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President’s Message
MRA launches campaign to replace bottle bill with a comprehensive recycling system william j. hallan
MRA President and Chief Executive Officer
One major topic of discussion at MRA over the last several months has been how to help grocers deal with the mandate of taking back bottles and cans again after the process was paused in March because of the COVID-19 pandemic. The state estimates that consumers were holding on to about $80 million in redeemable bottles and cans, and recycling companies estimate that number will grow by about 70 million unredeemed cans and bottles each week.
campaign focused on improving recycling in Michigan. The campaign will help Michigan residents understand the new bottle return rules and limits. Beyond that, it will encourage them to forgo the dime and, instead, recycle their containers curbside or at a recycling center. Recycling rather than returning would take some pressure off grocers and let the state keep the dimes to put towards environmental cleanup efforts. We hope our campaign will help people see how this could be a win for everyone.
In addition to dealing with large quantities of returnables, retailers are restarting bottle deposit takebacks amid social distancing requirements, capacity limits and extra cleaning requirements. Add to that frustrated consumers who’ve been holding on to used cans and bottles for months and retail employees fearful about handling these materials, and it’s an understatement to say there have been lots of challenges in restarting the takeback process.
Grocers were willing to fund the creation of the public education campaign through contributions to MRA’s advocacy fund. If you’d like to contribute to this effort, contact Amy Drumm at adrumm@retailers.com.
From conversations with members, we know that grocers are concerned that this higher return volume will last for one to two years given the backlog and phase-in restrictions. Early on, MRA advocated to allow for temporary open-air redemption centers and other options to alleviate the backlog in a safe and simple manner. While the state did not adopt these options, we continue to discuss ideas with the administration, as we keep them updated on challenges and work to find solutions. As part of establishing the takeback process, MRA was successful in getting retailers some flexibility to: (1) shut down takeback areas if they reach capacity or need to be cleaned; (2) reduce hours to provide for cleaning; (3) limit the number of available/operating RVMs; (4) enforce a strict 250 containers per customer limit; and (5) implement additional safeguards as needed. Focusing on the larger recycling issue At the request of several grocery members, MRA has engaged the public relations firm Truscott Rossman to launch a PSA
A longer-term goal of the campaign is to channel current customer frustrations into requests to change to the law. We’ll do that by directing consumers to a website where they can learn about their options and the ineffectiveness of Michigan’s current law — both in overall recycling results and ease of use. This message will primarily be carried through social media ads and on signs that retailers can use in takeback areas to educate customers and drive them to the website: MICanRecycle.com. You can download signs from bit.ly/2O8ec9O, and be sure to check out the website. Golf outing, Food Retailers Summit canceled Another topic that has garnered a lot of discussion here is how to handle member events in light of the pandemic. After much consideration, we decided to cancel both the Michigan Grocers/ Michigan Retailers golf outing, which is typically held each summer, and the Food Retailers Summit, which is typically held in the fall. We know how much you look forward to these events each year, and we’re disappointed that we have to cancel. However, protecting the health, safety and well-being of our members and staff is paramount, and this decision comes from keeping that in mind. We hope you understand. The Grocers Division Advisory Board will meet to discuss future plans, and we look forward to a time when we can safety gather again.
Michigan Grocers Division Advisory Board Michigan Grocers is a division of the Michigan Retailers Association
William J. Hallan, President Michigan Retailers Association Rich Beishuizen Country Fresh Craig Diepenhorst H.T. Hackney Dave Duthler AMRA Energy
Jim Forsberg Arctic Glacier Premium Ice Jim Gohsman SpartanNash John Leppink Leppink’s Food Centers Ken McClure Kroger Company of Michigan
Bryan Neiman Neiman’s Family Market DJ Oleson Oleson’s Food Stores Don Symonds Lipari Foods Thom Welch Hollywood Markets
William J. Hallan Publisher Lisa J. Reibsome Editor, Layout & Design, Ad Sales (517) 449-2256 MGAReibsome@comcast.net
Publisher does not assume responsibility for statements made by advertisers in business competition. © MICHIGAN FOOD NEWS 2020 MICHIGAN FOOD NEWS
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aluminum & plastic sales
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Congratulations to the 2020 scholarship winners Paul M. Felice Memorial Scholarship Winners
Michael Flickinger
Albert (Al) Kessel, Jr. Memorial Scholarship Winners
Mason Gabriel
Jacob Flickinger
Christopher Garbe
Michigan Retailers Association announces the 2020 Paul M. Felice Memorial Scholarship and the Albert (Al) Kessel, Jr. Memorial Scholarship winners. Each recipient receives a $1,500 scholarship toward any accredited, nonprofit private or public U.S. university. These one-year scholarships are awarded annually to high school seniors, college freshmen, sophomores or juniors whose parents work for MRA Grocers Division members or who are part-time student employees of member companies for at least six months a year.
The 2020 Paul M. Felice winners are: s Michael Flickinger — whose father, David, works for Meijer. s Mason Gabriel — who works part-time at Orchard Markets.
The 2020 Al Kessel winners are: s Jacob Flickinger — whose father, David, works for Meijer. s Christopher Garbe — whose mother, Diane, works for Meijer.
ichael is now a two-time Felice Scholarship winner. He will be a senior at Grand Valley State University in the fall where he majors in mechanical engineering. “This will be my 4th of 6 years, since I transfered with one year of credits, and GVSU has a 5-year engineering program regardless of credits,” he explains. A member of the American Society of Mechanical Engineers and the Product Design and Manufacturing Club, he made the Dean’s List last semester with an overall 3.314 GPA. “It is a great honor to be chosen not once, but twice!” he says. “I greatly appreciate this scholarship opportunity.” Michael’s brother, Paul, and sister, Sarah, are previous Felice Scholarship winners, and his brother Jacob is one of this year’s Al Kessel Scholarship winners.
acob will be a freshman at Grand Valley State University this fall with plans to major in accounting. Homeschooled through Mother of Divine Grace, he graduated high school in 2020 with a 3.92 GPA. Extracurricular activities included soccer; drama club; Grand Rapids Police Explorers, which is a police career education program; and the Kent Career Tech Center’s criminal justice program. “I am very grateful for the help that this scholarship will provide,” he says. “After college I plan to work in law enforcement.”
M M
ason also is a two-time Felice Scholarship winner. In the fall, he will be a junior at Grand Valley State University with a 3.0 GPA. Majoring in secondary education, he plans to teach biology. A 2018 graduate of Orchard View High School, he received varsity letters for cross country and band. He also participated in Quiz Bowl and the Links Club, which is a program that helps kids with disabilities. “It feels amazing that you guys are going to continue to support me and help me make a difference in my community,” he said. “I plan on working and volunteering until August when I start at GVSU. It’s been hard to serve my community during these tough times of the pandemic, but that’s when people need help the most. Thank you, again.”
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hris will be a junior at Grand Valley State University this fall where he majors in biomedical sciences/pre-med with a 3.78 GPA. In addition to making the Dean’s List, he is a member of Alpha Phi Omega and participates in Relay for Life; Best Buddies, which is an organization that matches college students with people with intellectual and developmental disabilities; and other groups. A 2018 graduate of Bay City Western High School, he graduated summa cum laude. “I am beyond grateful for the opportunity to be able to focus on my classwork and worry less about funding it,” he says. “Thank you so much for supporting me and my studies.” After graduating, he plans to attend medical school to study ophthalmology. Recipients are chosen by a third-party administrator — International Scholarship and Tuition Services. Academic record, test scores, extracurricular activities and recommendations are considered. The 2021-2022 scholarship competition will open Jan. 1. MICHIGAN FOOD NEWS
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Making THE MOST of it Lessons learned as Michigan Grocers lead through the COVID-19 crisis The Michigan Food News asked several Michigan grocery leaders to provide insights about what it has been like to conduct business during the COVID-19 pandemic. Sharing their experiences are Ken DeLuca, president of the Kroger Co. of Michigan — a supermarket chain with 119 Michigan locations; Gary Pfeil, president and CEO of Busch’s Fresh Food Market — a 16-store independent supermarket chain in southeast Michigan; and Steve Dutkiewicz, president of Dick’s Market — a family-owned —By Lisa J. Reibsome, Editor grocery store about 20 miles south of Grand Rapids.
Q: What’s THE MOST significant way the new normal will be different from the old normal in the grocery industry? Steve Dutkiewicz: This first question is tough because you don’t want to believe we cannot go back to normal. As a singlestore operator, I’d really hate to think that unless you are one of the “Big Guys” you won’t get much attention or even product from the manufacturers anymore. But favoritism is happening, and it is not fair at all. So I think the new normal will be finding innovative ways to adapt quickly as changes keep coming. Gary Pfeil: The normal we’re seeing now has a few notable elements across the board: n There’s more stock-up shopping, where guests make less trips but buy more at one time, kind of how our parents used to shop. n Families are spending more time cooking together and are sitting down at the table for dinner at least one extra time a week. n We’re no longer allowing guests to serve themselves in the store. So we’ve shut down the soup bar, salad bar, hot food bar, bulk olive bar, bulk food bins and basically anywhere guests used to serve themselves using a common utensil. n Cleaning and sanitation practices have been dramatically ramped up including cart cleaning and frequently wiping down case doors and handles, registers and belts, pin pads and more. Ken DeLuca: Over the course of the last few months, remaining open as an essential business has allowed us to shift the way in 6 JULY/AUGUST 2020
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which we operate to keep our associates and our communities safe and fed. Safety has always been a core value of ours. Going forward, we will continue to provide a safe environment for our customers and associates, while supplying fresh and safe products. So our new normal is ensuring that we maintain this expectation amid the ever-changing federal and state requirements and health recommendations.
Q: What are THE MOST interesting ways your pandemic response showed your company’s strengths?
Dutkiewicz: Much like when winter storms hit, small town grocery stores were swamped with customers at first. Excluding out-of-stocks by suppliers, we responded well with our normal high level of service. I felt this was due to our having always dealt with fluctuations in sales from winter storms and also from the increased summer traffic we get every year from nearby campgrounds. Pfeil: First and foremost we came together as a team to handle the increased business. To me, that showcased Busch’s strong sense of teamwork. We all stocked, learned to ring a register, shagged carts and picked online orders. We did whatever was needed to satisfy our guests to the best of our ability. Everyone worked long days and weekends to create one united team dealing with the situation. We also brought in secondary suppliers and created retail packages from our central bakery so we could still supply items that were no longer available through normal channels. This included flour, yeast, cake mixes, frosting, rice and beans
Steve Dutkiewicz, Dick’s Market
Gary Pfeil, Busch’s Fresh Food Market
to name a few items. This showed our ability to innovate. In addition, we were flexible. We quickly flexed people into temporary jobs to deal with the changes such as the extreme increase of online shopping. Overall, we were already battle tested from a ransomware attack that occurred in December 2019, so the team was in fighting form and up to the pandemic challenges. It’s been a difficult year but one that truly showcased our mental toughness. DeLuca: Our response highlighted our ability to quickly adapt to the changing needs of consumers and associates. It also emphasized our entire team’s ability to lead because we initiated strict safety and health measures before the state began to mandate them. This included cleaning commonly used areas more often, adding extra hand sanitizing stations, implementing capacity limits and instituting one-way aisles.
Ken DeLuca, Kroger-Michigan
Q: What’s THE MOST important thing you can do or say as a leader to inspire your team right now? Dutkiewicz: The lockdown has made many people grouchy and even downright mean sometimes to service clerks and other front-line workers. It’s hard for our employees to understand why people would take out their frustrations on the essential workers who are trying to serve them while putting up with extra mandates such as masks and constant temperature checks. I tell my employees what I’ve always said: Try to forget a bad encounter with a distraught customer and remember the occasional kind words we get from other customers. Indeed, our social media has been flooded with people praising Dick’s front-line workers for doing such a great job under the circumstances. So I try to help everyone focus on that and not be dragged down by the negative encounters. Pfeil: I aim to:
Q: What’s THE MOST unexpected outcome from your
n Be present in the moment.
Dutkiewicz: I must admit I was skeptical when my grocery team began putting out large displays of staples such as bins of rice and dry beans or end caps of flour and baking supplies. But, we sold these items quickly. It became clear to me that, despite consumers’ growing desires before the pandemic to have delis and restaurants serve them dinner, they really do know how to cook!
n Be thankful and respectful of our associates’ efforts.
pandemic response?
Pfeil: The overall respect and appreciation guests expressed to Busch’s entire group of associates was a bit unexpected. They brought us lunches, created signs of appreciation and placed full-page ads in newspapers, donated tips and provided inspiration to us all during a fragile period when we truly needed their support. They were fabulous! DeLuca: Communication has always been a priority, yet we were able to make it even better. We have learned how to better streamline communication with our store teams to be nimbler and more effective for our customers and associates.
n Be part of the team — no rank, no title ... just part of the solution. n Understand that our associates all have a life outside of work and their families also need attention during this pandemic. n Be calm as we set the tone that all others will follow. n Be present in the moment — that’s worth repeating. DeLuca: It is important that I continue to lead by example. While it’s an unpredictable time and some days are more difficult than others, it is important that I remain calm, while making quick decisions. Navigating these unchartered waters together has turned our already tight team into more of a family. It is my job to keep our associates uplifted, positive and focused on helping our customers and each other. I continue to show appreciation and support for their safety as essential workers as well as being present at all times. My message is that we are in this together, not as individual associates or stores, but as one united Kroger-Michigan family. continued on page 8 MICHIGAN FOOD NEWS
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Lessons learned as Michigan grocers lead through the COVID-19 crisis continued from page 7
Q: What’s THE MOST challenging part of your day? Dutkiewicz: The challenges keep changing every few weeks. At first it was sourcing product, especially paper products, from different companies that I had not worked with before. Then it was scrambling to source meat. Now, it is increasingly difficult to find new hires due to the extra unemployment compensation people can receive for an extended time.
saw that our toilet paper wasn’t in our regular packaging. We had to source it from a restaurant supply company and package it ourselves. And while most of our customers appreciated that we found a way to stock toilet paper; sadly, someone assumed we were doing something underhanded. I’m happy to report that the case was quickly dismissed when we sent the invoice to the state with an explanation. But with better reporting, this situation may have been avoided.
Pfeil: Keeping up with the changes and communicating the changes effectively has been the biggest challenge to me. In addition to conducting health and safety meetings twice weekly, every day we addressed changes to our operation and forwarded to the troops at store level changes to our normal operating procedures. This included changing hours of operation, closing self-serve areas, implementing new cleaning and sanitation measures, adding mask requirements, not allowing reusable bags, plus shutting down and then reopening can and bottle takeback areas. The changes were fast and furious, and our front doors looked like a big ‘U POST IT’ wall as we tried to communicate all the changes.
Pfeil: I would not say there is a lot that is misleading, but sometimes reporting on something can make it a much bigger problem than it would have been without the story. One example is the pork shortage from the closure of pork plants due to the COVID-19 outbreak within the facilities. Pork sales may have been up 30% due to the pandemic; however, with the media reporting ‘shortages,’ everyone ran to the store to stock up, increasing sales by 100%. While the story was true, it caused shoppers to react in a way that created a much bigger shortage than would have existed without the story. But, I guess that is just the way it goes. At the same time, the news media also did a great deal to support grocery workers as essential workers throughout the pandemic.
DeLuca: The most challenging part of my day is wondering if we have done enough and asking what else we can do. Knowing that we employ more than 19,000 associates here in Michigan, keeping each of them safe along with keeping our customers safe remains top priority. Balancing the essential need of serving our communities with keeping our associates and customers safe will remain at the forefront of how we operate every day. And that makes each day challenging.
DeLuca: I don’t think the news media is purposely misleading, but reporting can sometimes create more of a problem. When people read about a minor issue and react, it can inflate that minor issue into a major one. During the pandemic, this has happened with stories from price gouging to store safety issues. As our associates work tirelessly to keep our doors open, they need to be uplifted and hear more positive stories.
Q: What’s THE MOST misleading thing in the news right
Q: What’s THE MOST helpful advice you can give your
now about grocery?
colleagues in the retail industry?
Dutkiewicz: That we would price gouge on products that are experiencing a shortage. The public can be easily misled when the media use the term price gouging to boost readership and when politicians use it to appear to be tough on business rather than finding out what’s really going on in the industry. Dick’s was actually turned in to the attorney general by someone who
Dutkiewicz: Take a few days off! Seriously, it was such a relief to go up north for a few days recently. I don’t think I even realized how stressed I’d been from all of this. You get caught up in daily duties, which nowadays are doubled. It can wear you down quickly. Find a way to unplug so you can come back and continue to serve your employees and customers.
Grocers agree, success in the new normal depends on managing fast-paced change.
Pfeil: Embrace the times we are living in today. There are many silver linings to be found in the retail industry right now. Over the last several months, we all should have gotten closer to our business, our associates and our suppliers. That makes now a good time to make changes to our business model that will make our businesses stronger, our associates happier and our suppliers more responsive to the needs of the business. DeLuca: Communication has been a key driver in our ability to pivot quickly. There is no such thing as over communication, so keep communicating. There is also no such thing as being too appreciative of your associates, so we must continue to be sensitive, show empathy and be good listeners. We’ll get through this! Editor’s note: Some responses were edited for length and clarity.
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Making THE MOST of it Grocery Wholesaler Perspective — Lessons learned leading through the COVID-19 crisis David Smith, president and CEO of Associated Wholesale Grocers, Inc. (AWG), shares his insights from leading the nation’s largest cooperative food wholesaler during the COVID-19 pandemic. Just as Sept. 11, 2001, changed how we think about flying and the potential for terrorism in America, this pandemic has likely changed us as a nation as it relates to thinking about personto-person contact, the potential transmission of disease, our medical community, the government and what’s essential. While the future is unclear, one thing is certain — the new normal for this generation will occur under a cloud of concern about shopping in a way that feels safe.
Based on a national poll this week, 61% of Americans remain concerned they could get sick from shopping at a brick and mortar store; this number has fallen only 5% from April 1. Shoppers continue to be very selective about when, how often and where they shop. While sales are up significantly since March 11 — the day the World Health Organization declared the coronavirus outbreak a global pandemic — the number of customer transactions is down, and we expect that to continue in the immediate future.
Q: What’s THE MOST significant way the new normal will be different from the old normal in the grocery industry?
New financial constraints make up the third part of the new normal. With unemployment at 13.3% and another 3% not ready to reenter the workforce, lower-income consumers are hurting. Projections show that 40% of the workforce who make less than $40,000 a year are out of work. While the stimulus check, incremental SNAP benefits and additional unemployment payments provide temporary relief, we are in a recession and our lower-income consumers are disproportionately impacted. It’s our job to provide more everyday values to help stretch their dollars.
Smith: The new normal may well be defined by safety, technology and financial constraints. Without question, the new normal is all about safety. The demand for safety has driven the exponential growth of online grocery sales, bringing with it the need for people to quickly adopt new technology. With video conferencing apps hosting church services, business meetings, family get-togethers and more, and with people using a variety of online shopping options, new technology adopters now exist across all age groups and demographics. The demand for safety has pushed businesses to invest in technologies to make shopping easier, safer and a better overall experience. This makes new technology the second component of the new normal.
With reputations for being safe and clean, AWG member stores have made it possible for consumers to fill their needs at one location. Member stores are showing sales gains that are about double the sales increases of competing stores in Michigan and the other 27 states we serve. This means, for example, when other stores were up 25%, AWG stores saw a 50% sales increase. We feel this is a real acknowledgment that our members are doing the right things, and the AWG supply chain is working.
In the new normal, consumers fall into one of two groups: sustained or constrained. Sustained consumers are primarily affected by safety concerns and change their behaviors to keep their families safe and healthy. Constrained consumers are continued on page 10 MICHIGAN FOOD NEWS
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Grocery Wholesaler Perspective — Lessons learned leading through theCOVID-19 crisis continued from page 9
primarily impacted by financial concerns. They have the same concerns as sustained consumers, but the weight of financial worries drive them. This, of course, impacts grocers — who have a distinct advantage over other retail channels. While discount and limited assortment stores flourished in prior economic downturns, today the emphasis isn’t just on low cost, it’s also on safety. Discounters and big boxes are perceived to be more crowded, raising safety concerns. Limited assortment stores often require shoppers to go to another store to complete their shopping, also raising safety concerns. So, the independent grocer is ideally positioned — if they can deliver on a compelling value proposition. It is our responsibility to help our member stores support and serve consumers who have been impacted by the economic consequences of this pandemic. In the back half of 2020, our cooperative will invest millions in longterm product price reductions, expanding our array of everyday low price items, launching price drops and significantly expanding promotional spending on our store brands program. This will provide member stores with 3,500-5,000 or more lower prices every day and an even more compelling reason for consumers to rely on them during the recession.
Q: What are THE MOST interesting ways AWG’s pandemic response showed your co-op’s strengths?
That’s a great question. As a cooperative, we don’t have to be concerned about quarterly financial returns to Wall Street. Our board, shareholders and customers are all the same — retailers who belong to our cooperative. Our mission is to “provide our member-retailers all of the tools, products and services they need to compete favorably in all markets served. This includes top quality supermarket merchandise and support services, all at the lowest possible cost.” This means our focus is on our members’ needs and maintaining the best possible supply chain results.
The Crisis: Unfortunately as this crisis started, supply challenges immediately emerged. Over 100 vendors placed strict allocation limits on their products, and the remainder simply canceled trucks or failed to fulfill orders. We were unable to fulfill all of the unexpected buying demands. Stores panicked as well. We saw store orders increase from a typical 800 cases to 8,000 cases, overwhelming our system. Our Response: We placed daily capacity limits by store and fixed order maximums by item on some products. We assembled a COVID-19 team and began monitoring the situation in real-time so we could escalate our plans as hot spots developed. We restricted third-party access, screened essential visitors and delivery drivers, maintained distancing, implemented continual cleaning, and placed cleaning and hand sanitizing supplies throughout our facilities for all teammates. About 85% of our administrative staff were able to work from home, and we altered our delivery process to minimize points for possible virus transmission. We also expanded our work shifts, extended hours of operations, provided a pay increase of $2 an hour and sick time pay early on. In addition, we partnered with peer companies to supplement our workforce. Between direct hires and temporary contract teammates, we onboarded well over 1,000 new employees. Catching up with a system-wide inventory deficit of approximately $300 million was not easy, fast or without high cost, and our work is not done. While our vendor partners have worked very hard to ensure we get our fair share, and we ramped up our production by at least 60%, most of the manufacturers don’t have the expanded capacity to meet demand. Based on our core values of humility, accountability, transparency and serving, it was essential that we acknowledge our challenges, own our responses and communicate consistently. Increased communication was entwined with all our actions. We regularly held small or virtual meetings, displayed video messages to our teammates, provided daily updates on our member portal and sent frequent member update letters. This caused us to grow closer as a leadership team, unified as teammates and more potent as a cooperative — building common appreciation for our industry as a supply chain provider. I also started a weekly podcast series, “AWG Grocer Pod – Retailer Rundown” where I interview retailers to discuss what they are seeing, how they are responding and lessons learned. This is open to all retailers; we have hundreds of weekly listeners. To listen, visit: awgsalesservices.com/whats-new-awpodcast.
Q: What’s THE MOST unexpected outcome from AWG’s pandemic response? “Since March 15, 2020, our member store retail sales percentage gains have remained about double the percentage gains of competing stores.” 10 JULY/AUGUST 2020
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The retail sales performance of our member stores. Our yearly goal is for their retail sales to exceed their peer group by 100 basis points (1.0%). Last year was a good year, and our stores collectively exceeded that goal. Since March 15, 2020, our mem-
ber store retail sales percentage gains have remained about double the percentage gains of competing stores. While we don’t understand all of the factors causing that phenomenon, we have observed that our member stores have better in-stock conditions, their perishable departments are well-stocked, and they go the extra mile with cleaning, disinfecting and continuing to provide excellent service. Our retailers and their fantastic store teams didn’t miss a beat. Now we have shifted our focus to maintaining that momentum and have launched a multi-prong initiative to solidify shopper satisfaction and build loyalty.
Q: What’s THE MOST important thing you can do or say as a leader to inspire your team right now? I’m blessed to work for fantastic retailers, collaborate with very supportive vendor partners and work with a winning team. We call these three groups the legs under our stool of success. My job is to provide the gratitude and recognition they deserve. They all look to me for a view of where we’re going and how we’re going to get there. That vision, to me, is inspiring. Part of that vision will be unveiled in our first ever Virtual Innovation Showcase, which is just around the corner. Members and vendor partners will see new innovation and offerings from our vendor community, hear from industry experts and engage with our AWG team. Our Innovation Showcase has quickly become the biggest event of the year for us, with thousands of attendees. In this virtual format, we believe that even more people will benefit from the experience, without the need to travel! Another exciting part of our future is our newest venture: our all-in-one distribution hub planned for Hernando, Mississippi. It’s the most significant investment in our company’s 94-year history and the largest single project ever launched by a wholesale food distributor in the U.S. It will combine multiple older-facilities under one roof and provide our member companies a competitive advantage. The new facility will serve as a source for expanded product variety — providing stability and a scalable platform for the future. While a traditional division stocks about 20,000 unique items, this new facility can house 80,000 or more, which will be a great advantage for our member stores. For our teammates, the new facility means a clean, safe, temperature-controlled environment, great working conditions and amenities. For our vendors, the facility will provide expanded receiving hours, quicker turnarounds, more full-truckloads and less mixing, less damage, less need to provide direct store delivery, reduced transportation expense and more efficiencies in their warehousing and administrative relationships. All that means more sales for our vendors and a more efficient supply relationship that we will translate into lower product cost for our member stores.
Q: What’s THE MOST challenging part of your day? The most challenging part of my day stems from my concern for our people and for doing right by them in all we do. Our assets on paper are warehouses, stores, equipment, inventory, trucks, and so forth. But none of those accomplish anything for our
“The impact of the pandemic has changed our generation. As an industry, we will benefit from the lessons learned from it.” members without our teammates. They are our most valuable asset, and it is their efforts, their accomplishments and their dedication that drives our prosperity. Looking out for them and their wellbeing, providing them with help and support, and leading them in doing things right and doing the right things is the most challenging and most rewarding part of my job.
Q: What’s THE MOST misleading thing in the news right now about grocery?
That’s a good question, as there are plenty. Misinformation on shortages, community spread of COVID-19, price gouging and the general promotion of fear has become very popular in the news. The outcomes affecting us have been irrational hoarding, unavailability of adequate masks and other supplies, cost spikes, shortages and worker absenteeism, to name a few. Consumer perceptions of price gouging is one of the most misleading issues going on in the industry. Given that commodity costs are driven by supply and demand, pricing on fresh meat, eggs and similar items fluctuate. When suppliers follow these market fluctuations and retailers likewise do not internalize these significant cost increases, then prices increase. Media coverage can this make this an even more sensitive issue if they point to this and say that the merchant is price gouging rather than reporting that prices are following the commodity cost increases from producers and suppliers. I do not believe that any legitimate merchants, indeed, not our members, have ever tried to increase their pricing and profitability at an item level during a crisis. They know that pricing is sensitive, and they are content with selling more and being as efficient as they can be. Real reporting and discussions with retailers would reveal that grocers often absorb much of the cost increases rather than pass them on to their customers.
Q: What’s THE MOST helpful advice you can give your colleagues in the retail industry?
We must skate to where the puck is going and embrace the changing consumer demands, the concerns of workers and shoppers, and not simply just believe that this too shall pass. The impact of the pandemic has changed our generation. As an industry, we will benefit from the lessons learned from it. Consumers know their local grocers are wholly reliant on their business and are deeply concerned about their customer’s health and safety. Local grocers stock and sell exactly what their communities need and are able to demonstrate value. Independent grocers are positioned to grow and thrive. We’ve just got to help them achieve their potential. Editor’s note: Some responses were edited for length and clarity. MICHIGAN FOOD NEWS
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grocer insight Nielsen research reports that off-premise alcohol dollar sales are up about 25% over last year at this time. Dollar sales for spirits are up the most at 33%, with wine next — up 27%, followed by beer up 11%.
Q: Alcohol dollar sales are way up at our five stores, much more than the 25% that the Nielsen numbers report. For our store that is leading in alcohol sales, numbers for the middle of June show that beer is up 67% over last year at that time, wine’s up 50%, and liquor is up 36%. At three of our other stores, beer also is up the most. At the remaining store, wine sales are up more than beer and liquor. BOB WAGONER Wagoner’s Hometown Food Stores 5 locations: Fennville, Bloomingdale, Mattawan, Lawton, White Pigeon
How does that compare for your stores?
In mid-March our alcohol sales spiked, with liquor up about 115% percent over last year at that time, wine sales up about 105% and beer up 85%.
Alcohol sales for both locations are up much higher than Nielsen’s findings. Tracking dollar sales from Jan. 1 through June 25, liquor sales led the way.
We don’t have the exact numbers on what type of alcohol is selling the most, but I believe the percentages are fairly similar to what Nielsen is reporting, with liquor leading the way, followed by wine sales.
Increases have been smaller since then, but alcohol dollar sales are still way up over last year. For mid-June, liquor led the way, up about 59% from the same time last year; beer sales were up about 52%, and wine was 39% higher than the same week in 2019.
At our Wadhams/Kimble store, liquor sales are up 202% over that same period in 2019. Beer sales are up 126%, and wine sales are up 119%. In Almont, liquor’s up 169% over 2019, followed by wine sales up 141% and then beer sales, which are up 135%.
ALEX ROGALLA
JOHN LEPPINK
MIKE VINCKIER
Orchard Markets 2 locations: Fruitport and Springlake
Leppink’s Food Centers 6 locations: Ferrysburg, Belding, Stanton, Lakeview, Newaygo, Howard City
Vinckier Foods 2 locations: Almont and Wadhams/Kimble
The Nielsen numbers are pretty consistent with how we have fared over the last 13 weeks. At one location alcohol dollar sales are up about 21.5%, and they are up 28% at our other store.
MICHIGAN FOOD NEWS
JULY/AUGUST 2020 13
Fairview Food Market reopens after semi-truck destroys building By Lisa J. Reibsome, Editor
On the cover: Owner Dan Swartzendruber stands in front of an old sign now displayed in the seating area of the new Smokehouse Cafe. By eliminating 70% of backroom storage, he was able to expand the bakery/kitchen and add a seating area. The cafe features homemade doughnuts and muffins and a smokehouse menu with home-smoked beef brisket, pulled pork, chicken, scratch pizza, sides and more.
At
10:40 a.m. on june 6, 2019, two semi-trucks collided, sending one into the Fairview Food Market through the produce department wall. No one was hurt, but the significant structural damage forced store owner Dan Swartzendruber to close for over 10 months. “The truck caused over $700,000 in damage,” Dan says. “And because we also lost all of our inventory, it’s accurate to say that, in reality, there was over a million dollars worth of damage.” It was difficult to be closed for an extended period. “Not being able to serve the community and spend time talking with employees and customers was really hard,” Dan says. “The accident closed us down just weeks before our planned 70th anniversary celebration, so that made it even more difficult.” Dan’s grandfather, Ray Swartzendruber, opened the store in 1949; Dan’s father, Glen, grew up working in the store, taking over in the 1980s when Ray retired. Much like his father, Dan helped out in the store from a young age, working along side his father, who passed away in 2007. Since then, Dan’s managed the store, spending a great deal of time there every week until the accident.
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“Even with the store closed, it was important to mark the 70th year that Fairview Food Market has been in the Swartzendruber family,” he explained. “So we made a few adjustments and decided to go ahead with the anniversary celebration.” That event was a bright spot in the months of paperwork, delays, demolition, planning, construction, renovation and more work that followed, finally leading to April 20, when the store reopened. While Dan was excited to reopen the store, he decided not to have a grand reopening celebration in the midst of the COVID-19 pandemic. “However, when we get to the other side of this tragic time, we will have a huge sale to celebrate being able to serve our faithful community,” he says. “Until then, we’re striving to do our best to serve everyone as safely as possible.” Even without a party, opening day was momentous. “I don’t know what it’s like to live anywhere but here in Oscoda County, but I can’t imagine anywhere else coming together so wonderfully to show the amazing support that I felt on our first day back,” Dan says. “It was heartwarming to hear how much we were missed and how happy our customers were to
The truck smashed through the wall in the produce department, breaking two large steel beams. To repair the extensive damage, Dan hired an accident restoration company, who agreed to hire local contractors to help. “It was important that money generated from this project be put into my community,” Dan says. The entire south wall, half of the east wall and the south half of the roof had to be dismantled before they could re-pour walls, install new beams and columns, and straighten a steel beam that was moved but not damaged in the other half of the building. Once the structure was repaired, Dan was able to begin the restoration process on the inside. The front half of the store now has a new look with higher ceilings and an adjusted layout, plus a new floor, paint, mural and seating area. “Our fresh produce remains in the same location, but refrigerated items are now in a brand new case to ensure a longer shelf life,” Dan explains. “With the changes, our customers enter into a large, bright, welcoming space.”
come ‘home to their store,’ as many of them said. Some even had tears in their eyes as they expressed their joy that we were open again. It was awesome to talk with people who had watched me grow up helping in the store and hear the stories they remembered when they saw our new mural.” A focal point of the new store is a mural of family photos (shown above) reminding everyone of the store’s roots. The timeline runs left to right starting with Grandpa Ray “looking dapper in his hat,” Dan says. The mural includes photos of many other family members, storefront changes and the famous “Beef Round-Up Sales” held every October for about 10 years. The last photo is of the upcoming generation, Dan’s twins, Jake and Heidi, who are now age 8.
Fairview Food Market specializes in fresh and smoked meats, having won several awards for their homemade beef jerky, smoked ring bologna and honey BBQ snack sticks. Windows were added to the meat department and bakery to spotlight the behindthe-scene’s work that is vital to the store’s success.
MICHIGAN FOOD NEWS
JULY/AUGUST 2020 15
Grocer shares what it’s like to operate during pandemic
To Our Retail Partners: Michigan’s Apple growers continue to provide fresh, healthy fruit for shoppers to enjoy. Thank you for your support of Michigan Apples and the place where apples love to grow. Contact your Michigan Apple supplier to place orders for Fall 2020.
On June 23, MRA’s Amy Drumm and Polly’s Country Market’s Sean Kennedy (picture above) provided testimony on COVID-19’s impact on Michigan’s grocery industry. Speaking to a Michigan House Agriculture and House Commerce and Tourism Joint Committee, Kennedy addressed four issues: (1) supply chain challenges, (2) complying with executive orders, (3) legal concerns and (4) the bottle takeback process. Supply chain: Kennedy told legislators what it’s been like to operate his seven-store chain during the pandemic. He said that while they typically have an 85% fulfillment rate, at the start of the pandemic it was only 30 to 40%. In April and May, it averaged about 60%, and now it’s about 65%. He also addressed price gouging, explaining that prices have gone up because costs have gone up, and grocers can’t always absorb the costs. Executive orders: He also explained that it’s been difficult to keep up with the executive orders as they change frequently, at times coming with only a few hours to implement the directives. In addition, getting materials such as Plexiglass and masks was difficult when everyone needed to purchase the same supplies. Legal concerns: Employees were told that, without a doctor’s note, they had to wear a mask while working. They’ve had some problems with asthma and fainting, Kennedy said, causing him to wonder if he was going to be held liable if something happens down the road because he made employees wear masks. Bottle bill takeback: Kennedy shared that grocers were hoping the state would set up centers to take back all the cans and bottles that people had been storing. However, that didn’t happen. He shared that they deal with a lot of angry customers who are upset with the return limits and that stores have to close down returns for the day when they’ve reached capacity.
MichiganApples.com
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To conclude, he explained how early on people appreciated everyone’s hard work to keep grocery stores running. But now people are basically fed up and easily set off. He’s worried because his front-line workers deal with upset customers every day. The committee thanked him for helping them understand what it’s been like for grocers during the pandemic.
Government Affairs Update
Before summer break, Michigan Legislature addressed issues that impact grocers By Amy Drumm MRA Vice President, Government Affairs Travel removed from screening requirement for grocers MRA was successful in getting a revision to an executive order that laid out an employee health screening protocol for grocery stores and pharmacies that was more restrictive than the one for other retailers. The original order required a 14-day quarantine for anyone who answered yes to a question about traveling. We were able to get the health screening specifics removed when the order was reissued as E.O. 2020-126. The current order now references the same requirements that all businesses must follow regarding symptoms, which are spelled out in E.O. 2020-114 “Safeguards to protect Michigan’s workers from COVID-19.”
tunately, the governor vetoed the bills over concerns raised by local governments. The legislature plans to modify the legislation and try again.
LEGISLATION We are closely following several legislative issues.
The Senate also increased the cap on cigar taxes from 50 cents to 65 cents as of Nov. 1, then to 75 cents on Nov. 1, 2021. The cigar tax cap is set to sunset on Oct. 31, 2021. Alternative nicotine products not regulated as a drug or device by the FDA would also be subject to a new 50 cents per ounce tax based on the net weight listed by the manufacturer. Lastly, the Senate changes would require the state to conduct unannounced age-sales compliance checks on retailers selling any tobacco/vaping products at least once every two years, publish results of those checks online and prohibit a retailer with two or more violations from selling tobacco for a period of time. A retailer with two violations in a year would lose the ability to sell tobacco for seven days, 30 days for three violations or three years for four or more violations.
E-prescribing bills now law MRA is pleased to report that prior to leaving for summer break legislators approved bills to require that all prescriptions be sent electronically to the pharmacy. These bills have been in the works since 2017. HB 4217, SB 248 and SB 254 were approved almost unanimously and signed into law as Public Acts 134-136 of 2020. The bills’ effective date was modified from Jan. 1 to Oct. 1, 2021, to give the department more time to promulgate rules. MRA supports COVID-19 liability relief MRA supports draft legislation to ensure businesses that follow the state’s COVID-19 requirements cannot be subject to frivolous lawsuits. The legislation would limit lawsuits to persons who were hospitalized or otherwise experienced a serious illness. It also would provide that an employer or business is subject to liability only if he or she recklessly disregards a substantial and unnecessary risk that an individual would be exposed to COVID-19, or deliberately exposes a person to the virus. Property tax/sales tax relief vetoed Legislation that would have pushed back the summer property tax bills and allowed later payment without penalty were approved right before the legislature left for summer break. The legislature also sent bills to the governor’s desk that would have codified the sales, use and withholding tax deferral and installment plans the Department of Treasury announced earlier this month and sought to extend the relief into July and August and apply to all filers, including accelerated filers (taxpayers with more than $720,000 in annual sales/use tax liability or $480,000 or more in annual employee withholding tax liability). Unfor-
Vaping/tobacco sales changes considered In June, the Senate quickly approved bills that reflect the federal government’s new Tobacco 21 law and create a regulatory framework around the sale of vapor products. The House held an initial hearing on these and plans to work on the details over the summer break. Senate-made changes would require all retailers selling tobacco or vaping products to be licensed.
Restaurants and bars get alcohol sales relief While the restaurant and bar industry remain under the microscope for safe reopening, Gov. Whitmer did provide some relief by signing legislation that allows them to purchase more alcohol directly from retailers, sell cocktails-to-go, use social districts for outdoor seating and receive a discount on alcohol purchased through the Michigan Liquor Control Commission. Under Public Acts 124-126 of 2020: n Restaurants and bars can purchase up to 120 liters of spirits a year with no monthly cap from retailers with SDD licenses. Previously, they were limited to 9 liters a month. n On-premise licensees receive an increased discount of 23%, up from the 17% all licensees receive, when purchasing liquor from the MLCC for the next 12 months, ending July 1, 2021. n On-premise licensees and off-premises tasting rooms may sell cocktails-to-go in sealed containers up to one gallon in liquid volume through Dec. 31, 2025. continued on page 18 MICHIGAN FOOD NEWS
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MDARD News
MDARD’s approach to onsite inspections during COVID-19 pandemic By Tim Slawinski Food and Dairy Division Director, Michigan Department of Agriculture and Rural Development
Throughout the COVID-19 pandemic, the Michigan Department of Agriculture and Rural Development, in partnership with the food and agriculture industry, has taken precautions to help slow the spread of COVID-19. Some of these precautions involved minimizing face-to-face interactions and following social distancing practices. MDARD will continue to follow the practices which put the health and safety of our staff and the firms they inspect at the forefront. While the goal of onsite inspections remains the same — to evaluate and ensure food safety — the way in which inspections are accomplished is changing to ensure the safety of all involved. When possible and practical, MDARD food safety inspectors will conduct a pre-inspection phone call to announce their intent to inspect your business and discuss concerns with the person in charge (PIC). Time spent onsite will be limited. Inspectors may conduct discussions and exit interviews with the PIC via phone before or after the inspection. Inspectors may take a hands-off approach and ask employees of the establishment to complete tasks previously performed by inspectors. Tasks may include taking food temperatures, verifying sanitizer concentrations or checking date marking. To help slow the spread of COVID-19, MDARD inspectors are committed to adopting practices recommended by the Centers for Disease Control and Prevention. This includes wearing a face covering and frequently washing hands throughout the inspection. Where possible, inspectors will observe social distancing. MDARD inspectors are supplied with disinfectant wipes and spray to disinfect inspection equipment and will be using dis-
posable personal protection equipment (PPE) such as lab coats and gloves. Food safety inspectors are required to self-monitor daily for symptoms of COVID-19, and if symptomatic, are required to cease work immediately and report their symptoms. Inspectors may wear additional PPE, such as disposable smocks, hair coverings or gloves. If your business requires and provides additional PPE, please notify your inspector. Virtual inspections may be possible in some cases; however, they are not practical for all inspections. MDARD food safety inspectors will carefully assess the risks and benefits of performing onsite inspections. If an inspector determines an onsite inspection needed, all businesses are expected to voluntarily comply with Michigan Food Law inspection requirements. Under current executive orders issued by Gov. Gretchen Whitmer, food establishments are required to take precautions to keep their customers and employees safe and healthy. Operators should thoroughly review the applicable executive orders to ensure the necessary precautions are implemented. Your assistance in helping slow the spread of COVID-19 while keeping everyone safe and healthy is greatly appreciated. MDARD food safety inspectors do not have enforcement authority outside of the Michigan Food Law and the Michigan Modified Food Code. However, it is expected that all businesses voluntarily comply with all applicable regulations. MDARD inspectors observing executive order violations will notify the PIC of their duty to comply and may refer their observations to the Michigan Department of Labor and Economic Opportunity for further investigation. For the latest information regarding Michigan’s COVID-19 response and recovery efforts, please visit www.michigan.gov/coronavirus.
Government Affairs Update continued from page 17
n Local governments may designate social districts to provide more outdoor seating and areas for people to safely congregate while practicing physical distancing. These areas must be approved by local governmental units and include management, hours of operation, clear signage and maintenance plans. To participate, businesses must hold an on-premises license, share a common border or be adjacent to the social district, obtain an annual permit and serve beverages in specially-marked, nonglass containers that are unique to that social district. Social districts can operate until Dec. 31, 2024. 18 JULY/AUGUST 2020
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Friends of Retail will focus on the general election We’ve decided to postpone our Friends of Retail designations for state House members until the November 3 general election. All of our advocacy efforts in late April-June have been focused on helping food retail businesses operate through the pandemic, reopening retail and managing COVID-19 related updates and legislation. MRA typically distributes a Friends of Retail questionnaire for candidates and creates a voting scorecard for incumbents. These tools help us determine our Friends of Retail and will be used ahead of the general election.
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