012 Kraft

From The Chair |

J onathan M ay es

Senior Vice President, Government Relations, Public Affairs Corporate Social Responsibility & Community Relations Safeway Inc.

Attitude of Gratitude Cicero once said, “Gratitude is not only the greatest of virtues, but the parent of all others.”

I couldn’t agree more, and try to live my life, each day, with an attitude of gratitude.

As I reflect on my year as California Grocers Association chair, which feels like a blur, I’m grateful for: your ardent support of CGA; Ron Fong and his talented team for their exemplary work on behalf of our industry; Headlite Jim Van Gorkom and the Illuminators’ strong support of all we do; and the new and deeper friendships I’ve been blessed with this year.

I’m also grateful for your support of this year’s highly successful CGA Strategic Conference, which returned to California after 16 years in Nevada. Your efforts precipitated a more than 10 percent increase in attendance over last year.

The Conference highlighted the creativity and innovation required to be successful in today’s retail and supplier environment, and featured collaborative learning opportunities led by industry experts such as: n

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E llie Krieger — Celebrity Chef, Author and TV Host T erry Jones — Founder and former CEO, Travelocity.com L ori Raya, Dan Sanders and Justin Jackson, participants on a Retail Executive Panel Discussion hosted by the indomitable Kevin Coupe.

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In closing, I want to wish my friend and fellow cyclist Kevin Davis of Bristol Farms much success as I pass the gavel to him later this month. I’m confident he’ll do an outstanding job in his new role.

Finally, I thank you for your support of my efforts this year as Chairman of CGA’s Board. I look forward to when our paths next cross. Until then, I wish you exceptionally good health, happiness, and an abiding sense of gratitude. n

C AL I F O RN IA GR O CE R

Survey results showed overwhelming praise with nearly 98 percent of respondents saying they “would recommend the conference to a colleague”; 90 percent saying the location was “excellent” or “good”; and 80 percent saying the conference “compared favorably to previous years.” If you attended this year’s event, “thank you.” If you didn’t, we hope to see you there next year.

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Viewpoint |

KEVIN COUPE

Nine Miles Of Bad Road Go figure. It all comes down to people.

The three senior executives who were part of the panel discussion that I recently moderated at the California Grocers Association Strategic Conference in Palm Springs were from companies at very different stages of development.

Dan Sanders, president of Albertsons in Southern California, is dealing with the constant rumors of a possible sale of the parent company, SUPERVALU, that could leave him with new bosses and new strategic imperatives. Justin Jackson, COO of Andronico’s Community Markets, is helping to steer a once-powerful regional retailer during a post-bankruptcy existence. Lori Raya, president of Vons, doesn’t have those sorts of problems... but she does have an increasingly competitive marketplace with which to deal.

And yet, what struck me during the session was the extent to which they all focused on the same thing as being their differentiating advantage. People.

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C A LI F O RN IA G RO CE R

“What makes a company effective at store level is the relationship between your employees and your guests,” Sanders said. “We have 3 million guests a week that come to each Albertsons store, and they care about the store and the people there, and those relationships make a huge difference in terms of gaining traction.”

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“Concentrating on what they could do while the company was dealing with its financial problems meant focusing on what would be possible in the post-emergence period,” said Jackson, referring to the company’s employees. “Some people left, but those who stayed and were really committed helped boost us out of bankruptcy.”

Raya put it this way: “Everyone has a desire to do meaningful work and a sense of a higher purpose, so the challenge is to help your workforce discover and build on that sense.”

Now, let’s be clear-minded about this. There are plenty of executives who talk about the importance of the people on the front lines, but who don’t really deliver on that promise. There are plenty of companies that put the words “our people” into their mission statements or corporate slogans, but it ends up being lip service.

It is not my sense that Sanders, Jackson or Raya are that kind of executive; they were willing to drill down into how they are making their people part of their strategic approach to business, and that carries some weight. (In the case of Dan Sanders, he wrote a book on the subject - Built To Serve: How To Drive The Bottom Line with PeopleFirst Practices. If you haven’t, you should read it ... it is available from Amazon, and as an e-book.)

But in thinking about what Sanders, Jackson and Raya had to say, I cannot help but think of Bob Murphy, the now-deceased radio voice of the New York Mets. (There is a California connection here; Murphy’s brother, Jack Murphy, was sports editor and columnist for the San Diego Union and helped to bring both the San Diego Chargers and San Diego Padres to the city; the ballpark there was named Jack Murphy Stadium until the city sold naming rights to Qualcomm. But I digress...)

When Murphy broadcasted a game, he would sometimes see that one team or the other was dealing with a tough situation, and he’d say, “They’re looking at nine miles of bad road.”

Which is exactly what California retailers are facing. What every retailer is facing. Not only do they have to train and empower their people so that they can traverse these roads, but they need to understand where all the potholes and land mines are.

It is my sense these days that things are about to get tougher.

Viewpoint |

KEVIN COUPE

Kevin Coupe, Lori Raya, Vons; Justin Jackson, Andronico’s Community Markets; Dan Sanders, Albertsons

In recent days, there have been a wide variety of stories about how retailers are testing things like same-day delivery, next-day delivery, and price-matching strategies that are designed to make them more competitive during the upcoming end-of-year holiday shopping season.

These retailers largely have been focusing on non-food issues, but it is not hard to see how these moves – especially same-day delivery – could make online players (like Amazon and, increasingly, Walmart) more competitive in the food business.

There also are reports that Amazon is likely to export its Amazon Fresh offering to California sometime soon, which involves using its own trucks to deliver fresh foods, not just packaged goods.

If this happens, Amazon won’t be starting from scratch; think how much purchase data it has for people who live in places like Los Angeles and San Francisco, two markets it is likely to target.

How does one compete?

That’s the same thing here. Make the shopping experience and the people who deliver on your value proposition compelling, and you aren’t fighting fire with fire. You’re fighting fire with water.

The other day, I visited a small store format in Los Angeles - it is called Yummy, and it is a store with a limited assortment of branded products, a solid fresh foods offering, and a value proposition that has it delivering orders within certain neighborhoods within 30 minutes of the order being placed.

It is a three-store operation, so there isn’t much scale. But when I stopped by the Playa Vista store, I found it to be shoppable, interesting, with a friendly young woman at the checkout and possessing the kind of warmth that some other stores can struggle to find.

Innovation is possible. Differentiation is possible.

Go figure. n

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For one thing, you invest in people. It isn’t just a truism that people can make all the difference in the efficacy of a shopping experience – it is a cold, hard, bottom line fact. You make it so that all the same-day or next-day delivery promises in the

When retailers complain about “showrooming,” in which customers go into a store to look at and handle an item, only to then turn around and order it online using their smartphones, I contend that they’ve helped create the problem by making the customer’s smartphone the most compelling thing in the store to look at.

C AL I F O RN IA GR O CE R

For any retailer, this means nine miles of bad road.

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“If y ou would not be forgotten as soon as y ou are dead, either write something worth reading or do something worth writing . ” — B e n j am i n F r an k l i n

At this year’s CGA Educational Foundation Hall of Achievement Dinner, we had the privilege of honoring two remarkable men in our industry (see page 43 for dinner highlights). Throughout the evening, I was continually reminded of the importance of leaving behind a meaningful legacy, for which our two honorees surely will.

Some people mistakenly believe they offer nothing of great significance worthy of passing on to others. Some of the most inspirational, enduring legacies are from people beyond the history books and newspaper headlines. Ordinary people are creating and passing down inspirational, historical legacies.

Whether we live 45 or 95 years, it’s our responsibility to do the most with what we have and leave this world a better place than we found it. To do this, we must discover and cultivate our gifts, take care of ourselves to ultimately take care of others, and strive to impact those around us in a positive way.

I think you’ll agree that we are all blessed to work in the grocery industry. It’s a highly competitive industry that runs on razor thin margins, but always manages to come together with a common goal to make this world a better place. Whether it’s in support of the Foundation’s scholarship and tuition reimbursement programs, breast cancer awareness, or hunger relief, we do amazing things for a lot of people in our communities.

These companies are impacting the lives of millions.

Your company impacts the lives of millions. What impact will you have? How will you be remembered?

The holiday season is upon us, which means you’ll soon take stock of the year gone by and compile New Year’s resolutions. Instead, why not make a list of 10 things you can do in 2013 to ensure you leave behind a more meaningful legacy: Build what you want, do what you love, include your favorite educational foundation in your estate planning (gratuitous plug), follow your dreams.

Remember what Steve Jobs said, “Those who are crazy enough to think they can change the world are the ones that actually do.” n

Shiloh London, Executive Director, CGA Educational Foundation

C AL I F O RN IA GR O CE R

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There are countless stories I could share about the work our member companies have done in 2012: Supervalu, Whole Foods Markets, Hershey’s, Costco, Anheuser-Busch, and so many more CGA members contributed time and resources to help victims of Hurricane Sandy; Stater Bros.

Markets offered free antibiotics to anyone with or without health insurance coverage who

presented a prescription; C&H Sugar/Domino Foods partnered with Duncan Hines to fight hunger with bake sales throughout the nation, and Acosta Sales & Marketing raised $1.6 million this year for the Muscular Dystrophy Association to support its healthcare services and muscle disease research projects.

cga educational foundation

Leaving a Legacy

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CG A NE WS

New Members CGA would like to recognize its new members of 2012!

Almond May, Inc. 837 9th Street Hermosa Beach, CA 90254 Phone: (310) 379-1674 Fax: (310) 372-5349 Contact: Ian Plumbley

Consulate General of Brazil In Los Angeles 8484 Wilshire Blvd, Ste 300 Beverly Hills, CA 90211 Phone: (323) 651-2664 Fax: (323) 651-1274 http://losangeles.itamaraty.gov. br/pt-br/

TC Transcontinental Northern California (Supplier Executive Council Member) 47540 Kato Rd Fremont, CA 94538 Phone: (510) 580-7737 Fax: (510) 580-7764 Contact: Mike Hinson mike.hinson@tc.tc www.tc.tc

Warehouse Markets, LLC 10385 Folsom Blvd Rancho Cordova, CA 95670 Phone: (916) 857-0500 Fax: (916) 857-0505 Contact: Michael Webb mwebb@warehousemarkets.com

Ecopia Worldwide LLC 1256 Park Road Chanhassen, MN 55317 Phone: (952) 548-5450 Fax: (952) 548-5459 Contact: David Busby eco.ecopia@gmail.com www.goecopia.com

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C A LI F O RN IA G RO CE R

Recent members that became a part of CGA:

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Amoretti Company Beef Information Center California Table Grape Commission (SEC) CAM Services Cardenas Markets, Inc. Central Valley Ag Export Colonial Life Corrigo Incorporated Day-Lee Foods, Inc. Del Real Foods Don Pedro’s Kitchen (SEC) Durham Brands Early On, Inc

Enformed ER Jones Management Inc. Flowers Baking of California Fresco Foods FrutStix Gizmo Beverages Gongco Foods/Food 4 Less Hamilton Brewart Insurance Agency Itasca Retail Jensen’s Finest Foods Jerry’s Bags & Labels Karl Strauss Brewing Kayem Foods LOC Software (SEC) LYFE Kitchen Retail LLC

Martin Container, Inc. McNairn Packaging, Inc. MOM Brands Moss Adams LLP (SEC) Nor Cal Beverage Co., Inc/ Go Girl Energy Drink Nugget Markets OfficeMax Inc. People Water Prime Plastic Products, Inc. Prudential Overall Supply Pure Swiss Inc. Pure Water Technologies (SEC) rePLANET, LLC Shelter Cove General Store, Inc.

Sheppard, Mullin, Richter & Hampton SmartSweep Stericycle ExpertSOLUTIONS Sunflower Farmers Market Tampico Spice Company The Clorox Company Tropicale Foods, Inc. TruGrocer Federal Credit Union

Capitol |

INSIDER

One For The History Books California voters passed the first statewide tax measure in more than a decade while defeating the repeal of the death penalty and a right to know what’s in your food initiative. Most predicted the exact opposite!

The election of 2012 is definitely one for the history books. While the national results were anti-climatic, the results in California were nothing short of amazing.

Proposition 30, the Governor’s initiative to increase income taxes on those making more than $250,000 annually and a quarter cent sales tax increase won with more than 53 percent of the vote. Two weeks before the election, polls showed support for the measure below 50 percent and trending downward. Supporters of the measure were getting nervous and concerned.

This is when the Governor kicked it into overdrive.

He spent the last few days of the campaign traveling up and down the state stopping at nearly every college campus to campaign for the measure. This strategy also had supporters concerned because in the past college-aged students are energetic and attend rallies but rarely make it to the polling booth.

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C A LI F O RN IA G RO CE R

Then with only a couple days before the election, the leading opposition group received an $11 million contribution from a

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non-profit in Arizona to help defeat the measure.

Looking back, this contribution may have done more to help pass the measure than it did to defeat it. Those supporting Proposition 30 were not about to let “secret” PAC money come in and defeat what they had worked so hard to pass.

Proposition 32, the Paycheck Protection Act, also cannot be overlooked for its assistance in helping Proposition 30. In the end, Prop. 32 was soundly defeated by a campaign with more than $60 million in contributions from the state’s largest unions.

This measure motivated the democratic base more than even President Obama could and drove voter numbers to historic levels.

The ripple effect from the initiative battles definitely played a result in the outcomes of the legislative races. For the first time since 1933, both legislative houses will have a super-majority of one party. The biggest difference is that in 1933, the Republicans held the power. This go around the Democrats are in control.

Prior to Election Day, most following the races thought the Senate Democrats had a very good chance of obtaining the magic two-thirds. With a super majority, the party in control has the power to raise taxes, confirm gubernatorial appointments, change the rules and override vetoes all without any participation by the other party.

Through redistricting, Senate Democrats had definitely picked up one seat along the Central Coast which had been held by Senator Sam Blakeslee (R-San Luis Obispo). All they needed was to pick up one more with three races up for grabs. On election night, they picked up two giving them 28 total votes – at least for the short run.

The new maps also created a pathway for Assembly Democrats to achieve a super majority but most thought it would take at least a couple election

Capitol |

cycles to achieve. Democrats picked up the two needed seats by winning two open seats, one of which was previously held by a Republican, and they defeated a Republican incumbent. They now sit at 54 votes.

It may take longer than leadership wants for the full effect of the super majority powers to be fulfilled. In the Senate, two Senators were elected to Congress and will resign their seats very soon.

This will give the Senate a super majority on paper, but one vote shy in reality. Both seats are expected to be filled by democrats in a special election sometime early next year.

At least one of the open Senate seats is expected to be filled by a current Assembly Member. If that occurs, Assembly Democrats will be one vote shy after the Senate special elections.

CGA_Ad_TADIN_NECB.pdf 1 9/10/2012 3:13:28 PM This will be corrected after another special election occurs later in the year.

INSIDER

This was the first full election cycle under the top two primary rules and maps drawn by an independent redistricting commission. Those elected will live under the new term limit rules allowing each to serve a maximum of 12 years in one house. Whether or not these election reforms have improved the system will be debated for years.

However, this election has resulted in the biggest class of new members we have seen in quite some time – 38 new assembly members, 9 new state senators and 14 new members of Congress.

December 3 marks the beginning of the 20132014 legislative session. It will definitely be one to watch! n This article was authored by Louie Brown, a partner in the Sacramento office of Kahn, Soares and Conway, LLP.

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Perspective |

C hris M icheli

A Review of 2012 California Labor and Employment Legislation With the conclusion of the 2012 California Legislative Session, a number of new labor and employment law bills were adopted.

The 2012 California Legislative Session was viewed favorably by the employer community because a number of burdensome measures were defeated or received amendments to address employer concerns. This article outlines some of the major bills that were considered this year. CGA was actively engaged in debate on each of them.

Bills Signed Into Law

AB 1844 (Campos) – employer use of social media – Chapter 618 Adds Chapter 2.5 (commencing with Section 980) to Part 3 of Division 2 of the Labor Code This bill prohibits an employer from requiring or requesting that an employee or prospective employee disclose a social media username or password, to access personal social media.

This bill would also prohibit an employer from retaliating against an employee or applicant for not complying with a request or demand that violates these provisions.

This measure was supported by the variety of interest groups. It seems that everyone has taken interest in the two social media bills enacted in California this year, as they are among the first in the nation.

AB 1964 (Yamada) – employment discrimination: reasonable accommodations – Chapter 287

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C A LI F O RN IA G RO CE R

Amends Sections 12926 and 12940 of the Government Code

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This bill includes a religious dress practice or a religious grooming practice as a belief or observance covered by existing protections against religious discrimination.

This measure went through the process relatively unscathed because there was no opposition to provide employment discrimination protection to

those exercising their religious beliefs through certain dress or grooming practices. This measure was brought to the author by members of the Sikh community in this state.

AB 2674 (Swanson) – employment records – right to inspect – Chapter 842 Amends Sections 226 and 1198.5 of the Labor Code This bill requires an employer to maintain personnel records for a specified period of time and to provide a current or former employee, or his or her representative, an opportunity to inspect and receive a copy of those records within a specified period of time, except during the pendency of a lawsuit relating to a personnel matter. The bill provides that an employer is not required to comply with more than 50 requests for a copy of the above-described records filed by a representative or representatives of employees in one calendar month. The bill excludes employees covered by a valid collective bargaining agreement if the agreement provides a procedure for inspection and copying of personnel records. In the event an employer violates these provisions, the bill would permit a current or former employee or the Labor Commissioner to recover a penalty of $750 from the employer, and would further permit a current or former employee to obtain injunctive relief and attorney’s fees.

This bill went through the process with no real opposition or concern regarding its provisions perhaps because it also lowered the penalty for failure to make personnel records available.

SB 1255 (Wright) – itemized wage statements – Chapter 843 Amends Section 226 of the Labor Code This bill provides that an employee is deemed to suffer injury for purposes of the above-referenced

Perspective |

penalty if the employer fails to provide a wage statement that contains accurate and complete information, and if the employee cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid to the employee during the pay period, deductions made from the gross wages to determine the net wages, the name and address of the employer, and the name of the employee and only the last 4 digits of his or her social security number or an employee identification number.

This measure was initially opposed by the business community, but later amendments caused employers to drop opposition. This broad measure underwent significant negotiations to address competing interests. It was intended to address some of the ongoing litigation in the area because Section 226 has become a hotbed, with many claiming that there is a fair amount of unwarranted litigation in this area.

Other Bills of Interest

The following measures were either vetoed or did not reach the Governor’s Desk:

AB 1439 (Alejo) – minimum wage: annual adjustment – Failed passage This bill would have provided for an adjustment to the hourly minimum wage on January 1, 2013 and annually thereafter. It would have been calculated using the California Consumer Price Index.

AB 1450 (Allen) – employment discrimination: status as unemployed – Vetoed by the Governor This bill would have made it unlawful, for an employer to publish an advertisement or announcement for any job that includes provisions pertaining to an individual’s current employment or employment status, as specified. Violations would result in civil penalties that increase as the number of violations increase.

AB 1740 (Manuel Perez) – employment protection: victims of domestic violence – Failed passage This bill would have extended these protections to victims of stalking. The bill would also prohibit an employer from discharging or in any manner discriminating or retaliating against an employee because of the employee’s known status as a

victim of domestic violence, sexual assault, or stalking, and require the employer to provide reasonable accommodations for such a victim.

AB 1789 (Morrell) – wage orders: private rights of action – Failed passage This bill would have required the commission to review and, if necessary, revise every wage order in effect as of January 1, 2013, to ensure that each order is consistent with current work conditions in the industry covered by that wage order. The commission would be required to indicate on its Internet Web site that an order has been reviewed and whether revision of the order is needed.

AB 1999 (Brownley) – family caregiver status protection – Failed passage This bill would have included “family caregiver status” as an additional basis upon which the right to seek, obtain, and hold employment cannot be denied.

AB 2039 (Swanson) – family and medical leave – Failed passage This bill would have increased the circumstances under which an employee is entitled to protected leave pursuant to the Family Rights Act by (1) eliminating the age and dependency elements from the definition of “child,” thereby permitting an employee to take protected leave to care for his or her independent adult child suffering from a serious health condition, (2) expanding the definition of “parent” to include an employee’s parent-in-law, and (3) permitting an employee to also take leave to care for a seriously ill grandparent, sibling, grandchild, or Continued on p.18 domestic partner, as defined.

C hris M icheli

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C hris M icheli

Continued from “A Review of 2012 California Labor and Employment Legislation”

AB 2099 (Cedillo) – statutory penalties for wage and hour violations – Amended into different subject matter This bill would have increased the fine for a violation of this provision from not less than $100 to not less than $250.

SB 1114 (Dutton) – overtime compensation – Failed passage This bill would, until January 1, 2015, would have established 40 hours as a week’s work and require payment of prescribed overtime compensation for hours worked in excess of 10 hours in one workday. The bill would also make conforming changes.

SB 1115 (Dutton) – flexible work schedules – Failed passage This bill would have permitted an individual nonexempt employee employed by an employer with 10 or fewer employees to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek, and would allow the employer to implement this schedule without any obligation to pay overtime compensation.

SB 1374 (Harman) – good faith reliance on written opinions – Failed passage This bill would have provided that any person who relies upon a written order, ruling, approval, interpretation, or enforcement policy of a state agency shall not be liable or subject to punishment for a violation of a civil statute or regulation. n

T:7.375”

Happy 60th Anniversary, Save Mart Supermarkets!

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freshandeasy.com

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©2012 Fresh & Easy Neighborhood Market Inc.

T:4.875”

From all of your friends at fresh&easy.

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C A LI F O RN IA G RO CE R

By Keri Askew Bailey, Vice President of Government Relations

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Grocery Industry Scores Major Victory With Prop 37 Defeat C alifornia voters soundly rejected an attempt backed largely b y trial law y ers and anti -GM O activists to significantly alter the way food is produced, marketed , and labeled in California.

Proposition 37 never led in vote-counting and was defeated by 6 percent, a stunning shift from early days of the proposal’s life. The defeat represents a turn-around of rather historic proportions with initial polling conducted in the early days of the election cycle noting overwhelming support for the deeply flawed measure.

Dubbed the, “California Right to Know Genetically Engineered Food Act,” Proposition 37 was anything but what proponents called a simple labeling requirement. The proposed initiative sought to not only require labeling of many food products that were genetically modified (GMO) or that contained GMO ingredients, but to also ban use of the term “natural” in the labeling, marketing, or advertising of nearly every non-organic product other than raw agricultural commodities.

The NO campaign received significant support from many CGA member companies. In addition to supporting the overall NO campaign, CGA supported development of specific materials to be used with grocery consumers to help educate them on the challenges Prop 37 would have posed.

In the wake of this defeat, the conversation inevitably turns to what comes next? Proponents are pushing for qualification of a similar measure, I-522, in the State of Washington. Significant differences exist with regard to enforcement but it is evident our industry has not seen the end of this issue. Look for continued conversations going forward in an attempt to identify and cultivate solutions. n

The initiative contained a series of arbitrary exemptions including for food served for “immediate consumption” (restaurant food), alcoholic beverages, and organic or certified non-GMO products.

Enforcement would have been left to private attorneys who under the initiative would have been authorized to file suits without even so much as alleging damages or offering proof of violations. That wasn’t necessarily a surprise to anyone in the grocery industry as the initiative was drafted by a leading Proposition 65 litigant.

S ON T C A F E H T for

Initially, most polling conducted showed that based only on a reading of the ballot title and summary that voters would appear in official voter guides, the Yes side enjoyed an advantage that seemed insurmountable. Some early polls pegged support at above 70 percent in fact.

facts.com y r e c o r g 7 Prop3

However, as more sophisticated and detailed polling began to emerge there was reason for very cautious optimism. It quickly began to appear as though voters could be swayed if they learned about significant flaws in the proposed California-only standards.

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7 3 p o r P

Paid for by the California Grocers Association Issues Committee, Yes on Proposition 30 and No on Proposition 37.

Congratulations to Kevin Davis of Bristol Farms on becoming the next CGA Chairman of the Board!

Under Kevin Davis’ leadership, Bristol Farms now celebrates their 30th anniversary, proving that one need not compromise on service and quality to build a successful grocery chain. Bristol Farms enjoys a well-earned reputation as one of California’s premier grocers.

Unified Grocers is proud to play a part in that success and we look forward to many more years of great partnership.

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Ph: 800-724-7762 | unifiedgrocers.com

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New Laws Impacting the Grocery Industry The following measures were signed into law in 2012 b y G overnor J erry B rown. U nless otherwise noted, the req uirements of each take effect on J an . 1, 2013. F or additional information regarding these new laws , or to view a full list of enacted legislation, please visit our website at cagrocers. com or contact C G A’ s government relations department at (9 1 6 ) 4 4 8 -3 5 45.

Alcohol & Tobacco AB 1301 (Hill): This bill repeals and recasts provisions of the STAKE act to allow for penalties to be imposed on retailers for underage sales regardless of the results of the annual statewide survey on underage access.

AB 2184 (Hall): creates a new tied-house exception in the Alcoholic Beverage Control (ABC) Act that authorizes wine, beer and spirits producers to participate in promotional events held at an off-sale retail licensed location for the purpose of providing autographs on bottles or other items to consumers.

Business AB 1744 (B Lowenthal): As introduced, this bill would have created new obligations to outline additional information on itemized wage statements.

The bill was amended late in the process to apply only to temporary employment services.

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AB 1844 (Campos): This bill seeks to clarify the law with regard to employee use of social media by prohibiting an employer from requiring an employee or prospective employee to provide the username or password for a personal social media account. The bill allows employers to request such information in the course of an investigation or if the social media account is accessed on an employer-provided device.

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AB 1888 (Gatto): This bill will allow commercial drivers to attend traffic violator school (TVS) for violations that take place when they are exercising class C or M driving privileges. Completion of a TVS course would in turn allow those drivers to avoid a “point” against their commercial license.

AB 1964 (Yamada): This bill, which was unopposed, recasts provisions of the Fair Employment and Housing Act to ensure that “religious dress and grooming practices” are protected. The bill was amended several times

through the process in an attempt to address employer concerns.

SB 1186 (Steinberg): This bill is intended to address the issue of unwarranted litigation in the disability access arena. Among other things, the bill prohibits pre-litigation “demands for money” by attorneys, puts into place new provisions to prevent “stacking” of multiple claims to increase statutory damages, reduces statutory damages and provides litigation protections for defendants who correct violations, and establishes priorities for the California Commission on Disabled Accessibility that promote and facilitate disability access compliance.

SB 1234 (De Leon) & SB 923 (De Leon): This package of bills would create the Golden State Retirement Savings Investment Board, to study the creation of a private sector, mandatory participation retirement plan that would require eligible employers, as defined, to enroll employees into an employer-sponsored retirement plan or pension plan offered by the State. The Board would be required to report back to the Legislature and seek approval of any recommended plan.

Financial Institutions AB 1525 (Allen): This bill seeks to require specified training for money transmittal agents regarding fraud and elder financial abuse. CGA strongly opposed this legislation arguing many of our members are agents of money transmitters and it is impractical to impose mandated training requirements on a retail clerk.

Grocery AB 1616 (Gatto): This bill regulates the production and sale of some non-potentially hazardous home cooked food. The bill calls for two types of cottage food licenses – Class A which involves only direct

government

sales and Class B which involved both direct and indirect sales.

AB 2246 (John A. Perez): This bill seeks to require the CA Healthy Food Financing Initiative Council, by 3/31/13, to create and maintain a public web site to outline actions the Council has taken and funding sources available to support food access and healthy food options.

AB 2682 (Assembly Agriculture Committee): This bill seeks to, among other things, clarify that grocers may cut and wrap hard cheese on premise for direct sale to consumers without obtaining a milk plant license. CGA worked closely with the Agriculture Committee and the Department of Food and Agriculture to clarify these practices.

Recycling AB 1583 (Hernandez): This bill prohibits junk dealers and recyclers from purchasing or receiving bulk merchandise pallets, marked with indicia of ownership, from anyone except the indicated owner, unless specified information is provided to the junk dealer or recycler. In addition, the bill requires the junk dealer or recycler to maintain a written record of that information and in some cases make payments by check via US Mail when purchasing pallets.

AB 1933 (Gordon): This bill makes two changes to the Beverage Container Recycling Program in an effort to maintain solvency while more comprehensive program reforms are discussed.

Specifically, the bill attempts to crack down on the importation of empty containers from outside California in an attempt to collect (unpaid) container deposits on them. In addition, the bill temporarily freezes handling fees for convenience zone recyclers. This bill was an urgency measure and became law on 9/25/12.

Regulations

Weights & Measures AB 1623 (Yamada): As introduced, this bill would have increased the maximum fees local weights & measures inspectors could charge for inspecting scales and weighing devices. CGA secured amendments to instead simply extend the existing authority, set to expire on 1/1/13 absent Legislative action, through 1/1/16.

Women, Infants & Children AB 2280 (Lara): This bill creates a level of due process for WIC vendors. Among other things, the bill seeks to require the WIC Department to provide a minimum of 30-days notice of an alleged violation prior to re-inspection to establish a pattern of violations. CGA sponsored this legislation.

AB 2322 (Gatto): This bill seeks to outline parameters for any vendor application moratorium instituted by the Department of Public Health, including providing specific information to vendors such as length of moratorium, details of issues giving rise to the need for a moratorium and specific actions the Department will take to resolve those issues. In addition, the bill attempts to address some of the issues associated with incentives that have developed in California. CGA worked closely with the Department and the Author’s office to make these changes. This bill was an urgency measure and became law on 9/29/12.

Workers’ Compensation SB 863 (De Leon): This bill is intended to provide reforms in California’s workers compensation system that will allow for an increase in benefits to injured workers, particularly those with severe injuries, while reducing administrative and other costs for employers. Among other things, the bill will help to address unnecessary liens, shorten the medical-legal process, improve medical provider networks, implement independent medical review, and clarify reimbursement rules for medical and service providers. n

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SB 1099 (Wright): This bill provides that new regulations become effective on 1/1, 4/1, 7/1, or 10/1 rather than on the 30th day after filing of

the final regulation with the Secretary of State.

This measure will go a long way toward providing certainty to California’s businesses by allowing them to predict and prepare for new operating rules being mandated by government.

C AL I F O RN IA GR O CE R

SB 1219 (Wolk): This bill extends, through 1/1/20, the mandatory single-use plastic carryout bag recycling requirements for grocers while removing the prohibition on local government fees relating to those bags. CGA opposed this measure.

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washington report

The 2012 Elections F or those who remember the 1993 comedy “ G roundhog D ay ” starring B ill M urray, the local T V weatherman who finds himself trapped in a loop, repeating the same day over again, waking up in the morning after the recent elections may have felt a little similar.

It’s hard to comprehend, but after spending nearly $6 billion dollars in the 2012 election cycle the end result was status quo. President Barack Obama was re-elected to a second term, Democrats remained in control of the Senate, actually picking up a couple of seats, and Republicans held onto the House by a comfortable margin.

Fortunately for California’s supermarket operators and the industry as a whole, Proposition 37 was rejected by voters, although proponents are likely to continue their push in California and beyond. The National Grocers Association was proud to support CGA’s efforts to educate consumers and the public on the negative impact Prop. 37 would have on families and businesses. Our hats are off to CGA and the rest of the food industry for a job well done!

California also saw a number of interesting congressional races this cycle, including a number of “member vs. member” races as a result of redistricting. Senator Dianne Feinstein easily sailed to re-election winning over 60 percent of the vote; meanwhile a number of House races proved a bit more interesting.

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Dean of the California Congressional Delegation, Rep. Pete Stark, was defeated by 31-year-old Democrat newcomer Eric Swalwell, who won, in part, targeting what had been an asset to Rep. Stark and California; his 40-year tenure in Congress.

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Peter Larkin National Grocers Association President

In the California 36th Congressional District Rep. Mary Bono Mack was defeated by Raul Ruiz. Bono Mack was at a disadvantage not only as a result of redistricting, but also, some say, due to her lack of time spent back in the district. In a bitterly fought battle between two sitting members of Congress Rep. Brad Sherman defeated Rep. Howard Berman in a fight to represent the 30th District.

Back in Washington the stakes could not be higher.

Congress began a “lame duck” session of Congress on November 13 in an effort to try and address what has come to be called the “fiscal cliff.” Facing Congress is the reality that the individual tax rates and the estate tax expire on January 1, temporary tax provisions such as the AMT and other extenders have already or will expire, crippling automatic cuts enacted through sequestration are set to go into effect on January 1, coupled with a Farm Bill that has since expired and a vote to increase the debit ceiling is expected.

Unfortunately, the end result of the lame duck session remains unclear at this point.

What is clear is President Obama must engage Congress and help work out a deal that protects businesses operating as pass-through entities, gives certainty and protects family-owned businesses, while addressing a national debt that has hit historic highs and threatens our national security.

NGA continues to urge Congress to pass a oneyear extension of the current rates and estate tax, along with a longer extension of the Farm Bill to give the new Congress time to tackle tax and spending reforms in 2013. Time will tell whether Congressional leaders and the President are able to come to an agreement and convince their respective caucuses to support it. For the sake of our economy and the global economy, we hope so.

Just like in Groundhog Day, time eventually does move on and so NGA is also looking beyond the elections and the lame duck session to the future and looks forward to continuing to work closely with CGA and the industry as the new 113th Congress takes their place in history. n

MILLERCOORS CONGRATULATES

KEVIN DAVIS AND BRISTOL FARMS

©2012 MILLERCOORS LLC, CHICAGO, ILLINOIS Per 12 oz., Miller64 contains 64 calories, 2.4 grams of carbs, <1 gram of protein and 0.0 grams of fat.

washington report

Top 10 Takeaways From the 2012 Election B e yond the election night numbers and the winners and losers , there is much to learn from the 2 0 1 2 election .

What did we learn from the 2012 elections?

The country still faces a divided government; a Democratic-controlled White House and Senate and a Republican majority in the House of Representatives.

The Food Marketing Institute’s lobbying team and government relations committee will meet to design strategies from these takeaways to address those critical priority issues for the supermarket industry during the lame duck session, as well as the new state legislative sessions and the 113th Congress. Below is a list of several of our broad takeaways.

1. Candidates matter and so does what comes out of their mouths. Regardless of whether the state is red or blue and what the macro trends say should happen, voters are ultimately choosing between two people, and we need to help identify those candidates that will best represent us.

2. Many people waited in line to vote for hours in less than ideal conditions not because they wanted to make history, but because it was their constitutional right and civic obligation to vote.

They didn’t complain or walk away; certainly you know that if this same wait occurred at checkout, they most certainly would have complained.

This is a tribute to our electoral system and our electorate. Okay, I am an optimist.

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3. Out of roughly 120 million votes cast (57%+

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

of the electorate), the presidential election was decided by less than 3 million votes or 2% of the vote. Your vote does count. Several congressional races were not decided on election night because of close vote tallies.

4. There will be at least 80 freshmen in the Congress in January to get to know so all of us have our work cut out for us, but this also opens opportunities for new champions for our industry and new relationships. Invite your members of Congress to your store to see firsthand the issues impacting your business, your associates, and your customers.

5. Jobs and the economy was the number one most important issue identified by voters in this election. This will not go away. You see the manifestation of this issue at your stores everyday with customers continually trying to save money. Voters are not satisfied with the progress thus far on these economic issues.

6. If you have a well-organized, well-funded campaign you can win a ballot initiative like California’s Proposition 37. The initiative was ultimately defeated by a 6 percent margin in spite of very strong initial support from a left coast voter pool. We have a lot of work ahead of us on this issue, but kudos to CGA and all involved on the success against an initiative that could have ended our national labeling system.

7. Elections are only the start of making public policy. Now the work begins. Congress returns next week for the start of a lame duck session that will have to face: tax reform/expirations, sequestration, a possible credit rating downgrade, and having to raise the debt ceiling.

8. The likelihood of any effective “repeal and replace” efforts for the health care law was significantly diminished due to the election outcomes, but we hope the new Congress will come together in a bipartisan manner to address many of the needed fixes to the law.

9. Technology has changed the way elections operate, allowing campaigns to micro-target voters and reach out to them frequently and without much expense. Any household with a land line or a door bell for the last two months can attest to this change. At the end of the day, the election was decided by old-fashioned retail politics and get-out-the-vote efforts.

10. Today begins the campaign for 2014 midterm congressional elections. There were complaints about the $6 billion spent over the last 18 months on this presidential campaign.

One commentator announced that we had just spent $7 billion on Halloween.

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The CGA Strategic Conference returned to California in 2012 as

grocery retailers and suppliers from throughout the Golden State attended this year’s convention at the Palm Spring Convention Center in late September.

With the theme “California’s Retail Renaissance” the CGA Strategic Conference sculpted a threeday event that examined the state’s emerging new creative and innovative spirit – an era of retail enlightenment fueled in large part by dramatic cultural shifts in its shopping base.

This year’s highly successful conference was a combination of a timely, informative educational program, coupled with value-added networking opportunities, all wrapped in a single location back in the Golden State.

Travelocity.com founder Terry Jones shared how innovation is critical to creating meaningful customer relationships.

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“ This conference provides an extremely efficient method

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for networking with colleagues and service providers.

Given the intense level of grocery competition, I wouldn’t

miss it.”

— ric har d dr aeger , dr aeger’s s up er m a r ke ts

“Returning to California was a tremendous step forward for the conference,” said CGA President Ron Fong. “Our post conference surveys confirmed what we sensed during the show – attendees were excited to have the convention return to our own backyard.”

An Educational Renaissance This year’s conference featured an educational program that explored the retail transformation occurring in the Golden State and the significant changes occurring at this time in the grocery industry.

Attendees participated in share group discussions, heard from forward-thinking presenters who are on the cutting edge of retail innovation and brought a fresh perspective to the conference.

Business Conference Suite Holders

Anheuser-Busch InBev Bimbo Bakeries USA C&S Wholesale Grocers California Shopping Cart Retrieval Corp.

Coca-Cola Refreshments The Hershey Company The Jel Sert Company Jelly Belly Candy Co. Kellogg Company Kraft Foods Group, Inc. MillerCoors

Business Conference Suites included 40-minute meetings with grocery retailers.

Nestle Purina PetCare

The conference opened Sunday afternoon with celebrity chef and television personality Ellie Krieger who enlightened attendees to one of the biggest growth markets in retail grocery – health and wellness and natural foods. A regular guest on most major morning and food network television programs, Krieger shared her insights on the role grocers are playing in health and wellness and explored what future choices might impact this market segment.

Monday’s collaborative Share Group discussions provided a unique and engaging environment for attendees to share ideas on important industry issues including healthy eating, improving center store, sustainability, the digital age and California’s WIC program.

CGA Chair Jonathan Mayes.

The conference’s annual General Session continued the renaissance theme with keynote speaker Terry Jones, founder and former CEO of Travelocity.com and now chairman of Kayak.com Jones shared insights into the creation of Travelocity.com and

Procter & Gamble Snyder´s-Lance Inc. Unified Grocers Unilever 2012 Sponsors

Executive Level Sponsors Classic Wines of California Hillshire Brands Company WhiteWave Foods President Level Sponsors Del Monte Foods DS Waters of America, Inc. EarthWize Recycling Financial Supermarkets, Inc. MOM Brands NuCal Foods The Clorox Company Director Level Sponsors 4RplanetBag AlEn USA AM Federal Credit Union Bunzl Distribution

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Celebrity chef Ellie Krieger encouraged grocers to expand their health and wellness programs.

Each share group was moderated by an industry insider whose unique perspective and insight helped attendees think beyond the norm and gain meaningful new ideas and concepts to apply in their companies.

Nestle Waters North America

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Sponsors continued

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C & H Sugar Company / Domino Foods, Inc. Canada Beef Inc. Casa Martinez Salsa Cash Register Services, Inc Coffee Bean & Tea Leaf International Colonial Life Corrigo Incorporated Crown Poly Crunchies Food Company Day-Lee Foods Durham Brands Duro Bag Early On, Inc. F. Gavina & Sons Ferrero U.S.A., Inc. FMS Solutions Fresh Dairy Direct – So. Cal Frito Lay Gizmo Beverages Golden Gate Paper Company Hansen’s Natural Hartz Mountain Helados Mexico (Tropicale Foods) Hispanic Specialty Brands International Paper Itasca Retail Jerry’s Bags & Labels Joy Cone Co. Karl Strauss Brewing Company LOC Software Lone Peak Labeling Systems McNairn Packaging, Inc. Monster Energy Company NCR Corp.

NexCycle NRG EV Service/eVgo (5 Hour Energy) Paramount Sales Group PBI Market Equipment, Inc.

Continued from “California’s Retail Rennaisance”

the transformation of the travel industry that followed. His fast-paced, information-packed presentation effectively addressed the need for retailers to embrace innovation and experimentation and create fresh approaches that connect with consumers.

The conference’s educational offering continued Tuesday with a morning slate of timely, informative sessions that continued exploring California retail’s new creative and innovative spirit.

Concurrent sessions examined the evolution of consumer shopping, how retailers must connect with shoppers in a new economic age and the next generation of customers – millennials.

Chuck Eckman, Kraft Foods Group, Inc., shares his insights during Share Group discussion.

This year’s Retailer Spotlight shined on Stater Bros. Markets, and featured company insights, perspectives and strategies into one of Southern California’s major grocery chains from George Frahm, Executive Vice President, Retail Operations and Administration, and Dennis McIntyre, Executive Vice President, Marketing.

Closing the conference’s educational program was the newly created Luncheon Keynote presentation featuring a panel of three top California grocery executives, moderated by Kevin Coupe of MorningNewsBeat.com.

Artist David Garibaldi amazed attendees at the Opening Reception.

The panel included Lori Raya, President, Vons Companies; Dan Sanders, President, Continued on p.32

Illuminator Headlite Jim Van Gorkom welcomes conference attendees.

Michael Amiri, Nutricion Fundamental, Inc.

Sponsors continued

Retailer Review Sessions featured 20-minute face-to-face meetings.

“ This format, I find, is the best way to make presentations to customers.

Getting a room and having almost all the key players in California come by is outstanding! You guys do a great job in booking them and the meetings pay off!”

— b ob ken n edy, J a c k L in k’s

People Water Pick Up Propane Pure Water Technologies Ralston Foods rePLANET, LLC Retail Solutions, Inc. Roplast Industries Inc. Sabert Corporation Sioux Honey Association Stericycle ExpertSOLUTIONS Sugar Bowl Bakery Sun Products Corp.

Tampico Spice Co. The Jel Sert Company Tony Chachere Creole Foods Trade Fixtures/Display Technologies TruGrocer Federal Credit Union Vertis Communications Pre-Conference Session Sponsor California Table Grape Commission Opening Reception Co-Sponsors Kraft Foods Inc. E & J Gallo Winery

George Frahm shares company insights during Retailer Spotlight presentation.

It was all fun and games at The Illuminators Special Event!

Registration Sponsor Save-A-Lot Food Stores Tuesday Keynote Sponsor Supervalu Wholesale Networking Lounge Sponsors Coca-Cola Refreshments OfficeMax, Inc.

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Share Group Discussions topics included center store, sustainability, new technology and healthy eating.

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Educational Program Sponsor CGA Educational Foundation

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CGA

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Continued from “California’s Retail Rennaisance”

Albertsons Southern California Division and Justin Jackson, COO, Andronico’s Community Markets.

The panel addressed the topic: The Innovation Imperative. The panel explored what it takes to create and sustain a culture of innovation within grocery operations both large and small. Each shared insights on how they are shaping their companies to lead in today’s modern age of retailing.

Building Your Business The CGA Strategic Conference historically is one of the most productive business events of the year in California. Nearly 800 face-to-face meetings between retailers, suppliers and wholesalers were pre-scheduled for Monday and Tuesday (a 10% increase from 2011) .

The CGA Strategic Conference returned to California after a 16-year absence.

Debbie Frahm, Dan Meyers, Stater Bros. Markets; Bob Lim, Kraft Foods Group, Inc.

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The Networking Lounge allowed attendees to relax and unwind.

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Almost 800 meetings were pre-scheduled during the conference.

CGA President Ron Fong and CGA Chair Jonathan Mayes presented during the Opening Session.

Tuesday’s Luncheon Keynote featured a panel discussion with (l to r) Kevin Coupe, MorningNewsBeat. com; Lori Raya, Vons; Justin Jackson, Andronico’s Community Markets; and Dan Sanders, Albertsons.

Elsa Bugarini, Flanigan Farms, was the winning bidder for David Garibaldi’s Frank Sinatra painting. Proceeds from the auction went to the CGA Educational Foundation.

Exhibitors displayed the latest in products, services and equipment.

Top grocery retail companies both large and small from throughout California participated in this year’s conference. Meetings were arranged in 20 and 40 minute blocks and ran continuously throughout the day following the morning educational offerings.

“Our pre-scheduled meetings really make our show unique,” Fong says.

“It’s a huge plus for both retailers and suppliers to know exactly who they will be meeting, rather than hope for a chance meeting.”

Strengthening Relationships

On Tuesday, early risers looking for exercise joined Dan McDonogh, one of the most globally recognized fitness personalities, for the Muscle Milk Boot Camp and a customized body-weight only workout created just for conference attendees.

New in 2012 was the Networking Lounge, sponsored

by Coca-Cola Refreshments and OfficeMax, which provided attendees with a relaxing location to recharge electronic devices, print documents or unwind while not in meetings.

Thank You Illuminators Of course no conference is complete without Continued on p.34

|

Tom Herman, Northgate Gonzalez Markets

It’s said that “timing is everything” and that was the case at the conference’s Opening Reception on Sunday evening where attendees witnessed first-hand the incredible artistry of David Garibaldi, a finalist on the latest installment of “America’s Got Talent.” Garibaldi painted four six-foot portraits of pop icons – three of which where auctioned following his presentation with proceeds going to the CGA Educational Foundation.

C AL I F O RN IA GR O CE R

In addition to pre-scheduled meetings and strong educational programming, attendees also indulged in after-hour events designed to provide additional networking opportunities with peers and prospective clients in a more casual setting.

Share Group participant Kevin Curry, Safeway Inc.

33

CGA

| Strategic Conference

Continued from “California’s Retail Rennaisance”

the tremendous support and involvement of The Illuminators. The California Grocers Association wishes to thank this elite group of industry suppliers for their continued support of the CGA Strategic Conference.

The Illuminators hosted its annual golf tournament Sunday morning and provided breakfast and lunch for conference attendees. In addition, select CGA and Illuminator officers competed in rowing races

Monday evening in the Renaissance Hotel pool during the Illuminators’ traditional Special Event.

“For more than 80 years, The Illuminators have provided food and networking functions at CGA’s annual conference,” said CGA’s Ron Fong. “CGA recognizes the hundreds of Illuminator volunteers who donate time and product to the conference, helping to elevate it to the leading grocery convention in the Western United States.” n

Mark your Calendar

2013 CGA Strategic Conference September 29 – October 1, 2013

Matt Ippolito (left) and John Parke (right); E&J Gallo Winery with Mary Connolly, Costco Wholesale.

One of the key benefits of attending the Conference is the opportunity to strengthen business relationships and network with industry peers.

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C A LI F O RN IA G RO CE R

(l to r) Cynthia Weifenbach, ATA Retail Services; Mark Johnson, Mike O’Donnell, Unified Grocers, Inc.; Ron Fong, CGA.

34

(l to r) Joe Falvey, Unified Grocers, Inc. and Richard Draeger, Draeger’s Supermarkets.

Renee Amen and Jim Amen, Super A Foods, Inc., were one of more than 35 retail companies participating this year.

Congratulations

Kevin Davis of Bristol Farms

California Grocers Association incoming chairman of the board

member profile

Northgate Gonzalez Market

It’s a story as old as America itself – an immigrant overcomes seemingly insurmountable obstacles to come to the U.S. and build a better life for himself and his family.

This is also the story of Northgate Gonzalez Market whose story spans generations and whose roots in the supermarket industry and Hispanic community in Los Angeles go back 40 years.

Actually, the story goes back to 1952 when family patriarch Don Miguel Gonzalez Jimenez struggled to rebuild his shoe store in the town of Jalostotitian in Jalisco, Mexico after a devastating fire. After 14 years, Don Miquel and his oldest sons emigrated to Los Angeles where they worked long hours to help the family that remained in Mexico.

It wasn’t until 1979 that the entire family was reunited in La Mirada, CA. By this time, Don Miguel heard about a supermarket that was up for sale in Anaheim, which was home to many people from his town. The first Northgate market was opened in 1980 in a 2,000-square-foot space.

Today, the 35-store chain, has become one of the most respected retailers on the entire West Coast and its stores a beacon for Hispanic immigrants from all over Latin America as well as a growing number of non-Hispanic customers seeking the best in fresh ethnic foods.

This growing customer base has produced steady expansion for Northgate.

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C A LI F O RN IA G RO CE R

“We’ve been opening a store a month in the past several months,” said Mike Hendry, vice president of marketing. “They are all within our existing marketing areas of Los Angeles, Orange and San Diego counties.

36

By Len Lewis

New store locations include East Los Angeles, Inglewood and a store in San Diego is scheduled to open in December. The new units range from 35,000 to 40,000 square feet.

This expansion has good news and bad news elements.

“The economy is still tough although we are doing pretty well and our demographic segment is growing,” Hendry says. “A number of retailers have suffered in this area, but it’s given us the

opportunity to look at new sites that are more affordable than they’ve been in a long time.”

While expansion is important to Northgate, the major reason behind its success lies in staying relevant to customers, according to Hendry.

“As the Hispanic culture broadens to different groups, we’re growing in a lot of different ways” he says. “Our customers are accustomed to finding products from their own countries, as well as items you would find in any grocery store. So we’re doing a good job expanding our entire portfolio.”

This is particularly challenging since the term “Hispanic” now means so many different things.

“Our predominant customer is of Mexican descent,” Hendry says. “But we have a lot of South and Central American customers from places like Guatemala and El Salvador. As such, we have to market to individual neighborhoods and that’s true for everything from grocery to meat and produce.”

“Our mix has always been heavily skewed to fresh, but we’re also expanding our center store in order

mem b er profile

to get more of that grocery shop – categories like tea and frozen foods that will keep ahead of trends and customer demand.”

One of these trends, albeit something that’s been around for years, is the focus on health and wellness.

“We’ve made a concerted effort to bring in hundreds of healthy food items and we’re in the midst of resetting all stores with sections containing natural, organic and other healthy alternatives,” he says.

“We’re finding that people haven’t had a lot of options or had to drive pretty far to get some of these products,” Hendry adds. “Customers are

| Northgate Gonzalez Market

very happy we’re putting in these departments and we’re doing very well.

Some smaller stores won’t get as many products.

But the goal is to have all stores outfitted by the end of this year.”

Looking ahead, Hendry sees a combination of new store expansion and remodeling for Northgate.

“We just intend to keep growing in a smart way and round out our portfolio of stores within our current footprint,” he says. “We have a 400,000 squarefoot distribution center next to our headquarters in Anaheim that’s capable of serving a lot of stores.”

Asked if the company is thinking about any new formats, he replied: “We think about what our neighborhoods need and expand or contract our offering based on what’s working. We think less about formats and more about what’s right for the neighborhood. Ours is not a cookie cutter approach.”

Hendry says Northgate Gonzalez is exploring smaller formats – the chain has several 18,000 square foot stores. “We’re trying to figure out the right mix of products to have in them,” he says.

“It’s an area that’s growing for us,” he says.

“We have a new set of items with new packaging we’re putting in place. It’s very exciting to see that unfold and it will play an important role for us moving forward.” n

C AL I F O RN IA GR O CE R

For all stores this could include more private label products.

| 37

Congratulations ON YOUR

60

TH

ANNIVERSARY!

All trademarks are owned by PepsiCo, Inc. and its affiliates. Š2011

Food Trend Resolutions Shifts in today’ s consumers fuel ideas for S u n s e t’ s new editor - in- chief.

Flipping the calendar to a new year makes us look ahead with fresh hopes and energy. It’s no different at Sunset, where new editor-in-chief Kitty Morgan is zeroing in on key directions and ideas that will capture the consumer zeitgeist of 2013, including how it pertains to food and food products. Here’s a look at her horizon.

Cooking has become entertainment, chefs are celebrities, and dining out is a sport. The people who put the food in front of us – whether they are in restaurants, food trucks, grocery stores, or farmers’ markets – are the stars. Highlighting these creative individuals, gleaning their ideas and giving them platforms – that’s a key trend for today’s food messaging.

Weekends are for playing with your food.

During the week, consumers want to prepare easy, healthy meals – that hasn’t changed. But on the weekend, they’re ready to mix it up a bit – try new techniques, experiment with new ingredients, and cook with new combinations.

At Sunset that means offering more challenging recipes and unusual ethnic ingredients – pushing cooking in new and exciting directions – along with fresh and easy meals. Availability of unusual, exotic ingredients in stores and other outlets has expanded what’s available to today’s consumers too.

Everybody gets face time.

We’re still seeing stars.

What’s trendy in 2013 Here’s a trio of projected food trends* for the coming year.

1) Sour flavors catch on. Zingy foods will rule the day, with menus and markets featuring ingredients like fermented cherry juice, designer vinegars, and even sour beer.

2) Sweet and savory mash it up. Look for new ways of using fruits’ natural sweetness to jazz up traditionally savory dishes, including appetizers and meat entrees.

3) Special diets get their due. Whether consumers are vegan, lactose-intolerant, low-carb, gluten free, or eco-conscious (can you say “grass-fed”?), they’ll find an increasing number of purveyors and restaurants offering what they want and need.

|

Celebrity is an undeniable magnet. But what we’re seeing with our readers is that they don’t want to hear from just any celebrity – star power isn’t enough. They want to hear from real tastemakers who speak to their interests –

— Harriot Manley

C AL I F O RN IA GR O CE R

Social media has opened a real two-way conversation with consumers – at Sunset, our readers tell editors what they like, what they want, what they want to know. The big shift is making sure this isn’t just a sounding board, but a real dialogue.

creative and personable chefs, stylists, photographers, and in-the-know makers of new food or home products. It’s like a new generation and definition of what makes a star. n

FRESH MARKE T NE W S

Cooking is now center stage.

*Source: SRG 2013 Predictions

39

know the law

Ralphs Grocery v. UFCW: What Next?

On O ctober 3 , 2 0 1 2 , the California S upreme C ourt heard oral argument in R al ph s G r o cery C o m pa n y v. U n i t ed F ood an d C om m e r c i al W or k e r s ’ U n i on L oc al 8. The decision , which should come out b y early J anuary, could well decide the fate of C alifornia’s “M oscone A ct ” — a 1 9 7 5 law that denies C alifornia courts jurisdiction to issue injunctions in cases involving “ labor disputes. ”

The appeal considers whether it is constitutional for a state legislature to favor certain subjects of speech.

The “Moscone Act” prohibits state courts from issuing injunctions when “any person or persons, whether singly or in concert” is “giving publicity to, and obtaining or communicating information regarding the existence of, or the facts involved in, any labor dispute” so long as they not engage in “fraud, violence or breach of the peace.”

In 1972, the U.S. Supreme Court, in Police Department of City of Chicago v. Mosley, decided that an ordinance that prohibited picketing or demonstrations within 150 feet of any primary or secondary school building was unconstitutional when it contained an exemption for “peaceful picketing of any school involved in a labor dispute.”

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C A LI F O RN IA G RO CE R

John H. Douglas is a management side labor lawyer in the San Francisco office of Foley & Lardner LLP. He can be reached at jdouglas@foley.com

40

In invalidating the ordinance, Justice Thurgood Marshall found that it unconstitutionally described “permissible picketing in terms of its subject matter. Peaceful picketing on the subject of a school’s labor-management dispute is permitted, but all other peaceful picketing is prohibited.”

This kind of content-based discrimination, the Court concluded, violated the First Amendment: “The operative distinction is the message on a picket sign.” The “First Amendment,” however, the Court found, means “government has no power to restrict expression because of its message, its ideas, its subject matter, or its content.”

Unions in California rely on various exemptions for “labor disputes” within trespass statutes when police are called regarding pickets on private property – and frequently threaten (usually effectively) civil rights lawsuits to dissuade California police from arresting or DAs from prosecuting.

In July, 2007, Foods Co. opened a new non-union store in Sacramento’s “College Square” shopping area. UFCW organizers responded immediately with a five-day-a-week picket at the store’s front entrance urging a boycott. Foods Co. initially tried to get the union simply to respect certain rules that it was willing to apply to anyone engaged in “free speech” on its premises. The union, however, refused.

Eventually in April, 2008, Ralphs sought an injunction in Sacramento Superior Court, and contended that the Moscone Act was unconstitutional. The trial Court agreed that the Moscone Act was unconstitutional, but denied Ralphs an injunction after finding that the company had failed to comply with a separate statue setting up set special procedural requirements to get an injunction in a labor dispute - Labor Code section 1138.1.

Ralphs appealed. Two years later, the California Court of Appeal issued a decision agreeing that the Moscone Act was unconstitutional - and finding that Labor Code section 1138.1 was as well. The Court of Appeal directed the trial court to grant the injunction and the Union appealed.

In its upcoming opinion the California Supreme Court will very likely decide whether the Moscone Act and California Labor Code section 1138.1 are constitutional. If the Supreme Court agrees with the Court of Appeal life will become much easier for grocers trying to keep labor protestors away from their front doors and outside their parking lots.

If the Supreme Court dodges the issue – or agrees with the union – Ralphs might very well try to get the U.S. Supreme Court to hear another appeal.

Either way, the “balance of power” between California grocers and the UFCW is likely to shift significantly one way or another. Stay tuned. n

A toast.

To Bruce Everet te of Safeway Inc., for his induc tion into the CGA Educational Foundation Hall of Achievement.

“For recognition of those individuals who have spent their professional careers serving the grocery industry while giving back to their communities and their industry.”

- California Grocers Association

From your friends at

®

®, ™, © 2012 Kellogg NA Co.

Congratulations

To our own

Bruce Everette of Safeway Inc.

We are extremely proud of you for your important contributions to the grocery industry.

Congratulations on your well-deserved induction to the CGA Educational Foundation Hall of Achievement!

I n dust ry Honor s

Grocery Executives More than 450 friends, family and industry peers celebrated the induction of two industry executives into the CGA Educational Foundation Hall of Achievement on October 18 — a gala event that also recognized the Foundation’s 20th anniversary.

Bruce Everette, Executive Vice President, Retail Operations, Safeway Inc., and Dave Jones, Vice President, Industry Initiatives, The Kellogg Company, join a prestigious group of Hall of Achievement recipients who ahave 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 during the Foundation’s 20th Anniversary,” said CGAEF President Ronald Fong. “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.”

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 15-year Bel-Air employee Jeremy Cullifer, a multi-year CGAEF scholarship and tuition reimbursement recipient. After his presentation, guests bid on live auction items featuring a luxurious getaway to Costa Rica and an exclusive African Safari in Southern Maputaland, and participated in a FundA-Need supporting CGAEF’s college scholarship program.

The CGA Educational Foundation was created under the direction of the California Grocers Association Board of Directors in 1992 and is celebrating its 20th anniversary this year. In 20 years, the Foundation has awarded over 2,300 scholarships totaling $2.7 million and disbursed more than $1,000,000 in tuition reimbursement.

See photos on p.44

|

“It is very gratifying to see the strong industry support for this very important event,” Fong said. “With California’s

HOA Honorees Dave Jones and Bruce Everette, with CGA President Ron Fong and CGAEF Board Chairman Jim Van Gorkom.

C AL I F O RN IA GR O CE R

Led by this year’s event co-chairs Kelly Griffith, Safeway, Inc.; Scott O’Hara, the Kellogg Company; and Bob Wilson, Nestle DSD, the event raised more than $316,000 – funds that support the Foundation’s college scholarship and tuition reimbursement programs.

left to right:

43

honor ee

bruce ev er et t e ,

Safeway Inc.

|

C A LI F O RN IA G RO CE R

One of Safeway’s most experienced, well-traveled executives, Bruce Everette began his career in 1968 as a parttime courtesy clerk while attending school in Richmond, Virginia. He subsequently advanced through the retail ranks as Director of Bakery and Deli and then General Manager of the company’s former Drugs For Less operation. Bruce has held the position of Division President for both Arizona and Northern California markets. He has served as Interim President of Randall’s and Thom Thumb in Texas and Dominick’s in Chicago. He was designated an Executive Vice President in 2001, and is currently responsible for Retail Operations of Safeway Inc.’s 10 divisions and over 1,700 stores.

44

Bruce has a long history of service to the grocery industry. He has served on numerous advisory boards and association committees including the Western Association of Food Chains Board of Directors. He serves on the Board of Directors for Easter Seals, City of Hope, and Muscular Dystrophy Association. Bruce is also a member of the Executive Leadership Team for the American Heart Association, has served on the advisory council for Saint Mary’s College, and actively supports various non-profit organizations including the Salvation Army, Boys and Girl Scouts, and several local food banks.

above: L:R Sara Lee California team:

Willie Crocker, John Crowder, Perry Sanders, Tom Jones, Brian Giebler and Nate Jacobousse.

left: Shiloh London, CGAEF Executive Director, displaying an autographed Eagles guitar during the live auction.

above: L:R Shant Hagopian, Kim Steyer, Helen Segura, Foods Co.;

Sherry Hughes, Ralphs Grocery Company; Tricia Magtanong, and Mark Pincombe, Foods Co. HOA Honoree Bruce Everette with Safeway Inc. executives Kelly Griffith (L) and Henry Michon (R).

honor ee

d av e j o n e s ,

above: Michael Tracy, Market6, placing

a bid during the live auction.

left: CGA Chairman Jonathan Mayes (L) with CGAEF Chairman Jim Van Gorkom (R). bottom: Members of the Kellogg Company enjoying dinner.

Kellogg Company

Dave Jones joined the Kellogg Company in 1986 as a sales representative in Tulsa, Oklahoma.

He has held a number of field assignments in Springfield, MO, Grand Rapids, MI and Bedford, NH. In 1994, he was promoted to Director of Contracted Sales in Battle Creek, MI. In 1997, he was promoted to Director Team Sales for the Northeast Region in Princeton, NJ. He was named Director of Retail Sales in 2000 in Dallas, TX, and in 2004, was promoted to Senior Director Business Development & Sales Operations in Battle Creek, MI. He has been in his current role as Vice President, Industry Initiatives, since 2006.

Culliver, CGAEF Scholarship recipient, Raley’s/Bel-Air, and Maribel, Rivera Raley’s/Bel-Air.

|

above: L:R Aleksandra Jaksic, Raley’s/Bel-Air, Debbie Cullifer, Jeremy

C AL I F O RN IA GR O CE R

He currently serves on the following Board of Directors: FMI Educational Foundation, California Grocers Association, National Grocers Association, National Frozen & Refrigerated Association, Saint Joseph’s and Western Michigan University’s Food Marketing Program, Global Market Development Center (GMDC) and Food for All. He is Chair of the FMI Meetings and Conferences Committee, in association with the FMI Industry Collaboration Council, Chair of the WMU Advisory Board, and serves on the CGA Executive Committee.

45

2 012 sponsor s

The CGA Educational Foundation wishes to thank the following companies for their generous support of the 2012 Hall of Achievement Dinner.

Platinum Dinner Sponsors

above: L:R Bob Lutz, Unified Grocers, HOA Honoree Dave Jones and wife

Mari Jones, and Dan Meyer, Stater Bros. Markets.

above: The Hall of

Achievement Award.

Gold Reception Sponsors

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C A LI F O RN IA G RO CE R

left: Bob Garibaldi, Unified Grocers (L) with Chris Podesto, Food 4 Less/Rancho San Miguel Markets (R).

46

above: L:R Kelly Griffith, Safeway Inc., with wife Kristen Griffith and HOA

honoree Bruce Everette.

Here’s to a gentleman who really gets into his work.

Congratulations to our colleague, Dave Jones.

For his induction into the CGA Educational Foundation Hall of Achievement.

Your extraordinary efforts on behalf of our industry and your community have not gone unnoticed.

®, ™, © 2012 Kellogg NA Co.

Congratulations

Boss!

on being named California Grocers Associationâ&#x20AC;&#x2122;s 2013 Chairman

from your Bristol Farms Family

C G A C h a i r K e v i n Dav i s

By Len Lewis

Education Is The Key To Industry’s Future Davis, chairman and CEO of Bristol Farms, and incoming CGA Chairman of the Board, has long been an outspoken advocate for the supermarket industry and a long-time supporter of CGA’s legislative, educational and membership initiatives.

“I don’t care if they’re a psychology, business or education major, young people have a role in the grocery industry of the future and we need to express that today through CGA’s Educational Foundation,” he said.

“We’ve been very effective in developing an interest in our industry and a career path for students,” Davis says. “We need them in order to grow. The Foundation’s Board of Trustees and its scholarship program have done a great job in communicating the value of education to our members and to their employees.”

Continued on p.50

C AL I F O RN IA GR O CE R

If there was one word to describe Kevin Davis’ agenda for the California Grocers Association it would be education – a multilevel initiative that consists of informing more young people on career opportunities in the industry, retailers on the value of proactive membership and legislators on the real impact of issues facing the business.

| 49

cga chair

| Kevin Davis

Continued from “Education Is The Key To Industry’s Future”

“It’s encouraging people to grow with the industry,” Davis noted. “In turn, we are developing some great minds for the future of our industry.”

This will be essential in order for the supermarket industry to overcome major issues such as the lack of growth in California’s economy, new competition from alternative formats and overregulation by legislators.

“Elected officials are attempting to appease a vast array of special interests in areas like the environment, health and safety and other issues that raise the cost and difficulty of doing business across the state,” he

by expressing our concerns to the legislature and by having strong relationships with those officials,” he says. “There’s no doubt that the Legislature listens. In many cases, CGA has been able to have laws reflect our position so we can better serve our customers and the needs of the state on issues like the environment.”

The real work lies in making the playing field as level as it can be when it comes to regulations that impact the industry and to reduce the cost of doing business in California with smart legislation that improves the economy and creates jobs instead of chasing companies out of state.

“California has been rated the single worst state to do business in by several different magazines because of taxes and the overzealous regulation of businesses,” Davis noted.

“The Legislature’s intent is not to spend money unwisely,” he believes, “But they’re trying to take care of so many groups that they tend to lose sight of their primary task, which is to make California a place that people want to come to instead of one they want to get out of.”

Here, the key is to have strength in numbers through continued CGA membership growth.

“We could have an even stronger voice if more companies were involved in public policy through our association,” Davis suggests. “I think we have an opportunity to reach out to more chains and independents that could help CGA in many ways.

said. “At the same time they are encouraging us to build stores in what they consider food deserts. It’s a double-edged sword.”

|

C A LI F O RN IA G RO CE R

Bristol Farms, like other retailers, gets calls from communities all the time asking when stores will be built in their area.

50

“Building and operating stores with the vast array of regulations and permits that are needed is very costly,” says Davis. “Even things like recycling are hit and miss and changing all the time. There are so many stipulations, regulations and oversight by different groups that growing our business is very difficult.”

Here, CGA will continue to play an essential role.

“The association does a fabulous job in government affairs and being the voice of the industry in California

Independents are part of the local job scene, Davis says, and can make local elected officials more aware of the impact they have on the community. When their voice is heard, it raises that of the entire CGA. However, when it comes to membership, he sees CGA being more inclusive rather than exclusive.

As such, even retailers for whom groceries are not the primary product line should be considered for membership.

“We could use their voice in reaching our goals,” he says.

He reiterated that the major goal of CGA’s government relations program is to address potential regulations coming out of Sacramento, as well as local laws that often take their place.

Continued on p.52

Congratulations to Save Mart Supermarkets on 60 years of Retail Excellence!

Sara Lee/California

cga chair

| Kevin Davis

Bristol Farms Celebrates 30th Anniversary For 30 years people have been trying to pin a label on Bristol Farms. Is it a supermarket, a health food store or something entirely different?

For Kevin Davis, who has seen the 14-store chain through various incarnations, the answer is simple—Bristol Farms is an independentlyowned “lifestyle store” for consumers who want to experience food at its highest level. In other words, the best of everything. Maybe not so simple! But it has set Bristol Farms apart from all types of competitors for decades.

a year after Yucaipa Cos. acquired Ralphs where he had worked since 1974.

Growth continued in key areas and in 2000, the company opened a supermarket on the site of the legendary Chasen’s restaurant in Hollywood.

However you define it, Bristol Farms has had a greater impact on the supermarket industry at large than chains that are far older. The company was founded in 1982 by Irv Gronsky and Mike Burbank who sold their Los Angelesbased fine meat business but were not quite ready to retire.

They never liked the way supermarkets handled their meats so they decided to open a specialty butcher department and stock upscale groceries, deli and produce at a former supermarket in Rolling Hills, Ca. Coming up with the name was easy. Gronsky lived on Bristol Street and the word “Farms” made the operation sound fresh. The store was an immediate success and four years later they opened a second store in South Pasadena. The third store in Manhattan Beach opened in 1992.

But at 30,000 square feet, it was the largest and almost drained the partners financially.

|

C A LI F O RN IA G RO CE R

In 1995, Bristol Farms was sold to private equity firm Kidd Kamm, whose investors included Oaktree Capital. Davis joined the company in 1996 as executive vice president,

52

However, one way or another, it was always Oaktree’s intention to sell Bristol Farms and, in 2004, the company was sold to Albertsons.

In 2006, the company grew by another 40 percent by opening four stores in such lucrative markets as Westchester, La Jolla, San Francisco and Palm Desert.

That same year, the company was acquired by an investment firm led by Cerberus Capital Management and Minneapolis-based Supervalu.

It became a subsidiary of Supervalu.

But by 2010, the company sold Bristol Farms to Endeavor Capital, a new private investment company formed by the chain’s management team. In effect, this brought Bristol Farms back to where it started in 1982 as an independently owned company.

Congratulations Kevin Davis

New CGA Chairman of the Board From the Albertsons Family

cga chair

| Kevin Davis

Continued from “Education Is The Key To Industry’s Future”

“For example, we lobbied long and hard for a statewide bag bill,” Davis says. “We ended up with a patchwork quilt of ordinances that are different in stores across the street from each other.

“Try explaining to consumers why they have to pay for bags in one store and not at your competitor across the street,” he quips. “They don’t see what’s going on behind the scenes, just the results.”

What consumers also see is the changing nature of the industry due to non-grocery competition.

“When I was a box boy in the early 1970s, 98 percent of the food eaten at home was bought at a grocery store,” he reflects. “Today it’s 48 percent. Even drug stores advertise milk and eggs in order to draw people into their store for prescriptions. Everyone wants to be in the grocery business and all of them have taken business away from traditional grocers.”

The key for the industry, through CGA’s expertise, is to give consumers a reason to shop their stores, according to Davis.

The Bristol Farms executive served on the Coca-Cola Retailing Research Council and reflected on one of the Council’s studies that looked at how shoppers view grocery stores and their decision-making process.

Congratulations, Kevin.

|

C A LI F O RN IA G RO CE R

We’re pleased to salute Kevin Davis, CEO of Bristol Farms, on his appointment to chairman of the board of the California Grocers Association. For 30 years Bristol Farms has served its customers and its community with distinction, and we’re excited Kevin is bringing his leadership and experience to the CGA.

54

Helping valued clients like Bristol Farms succeed is what drives us. Discover how we can put that passion to work for you.

Los Angeles | Woodland Hills | Orange County | San Diego | San Francisco Santa Rosa | Napa | Silicon Valley | Sacramento | Stockton w w w. m o s s a d a m s . c o m

Certified Public Accountants | Business Consultants

Acumen. Agility. Answers.

cga chair

“One of the findings was that instead of going to the best store for everything as they had in the past, consumers now go to stores based on their mindset for that particular trip, whether it’s a stock-up trip at a low price discount store or a fill-in at a traditional grocery store,” he says.

| Kevin Davis

“No one wants to be used as a convenience store.

We have to offer consumers a compelling image of our stores. That means educating consumers on what we are and retailers on what we can and should be,” concluded Davis. n

C AL I F O RN IA GR O CE R

Congratulations to our fellow Trojan Alum Kevin Davis on becoming CGA Chairman of the Board.

From your fellow University of Southern California Trojans Mike Schall and Dr. Brian Harris.

| 55

Save Mart Supermarkets

turns

|

C A LI F O RN IA G RO CE R

When you grow up in a tough neighborhood, you get tough.

56

You develop what’s been called “street smarts” or “street cred” and you get to know everything about your environment and the people in it.

For the past 60 years, Save Mart Supermarkets has lived and thrived

in one of the toughest neighborhoods in the country – California – where a challenging business environment, a deep recession and one of the most diverse and demanding populations in the country has been the downfall of lesser chains and independents.

Save Mart’s success is the result of a long-term strategy put in place by

Chairman and Chief Executive Officer Bob Piccinini, his father, Mike, and uncle, Nick Tocco, who opened the doors to the Modesto-based retailer in 1952.

Today, the family-owned company operates about 226 stores with over 17,000 associates. The company remains resilient after having acquired

By Len Lewis

The same values and attention to customers that began more than 60 years ago continue guiding the company into a new era of grocery retail.

“The question of how we’ve been able to operate here is something we hear from a lot of our colleagues around the country.

We’ve just grown up with it and it’s where we simply have to live and work,” said Steve Junqueiro, president and chief operating officer, and a 39-year veteran of the chain who is active in both food industry and community affairs.

“Yes, California is a difficult place and becoming more difficult due to the influx of competition. The answer lies with customers and how we stay relevant in ways that find solutions for them every day,” he said.

Continued on p.58

C AL I F O RN IA GR O CE R

the Northern California Albertsons locations, executing a progressive remodeling program, and participating in a number of highly successful community-based programs.

| 57

6 0 y ears

| Save Mart

Continued from “Save Mart Supermarkets Turns 60”

Part of that solution comes from the development of different store formats in Northern and Central California and Nevada under the Save Mart, Lucky, S-Mart Foods, FoodMaxx and Maxx Value Foods banners.

“We’ve found we can answer the needs of the marketplace with some very compelling formats,” he said.

“But, staying relevant to customers is not a one shot deal. It’s something that must continually evolve,” Junqueiro shared.

“Customers have changed in the past five or six years for a number of reasons. Certainly the economy has changed the way they shop. They’re searching for solutions and value and they’re aided in that search because everyone’s in the food business these days,” he said, citing retailers like Target and major drug chains.

|

C A LI F O RN IA G RO CE R

“The whole consumer psyche and the way they make purchase decisions have changed immensely due to the introduction of e-commerce,” he added.

58

But the good news – and the retailer’s greatest challenge – is this new consumer is not exclusively about price.

“We have customers in all categories,” said Nicole Piccinini, senior director of strategy and business development, who is involved in industry associations, including CGA, and whose background at the chain includes private label category management and store systems technology development. “We do have a large customer base looking for value. But there are others who want more and are willing to pay a bit more for a level of service that goes beyond price. That’s what having different formats enable us to do – focus on the needs of individual communities in which we operate.”

What are consumers looking for these days?

“If I could answer that question we wouldn’t have another care in the world,” she added. “But generally speaking, it’s anything and everything. People have Continued on p.60

Bengard congratulates the Save Mart team for 60 years of excellence

6 0 y ears

| Save Mart

Continued from “Save Mart Supermarkets Turns 60”

access to so much information and this leads to an ever-growing desire for newer and better things.”

“But, it really depends on each community we go into,” she added. “Customers in some areas just want good, basic value. Others are looking for more variety. It’s our job to evaluate each location to see what best meets our customers’ needs. You’re not going to find the same customer in Carmel you’d find in Bakersfield.”

Save Mart’s advantage also lies in the fact that it is a chain that is able to think and act like an independent.

“It really is a little bit back to the future,” said Junqueiro. “No matter where customers are in their buying capabilities, they have become very discerning and specialized. Our job has always been to provide a good, efficient shopping experience in all our formats.”

“One example is our new generation of FoodMaxx stores – a price impact store with a bright, progressive

new look which appeals to both a price sensitive and conventional shopper,” said Junqueiro. “Save Mart wants to make sure it offers the best shopping experience possible even if it’s a price-oriented store.

The FoodMaxx shopping experience has remained relatively unchanged since the late 80’s.”

“In our newer FoodMaxx stores, we’re eliminating the steel racking that’s typical in a warehouse store and opening up the shopping pattern,” he said.

“We’ve also put in conventional floor tile and added new amenities like self-checkout lanes as well as pharmacies and tortillerias in some of the stores.”

Asked about store growth, Junqueiro notes Save Mart has been limited by availability.

“New construction is limited in our marketing areas and we’d be hard-pressed to find developers willing to start new projects,” he said. “There are just too many commercial real estate vacancies right now.”

Continued on p.62

Congratulations

|

C A LI F O RN IA G RO CE R

Save Mart Supermarkets on 60 Years of Service.

60

myfood4less.com ranchosanmiguelmarkets.com

Congratulations Save Mart on 60 Years!

Edge Sales & Marketing and our vendor community congratulate Save Mart on 60 amazing years! Hereâ&#x20AC;&#x2122;s to 60 more!

Edge Sales & Marketing www.edgesales.com

6 0 y ears

| Save Mart

Continued from “Save Mart Supermarkets Turns 60”

By the Numbers S ave M art:

107 lucky:

65

S- M art foods:

6

foodmaxx :

46

maxx value foods:

2

That’s not necessarily a bad thing for Save Mart.

“With our locations, we have an opportunity over the next two or three years to take a look at existing store formats to make sure they are serving our customers,” he said. “That’s why we’ve converted some of our conventional stores to the FoodMaxx banner. These stores answer the needs of those neighborhoods and our customers.”

The same is true for the company’s newest store banner, Maxx Value Foods – a limited SKU format that Junqueiro calls a work in progress.

“We’re continuing to refine it,” he added. “We want formats relevant to customers who live around each store.”

Piccinini added, “Right now, we’re focused on trying to understand how a traditional store can meet the needs of customers while also becoming more specialized in certain areas. A generic approach is not the way to gain market share in today’s world.”

“We are creating a more progressive go-to-market strategy that involves products we may not carry today,” she said. “But, it’s not for us to decide what to put in the stores – that will be determined by our customers. We want to make their life easier by maybe taking one extra stop off their chore list.”

After acquiring Albertsons’ Northern California division five years ago, Save Mart went from three major marketing areas to seven. Since then, it’s been focusing on adjustments that answer the needs of those markets.

|

C A LI F O RN IA G RO CE R

“There’s a lot of opportunity to merchandise stores the way consumers want them,” she added. “San Jose is a great example. We have about 15 stores there and it’s one of the most culturally diverse areas in California. If we were doing the same price, promotion, and product mix in every store there, we’d probably be wrong in a few of them.”

62

One thing helping Save Mart maximize opportunities is technology.

“We can always be more efficient,” Junqueiro said.

“We’re still streamlining operations and logistics while also creating synergies in a company that doubled in size overnight.”

“A lot of the systems out there allow us to be more efficient and effective in basic operating procedures,”

Piccinini added. “It’s become a new way to talk to the consumer by building trust and a holistic relationship – not just push information out to them.”

Piccinini added, “Many companies like to be first out of the gate with new technology – the early adopters.”

“We like to see how things play out,” she said. “So when we take a step, it’s a step in the right direction.

Technology is a big part of our future. We’re still working on how we want it to interact with customers and how we can leverage it to build our relationship.”

When it comes to digital marketing and social media, Save Mart is taking the traditional route of Facebook and Twitter while finding the newest social spaces like Pinterest as well. “We’re trying to get more information out to consumers and get their feedback on what they see in our stores and what they’d like to see,” she said. “For us, it’s about becoming a reliable source for things that are useful to them everyday.”

Junqueiro agreed, “It’s the retailer’s job to communicate with customers.”

And for 60 years, Save Mart has been doing just that through traditional channels like newspaper ads, radio, television, and community involvement.

“Now we have a new opportunity to develop an intimate relationship with customers where they live – and that’s the social media space,” Junqueiro said.

“Regarding what the chain is hearing from customers,” Piccinini added, “there is no simple answer.”

“We’re hearing from people across all spectrums,” she noted. “While we can’t please everyone and we can’t solve the economic problems in the country or in our state, we’re listening to them and are trying to find a better way to create better solutions for them.”

“We want our stores to help them whether it’s through price, convenience, or anything else. If we can make their shopping trip easier, then we’ve made their day easier,” she said.

New stores and remodels are important.

“Our greatest opportunity today is to work with the stores we have and to ensure each of them answers the needs of the market,” Junqueiro added.

As Piccinini put it: “Our position has always been, we have to be ready for anything. No matter what the economic or competitive situation might be, we’ll make sure we’re prepared to take on any opportunity that comes our way.” n

HAPPY ANNIVERSARY from the

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Here’s to

11/9/12

3:46 PM

Page 1

more years of Sweet Success!

|

©2012 Domino Foods, Inc.

C A LI F O RN IA G RO CE R

From your Friends at

66 Client: Domino Media: Save Mart

T H I S A D V E RT I S E M E N T P R E PA R E D B Y Job #: DM2011-1014 Issue: #6

B l a c k Tw i g L L C

Ad #: DOM- 1507 Ad Size: live-7.125x4.625 trim-7.375x4.875 no bleed”

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It’s a proud moment for a great company.

From your friends at Kellogg.

®, ™, © 2012 Kellogg NA Co.

68

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C A LI F O RN IA G RO CE R

By Oscar Katov

The World’s Biggest Salad Bowl A $3.8 Billion Cornucopia!

Continued on p.70

C AL I F O RN IA GR O CE R

Some patches of land in America are so arid that the hardiest sprigs of green can’t be coaxed to break through the top soil. But, our country’s many millions of coast-to-coast acreage enjoys an almost Biblical blessing, bursting with grains, fresh fruits and vegetables to feed our nation’s families, as well as nourish families elsewhere in the world.

| 69

california

| Produce

CALIFORNIA PRODUCE: Unmatched In The World While Monterey County continues to proclaim its self-annointed status as “The World’s Biggest Salad Bowl,” proud of its history in evolving from Mexican rancheros and the wild days of the gold rush -- Anaheim prizes its role as the country’s center for fresh produce marketing activity, citing the more than 20,000 U.S. and foreign representatives who flooded the city in October, attending the industry’s “Fresh Summit” International exposition.

However, If bragging rights were being correctly assigned, California itself should be taking bows, recognized for the extraordinary array of fresh fruits and vegetables grown in the state, unmatched by any other place in America. Bryan Silbermann, president of Produce Marketing Association (PMA), simply defines it this way: “California is absolutely unique in produce, that’s why we bring our exposition here.”

|

C A LI F O RN IA G RO CE R

And there’s still another important facet to this multi-layered, multi-billion dollar industry – development of “The Center For Produce Safety” at the University of California, Davis. Research there is directed at answering critical questions in specific areas of food safety practices for fruit, vegetable and tree nut production, and in harvest and post-harvest handling.

70

And, a key CPS objective is to provide the produce industry with practical, translatable research data that can be used at all levels of the supply chain – farmers, shippers, handlers and consumers. Funding for CPS has been provided by the California Department of Food and Agriculture, the University of California, Taylor Farms, and Produce Marketing Association.

Continued from “The World’s Biggest Salad Bowl”

Hidden in this extraordinary landscape are special places, where water and land come together in a confluence of wonderful results.

One of these places is in our own back yard – Monterey County – for years self-proclaimed as “America’s Biggest Salad Bowl” noted for its “cornucopia” of nutritious green products found in the produce departments of our supermarkets across the country – quickly hustling their refrigerated way from field to store, from California to New York.

“The dollar value of these “specialty crops” totaled $3.85 billion in 2011,” said Eric Lauritzen, Monterey Agricultural Commissioner. “It’s a great testimonial to the effective use of our 225,000 irrigated acres.”

Leaf lettuce led the group, topping $777 million, followed by strawberries, $713 million; head lettuce, $454 million; broccoli, $229 million; and celery, $182 million. Among all of California’s counties, Monterey ranks fourth in the value of its agricultural products, with some of these counties earning widespread consumer appreciation for their citrus products, and for a wide variety of wines recognized across the country.

The extraordinary fertility of Monterey County acreage and the value of its crops also is evident in the competition of the marketplace, where its multibillion dollar value exceeds the total value of Mexico’s produce exports to the U.S. The history of Monterey County agriculture goes back to the Hispanic mission-supported agricultural period, when farming was limited by both the size and distribution of the population, and by the singular emphasis of the economic base such as raising stock for the hide and tallow trade.

According to records of the Monterey County Historical Society, “the agricultural population of 780 persons outside Monterey City in the 1840s was scattered over the county on land grants, which covered nearly all of the valley area, but had little monetary value. Stockraising required large areas of land, imposing a pattern of sparse settlement. Cattle thrived with little or no attention. Nearly the whole unfenced expanse of the Salinas Valley was grazed by herds that were descendants of the original stock that had been driven up from Mexico for the missions.

The economy was very stable.”

california

Now move to 1848 and the discovery of gold.

The Historical Society report noted, “The discovery acted upon this relatively stable situation with the force of an electric shock. In less than two years the population of the state changed from a few scattered self-contained units to a predominance of males composed almost exclusively of miners.”

“The dollar value of these “specialty crops” totaled $3.85 billion in 2011.

It’s a great testimonial to the effective use of our 225,000 irrigated acres.”

“While we’re pleased by the volume of our specialty crops, and their marketing appeal by supermarkets across the country, there’s a special factor for us in knowing that our fresh products contribute to good health,” said Commissioner Louritzen.

Apparently, the message about diet and wellness has resonated in the supermarket industry. Growing numbers of retail grocers are hiring dietitians to develop store programs, and even to discuss individual programs with shoppers. And a Midwest chain has installed a dietitian in each of its 235 stores.

“Fresh produce and wellness are a perfect fit,” said Bryan Silbermann, president of the Produce Marketing Association. “I am delighted to see produce being sold at any retail outlet. While in New York recently, I saw a crowd lined up at a Duane Reade drug store on a Saturday night buying produce – not lined up for a movie or to see a play! Wonderful sight!” n

|

Ultimately, attention returned to the fields and farms, and technology changes, including irrigation, became

important. Also, recognition emerged for the need of seasonal field labor, particularly when a significant marketing shift occurred, in concentrating on single crop production, such as leaf lettuce.

C AL I F O RN IA GR O CE R

“Not only were the tens of thousands of newcomers intent upon reaching the gold fields, but, the vast majority of men had left jobs and crops unattended elsewhere. Food and supplies had to be brought in from distant places. The high prices prevailing at San Francisco attracted large shipments of commodities, and soon glutted the market with flour, beans, tobacco, lumber. Goods were left on deserted vessels, and perishables were thrown from warehouses into the streets.”

| Produce

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Congratulations, Save Mart.

72

We’re proud to a be part of your success.

BlueRhino.com ©2012 Ferrellgas, L.P.

CELEBRATING

60

Years OF

SAVE MART

C AL I F O RN IA GR O CE R

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C A LI F O RN IA G RO CE R

Reviving the Center Store

By Len Lewis

Retailers are never tired of hearing about the center store, but they are tired of losing it. That’s the assessment of longtime industry veteran Craig Rosenblum, who led a share group discussion on driving and reviving center store sales at the recent 2012 CGA Strategic Conference in Palms Springs.

Sitting down with California Grocer following the conference, Rosenblum, a partner in Willard Bishop Consulting with extensive expertise in strategic and tactical development, noted that, historically, non-consumable categories like pet, paper, health and beauty care, laundry products and baby products like diapers and wipes have been among the biggest for traditional supermarkets.

“Traditional grocers have been giving that up to the likes of the mass market operators like Targets and Walmart and to the club stores for some time.,” Rosenblum says. “Those are all the high gross margin percent and dollar categories that have been walking away.”

Continued on p.76

C AL I F O RN IA GR O CE R

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reviving

| Center Store

Continued from “Reviving Center Store Sales”

It’s a major topic of discussion because of the financial pressures it’s putting on traditional retailers, he says, noting that categories like ready-to-eat cereal, commercial baked goods and even cookies and crackers are also under fire.

“Competitors figure that if traditional grocers are not defending themselves, they’ll keep going,” Rosenblum says.

However, increased assortment is not necessarily the key to center store success.

“Retailers need a multi-prong approach,” he recommends. “First, they have to decide if these categories are core to their go-to-market strategy when it comes to meeting the needs of their shoppers.

Second, you have a couple of choices when it comes to a counterattack. First decide if you’re going to create a destination experience.”

Rosenblum uses New York-based Fairway Supermarkets as an example.

“In the case of coffee, another category mass marketers are going after, Fairway has made itself a destination,” he explains. “They probably have 40 barrels of beans from all over the world.

“They also can provide a coffee sommelier who can answer questions if you don’t know what coffee you want, or how it should be ground and what type of pot to use. They also do tastings. Basically, they want to educate you on all these elements to make sure you have a total experience,” he said.

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C A LI F O RN IA G RO CE R

Fairway is doing much the same thing in tea, with the largest selection of any supermarket. They continue the destination approach with oils and vinegars.

76

“Most traditional grocers might dedicate four feet or so, most of which is collecting dust on the top shelf,” Rosenblum says. “But Fairway wants customers to taste the different flavors and colors of imported and domestic oil and vinegars. They have freshly sliced bread in baskets for dipping so customers can do their own sampling.

“They want to drive the broadest assortment possible in both high end and value-oriented products,” Rosenblum said.

But the stores don’t stop with food. They want to be top-of-mind among consumers when it comes to things like vitamins and nutraceuticals.

“It looks like the old libraries with the sliding ladders,” he muses. “They have shelves that go up 12-14 feet and the broadest array of products you’ve ever seen – anything you can think of, right down to soaps and dietary supplements.”

Rosenblum says there’s been a lot of rumblings about losing these categories to vitamin shops like GMC or other channels.

“Here’s another instance where Fairway knows the margin these products make and what customers shop for,” he says. “They want to make sure those customers are comfortable shopping their stores.”

However, the question is whether development of destination departments means getting off the price merry-go-round that is inherent in center store categories.

“There are certain value components to it,” he explains. “But you can still satisfy the value shopper who’s looking at the price per ounce the same way you satisfy a customer who wants a $60 pound of Kona coffee or a $130 Italian vinegar. You’ve just got to know your customer.”

But rethinking the center store also means being aware of what’s outside the box.

“The fact is that traditional grocers are not just competing against other traditional grocers,” he says.

“The notion of just buying groceries in grocery stores has become a fallacy. Everyone sells them.”

Then you have the dotcom world.

“You have to know your customer in order to know how to compete,” Rosenblum emphasizes. “This doesn’t mean you must have a loyalty card. But it can get you to a whole new level of granularity and there’s a tremendous amount of analytics that can be done by understanding shopping trips.”

However, center store success may also mean retraining the supplier community.

“You can’t just come to a traditional grocer to offer SKUs in your portfolio that you deem acceptable because I, as a retailer, no longer compete with only traditional grocers,” he says. “I want the full spectrum

reviving

including club or bonus packs. Let me decide what’s best for shoppers and how I want to compete in the marketplace.”

Rosenblum believes the industry is getting closer to true collaborative efforts between retailers and manufacturers, but it’s still not anywhere near the magnitude required.

“There’s an old adage that the only time a retailer and CPG supplier become really collaborative is when we file joint tax returns,” he says.

The financial makeup of the two is vastly different.

But one of the best ways to foster collaboration is to make both agree on scorecards and metrics.

“These must cover the various elements, including the supply side, merchandising, broad financial metrics and the shopper side of the equation,” Rosenblum recommends.

On the other hand, retailers have to make sure that supplier programs are being properly executed in store.

| Center Store

“There’s a lot of fear of the unknown and the rapid rate of change taking place,” he says. “There’s also concern about the economics of online shopping and what impact it has on the retailer’s financial picture as an organization.

“Look at the battle between Walmart and Amazon,” he says. “Now, Kroger is saying that 8 percent of its sales in the next couple of years will come from e-commerce.

Despite these numbers, too many retailers still don’t have an e-commerce strategy, he says.

“My advice is to start doing something,” he says.

“Think of it as an umbrella for shopper communications through the web, email, kiosks or cell phones. All of them are enablers of communication and you have to understand how those things are related.” 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 U.S. 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

“They are not necessarily getting the magnitude of execution to drive a certain level of collaboration,” he says, citing such elements as getting the right assortment, space allocation, flow and adjacencies.

Both sides have to come to terms with assortment and the fact that consumers don’t need every flavor in every size. A retailer needs the right assortment to be competitive and place products in a flow or pattern that will increase shopability.

“You can’t rely on the old practice of putting milk in the back in order to drag shoppers through the store,” he says. “You need to develop the kind of environment that will enable you to best utilize space and service shopper needs.”

Some retailers are already changing the center store layout with more solution centers.

|

The social media part of center store is just as challenging, he noted.

C AL I F O RN IA GR O CE R

“There are some challenges especially if you’re starting to do it by occasion like dinner,” Rosenblum says.

“Then you need to provide the protein, vegetables, spices, and even the wine. The whole notion of meal solutions is still a challenge. It still needs labor and cuts across multiple silos in an organization.”

77

Happy 60th Anniversary

Save Mart Stores

MADDAN & COMPANY, INC. FOOD BROKERS SINCE 1947

601 MONTGOMERY STREET, SUITE 655 SAN FRANCISCO, CA 94111 TEL (415) 421-5777 • FAX (415) 421-2031 www.maddanco.com

|

C A LI F O RN IA G RO CE R

Happyanniversary,

78

Save Mart!

ADVE RTIS E R INDE X C A LI F O RN IA G RO CE R

| 80

Page Company

Phone

Fax

53

Albertsons/Sav-On Pharmacy

714-300-6000

714-300-6936

www.albertsons.com

58

Bengard Ranch

831-422-0997

831-422-7782

BardinB@bengardranch.com

www.bengardranch.com

72

Blue Rhino

800-258-7466

336-331-6700

sales@bluerhino.com

www.bluerhino.com

48

Bristol Farms

310-233-4700

310-233-4701

www.bristolfarms.com

66

C & H Sugar Company/Domino Foods, Inc.

510-787-4416

510-787-4205

kent.kunsman@chsugar.com

www.chsugar.com

13

C&S Wholesale Grocers, Inc.

916-373-4396

916-373-4296

pmiller@cswg.com

www.cswg.com

77

The California Conference for Equality and Justice

562-435-8184

562-435-8318

wnichols@cacej.org

www.cacej.com

4 California Shopping Cart Retrieval Corp.

818-563-3070/ 800-252-4613

818-563-3041

www.cscrc.net

66

CDS Distributing Inc.

415-864-8588

415-864-0380

david@cdsdist.com

www.cdsdist.com

IBC

Coca-Cola Refreshments

213-746-5555

213-744-8765

bophillips@coca-cola.com

www.cokecce.com

63

Corrigo Incorporated

877-267-7440

503-907-6003

info@corrigo.com

www.corrigo.com

78

The Dannon Company

253-606-7963

Andy.Bantz@dannon.com

www.dannon.com

64

E & J Gallo Winery

925-348-3161

510-476-5455

john.parke@ejgallo.com

www.gallo.com

61

Edge Sales & Marketing

925-224-8630

925-251-0327

sdagen@edgesales.com

www.edgesales.com

60

Food 4 Less (Stockton)/Rancho San Miguel Markets

209-957-4917

209-956-8550

www.food-4-less.com

18

Fresh & Easy Neighborhood Market Inc.

310-341-1200

310-341-1501

www.freshandeasy.com

38

Frito-Lay, Inc. (No. Calif. Div)

209-824-3753

925-734-3199

www.fritolay.com

79

Gelsonâ&#x20AC;&#x2122;s Markets

818-906-5709

818-990-7877

www.gelsons.com

59

Glass Agency

916-448-6956

916-448-2049

www.glassagency.com

41,47,67 Kellogg Company

269-961-2000

269-961-6286

www.kelloggs.com

6

Kraft Foods Group, Inc.

847-646-2000

847-646-2800

chuck.eckman@kraft.com

www.kraftfoods.com

78

Maddan & Company, Inc.

415-421-5777

415-421-2031

mikesr@maddanco.com

www.maddanco.com

25,BC MillerCoors

916-786-2666

916-786-9396 chris.mathews@millercoors.com

73

Monterey Mushrooms, Inc.

949-916-3744

54

Moss Adams LLP

310-477-0450

55

National Association For The Specialty Food Trade

73

Email

bob.humphrey@pepsico.com

amber@glassagency.com

Website

www.millercoors.com

keichele@montmush.com

www.montereymushrooms.com

310-477-0590

la.marketing@mossadams.com

www.mossadams.com

212-482-6440

212-482-6459

info@nafst.org

www.fancyfoodshows.com

National Raisin Company

559-834-5981

559-834-1055

sales@nationalraisin.com

www.nationalraisin.com

IFC

Pepsi Beverages Company - WBU

925-416-2573

925-416-2600

paul.turcotte@pepsico.com

www.pepsi.com

73

Procter & Gamble

925-867-4900

513-277-7964

www.pg.com

78 Raleyâ&#x20AC;&#x2122;s

916-373-3333

916-444-3733

www.raleys.com

42

Safeway Inc.

925-467-3000

925-467-3323

www.safeway.com

51

Sara Lee California

209-523-0700

209-523-1572

55

Schall Consulting Group, Inc.

404-580-0466

35

Smart & Final Stores

323-869-7500

72

Stater Bros. Markets

909-783-5000

www.staterbros.com

78

Sugar Bowl Bakery

888-688-1380

510-782-2119

sales@sugarbowlbakery.com

www.sugarbowlbakery.com

19

Sun Products Corporation

949-733-0263

949-266-8857

kent.mclain@sunproductscorp.com

www.sunproductscorp.com

27

Supervalu Wholesale

952-932-4373

952-932-4528

www.supervalu.com

15

Tadin Herb & Tea Co.

800-838-2346

323-582-8687

support@tadin.com

www.tadin.com

65

Taylor Farms

866-675-6120

831-676-9601

ccalcagno@taylorfarms.com

www.taylorfarms.com

1,21

Unified Grocers, Inc.

323-264-5200

323-262-0658

customercare@unifiedgrocers.com

www.unifiedgrocers.com

EHermanson@bbumail.com mschall@mindspring.com

323-869-7862

www.returnoninfluence.net www.smartandfinal.com

Š2012 The Coca-Cola Company.