California Grocer Issue 5, 2017

California

Finding growth in challenging times PAGE 48

The Silver Bullet PAGE 54 2 0 1 7, I S S U E 5

CALIFORNIA GROCERS ASSOCIATION

The changing face of Grocery PAGE 36

with

CATEGORY GROWTH SOLUTIONS

Trusted iconic brands and expert category management deliver real solutions for sustainable growth.

Join the Conversation: @HersheyCompany The-Hershey-Company thehersheycompany.com

January 7 - 14, 2018 The St. Regis Princeville Resort Kauai, Hawaii

REGISTER NOW

Registration Deadline is November 27, 2017

GIVE YOUR BUSINESS THE GIF T OF A FRESH APPROACH! The Symposium Is Your Opportunity Relax, Recharge And Renew.

to

Experts will tell you that to move your business forward

you occasionally need to take a step back to gain a new

perspective. Join independent grocers and food industry executives for a week of inspiration, education and

relaxation. You will come away with a renewed spirit

and fresh ideas that will benefit your business for years to come!

Registration includes:

* * * *

7 nights resort accommodations

from January 7 - 14, 2018

All conference educational sessions and programs

FEATURED SPEAKERS: CREATING A "YES, AND" CULTURE Galen Emanuele International Speaker

LEAN STARTUP IS NOT JUST FOR STARTUPS Aaron Montgomery Co-founder & COO, CarLotz, Adjunct Professor, Virginia Commonwealth University

Opening and closing night receptions Breakfast functions (Tuesday,

Wednesday & Thursday)

For complete information and to

register visit www.cagrocers.com/symposium

or call (800) 794-3545.

CREATING CULTURES OF LEADERSHIP Drew Dudley Founder & Chief Catalyst, Day One Leadership

CGA | BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

CHAIRMAN APPOINTMENTS Independent Operator Committee Chair DIRECTORS

CALIFORNIA GROCERS ASSOCIATION

Chairman Jim Wallace The Albertsons Companies

Second Vice Chair Kendra Doyel Ralphs Grocery Company

Secretary Hee-Sook Nelson Gelson’s Markets

First Vice Chair Bob Parriott Twain Harte Market

Treasurer Phil Miller C&S Wholesale Grocers

Past Chairman Kevin Konkel Raley’s

Renee Amen Super A Foods

Kevin Arceneaux Mondelēz International Inc.

Dave Jones Kellogg Company

Jon Alden Jelly Belly Candy Co.

Willie Crocker Bimbo Bakeries USA

Mark McLean CROSSMARK

Casey Rodacker Mar-Val Food Stores, Inc.

Teresa Anaya Northgate Gonzalez Markets

Steve Dietz United Natural Foods, Inc.

Casey McQuaid E & J Gallo Winery

Jonathan Samorajski Anheuser-Busch InBev

Joe Angulo El Super (Bodega Latina)

Damon Franzia Classic Wines Of California

Mario Mediati The Clorox Company

Denny Silva Coca-Cola Refreshments

Denny Belcastro Kimberly-Clark Corp.

Jen Fulton PepsiCo Inc.

Lynn Melillo Bristol Farms

Elliott Stone Mollie Stone’s Market

Leon Bergmann SUPERVALU

Michel LeClerc North State Grocery Inc.

Dan Meyer Stater Bros. Markets

Joe Toscano Nestlé Purina PetCare

Jeanne-ette Boshoff MillerCoors

Hillen Lee Procter & Gamble

Doug Minor Numero Uno Market

Jim Van Gorkom NuCal Foods

Bob Bukovec Tyson Foods, Inc.

Eric Lindberg, Jr. Grocery Outlet, Inc.

Nicole Pesco The Save Mart Companies

Michael Walton Unilever

Cindy Chikahisa Sprouts Farmers Market

Jonathan Mayes Albertsons Companies, Inc.

Laura Price Nielsen

Richard Wardwell Superior Grocers

Brent Cotten The Hershey Company

Joe McDonnell Campbell Soup Company

Mike Ridenour The Kraft Heinz Company

Kevin Young Young’s Payless Market IGA

President/CEO Ronald Fong

Senior Director, Events & Sponsorship Beth Wright

Dennis Darling Foods Etc.

Senior Vice President, Government Relations & Public Policy Keri Askew Bailey Senior Vice President, Marketing & Business Development Doug Scholz

Director, CGA Educational Foundation Brianne Page

Vice President, Communications Dave Heylen

Controller Gary Brewer

Executive Director, CGA Educational Foundation Shiloh London, CFRE

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Senior Director, Government Relations Aaron Moreno

California Grocer is the official publication of the California Grocers Association.

1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448–3545 (916) 448–2793 Fax www.cagrocers.com For association members, subscription is included in membership dues.

Subscription rate for non-members is $100 . © 2017 California Grocers Association

Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Bill Kaprelian bkaprelian@cagrocers.com

CONTENTS | ISSUE 5

FEATURES

66

Completing the loss prevention Puzzle

In the last of a three-part series on loss prevention, expert Larry Miller completes the loss prevention puzzle by covering center store prevention and technology for total store profit improvement.

36 The Changing Face of Grocery While the grocery industry may not be changing at the rate of most retail, more women are assuming leadership positions. California Grocer highlights six women making a difference.

COLUMNS President’s Message More Than a Theme. . . . . . . . . . . . . . . . . . . 5 Chairman’s Message Working in Concert.. . . . . . . . . . . . . . . . . . . 6

48

Viewpoint Turn, Turn, Turn . . . . . . . . . . . . . . . . . . . . . . 8

Finding Growth in Challenging Times There is a systemic change happening in today’s retail landscape that is effecting where, how and why consumers are shopping. This historic shift is making growth for retailers and Fast Moving Consumer Goods (FMCG) manufacturers seem elusive. But there are answers.

54

THE SILVER BULLET

The Silver Bullet With a vast array of shrink-reducing solutions available in the marketplace, choosing the best solution in which to invest can be an extremely daunting task. The answer may lie in modifying behavior.

Government Relations NIMBY – Not in My Backyard. . . . . . . . . . 12 Capitol Insider Falling on the Sword . . . . . . . . . . . . . . . . . . 16 Inside the Beltway Why New York City Matters to California. . . . . . . . . . . . . . . . . . . . . . . . . 18 Washington Report Time for Washington to Deliver Solutions. . . . . . . . . . . . . . . . . . . . . 22 Mommy Blogger The Family Business. . . . . . . . . . . . . . . . . . 80

DEPARTMENTS CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 10 Member Profile California Fresh. . . . . . . . . . . . . . . . . . . . . . 27 Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 32

72 Are You Leaving Profits in the Basket?

A founder and Chief Operating Officer of My Cloud Grocer shares his 10 best secrets to increase basket size week after week.

15 Minutes With…

Sekou Andrews. . . . . . . . . . . . . . . . . . . . . . 60 Supplier Profile Earth Friendly Products. . . . . . . . . . . . . . . 74 Know the Law Dealing Effectively with Homeless Tresspassers.. . . . . . . . . . . . . . . . 76 Index to Advertisers. . . . . . . . . . . . . . . . . . 79 CAL I FO RNIA GRO CER | 3

PRESIDENT’S MESSAGE

More Than A Theme

RO N F O N G PR E S IDE N T AN D CEO CALIFOR N IA GR OCE R S AS S O CIATIO N

This year’s conference theme – Working in Concert – Was really more than just a theme for CGA. Now more than ever, this year’s CGA Strategic Conference theme truly captures the values of our Association as we grow and look to further provide the highest level of excellence to our members. We do this as a collective, not unlike an orchestra.

Imagine a violinist playing the most beautiful melody alone in a vast concert hall. There is no doubt the music would be beautiful and uplifting, yet it would also seem to be lacking a punch. Now imagine that same violinist playing that same melody, but backed by a full orchestra.

Whether it is a symphony of giving that all of our members create with the CGA Educational Foundation to help further the educations of employees and their families, or a chorus of advocacy where member companies make their voices more powerful by singing the same notes in pursuit of outcomes at the state and local government levels – our power and success comes from working in concert.

As we convene this year’s annual conference, we should all seek to work in concert with one another. This is a chance for all of us to learn new riffs, new melodies, and new songs from one another.

Much like every musician is made better by playing with other musicians and learning new techniques that often comes out of it, we too as members of the grocery industry can become better at what we do by interacting and sharing with one another.

Thank you all for making the CGA orchestra one of the best in the business.

I hope you all enjoy the “concert” we’ve put together for you all this year and we can all be more in tune than ever before. ■

Each note has more sonic weight behind it pushed forward by every musician sharing that stage, all under the watchful guide of a conductor who steers everyone to play in a unison that is greater than the sum of its parts. It is truly a sound and sight to behold.

CGA is no different from that orchestra.

Every member, whether large or small, carries a note that is amplified by the notes around it. These notes are amplified even more with the notes added and carried by every employee at CGA. It is this harmony created that allows our work to be felt by our various audiences.

iStock

CAL I FO RNIA GRO CER | 5

CHAIRMAN’S MESSAGE

Worki ng in Concert

J I M WA L L AC E T HE ALBE R TS ON S COMPAN IES

The timing of this year’s CGA Strategic Conference theme couldn’t be more perfect.

Wallace

Collaboration is nothing new in the grocery world, but the scope and importance of it has changed dramatically. Initially, collaboration was only tied to buyer and seller transactions – price negotiations and speed to shelf. Now it also includes developing strong and personalized trading partner relationships, sharing data and curating assortment.

The continuing convergence of offline and online into the shopping equation is requiring all sides to collaborate more efficiently. Therein lies the challenge, because omnichannel retailing is in a constant state of flux with both retailers and suppliers. Both are expected to keep pace if they are going to succeed in attracting today’s shopper.

As demand for transparency and traceability throughout the supply chain increases, all steps along the path from farm to table need to work more closely together to ensure customers are receiving relevant information on health, food safety and environmental responsibility before making a purchase.

The greatest challenge continues to be the reluctance to share big data. Retailers own the direct relationship with customers while

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manufacturers have an extensive knowledge of brands and categories. A greater sharing of information will be needed if we are to personalize the shopping experience.

The benefits of collaboration are significant. Dramatic reductions in inventories and costs, improvements in speed, higher service levels and customer satisfaction can be achieved. Working together, we can effectively tailor innovation, drive demand, manage supply and assure execution, while exploring ways to differentiate the shopping experience.

So what is holding us back from achieving greater collaboration? The challenges can vary dramatically, but all partners aim is to align goals and incentives. Regardless of the challenges, collaboration needs to be anchored in trust to tap its fullest potential.

As greater trust is established, it will open the door to working in concert to strike just the right chord of today’s shopper. ■

iStock

VIEWPOINT

TURN, TURN, TURN

K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M

“To every thing there is a season … a time to break down, and a time to build up…”

- Ecclesiastes 3:1-8 I was speaking at a company event the other day where the folks were justifiably proud of themselves. It was after the company’s 25th anniversary of being in business and there was a lot of back-slapping going on.

I don’t blame them that. I believe in celebrating success. I’ve certainly done my share of back-patting in my office (though it requires me to be a bit of a contortionist since I work alone).

Unfortunately, I had to deliver some bad news.

Good is what you were yesterday. Your reputation with your customers is entirely in the past tense. Today and tomorrow and the day after that, you have to earn it all over again, and have to do so in a business climate that is far more volatile, with customers who are far more fickle, and with competition that is far more diverse and aggressive, than anything you’ve faced in the past quartercentury.

(Sometimes I go to these events, and I feel like I’m Frederic March in “Death Takes A Holiday.”)

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The thing is, there is no question in my mind that these are treacherous times to be a retailer. In my previous column for this magazine, “Something Went Bump,” I wrote about some of the potential implications of an Amazon acquisition of Whole Foods.

Now, as I write this column, that deal has been signed, sealed and delivered, and Amazon already has begun the process of reinvention and reintegration, while trying to maintain Whole Foods’ cultural imperatives.

It won’t be easy, and success is hardly a sure thing. But then again, Amazon CEO/ Founder Jeff Bezos once said that if you know what the outcome is going to be, it isn’t really a test. And Amazon has the notion of testing limits built into its DNA. But I don’t want to write about Amazon and Whole Foods this month. If you want to know what I think about how the partnership will play out, go back and read my last column. (At the risk of contorting myself while patting my own back, I think I got it right.)

No, what I want to write about this time around is the other stuff…the challenges that now ought to seem self-evident to every other retailer in the space.

Like Walmart and Google teaming up to battle with Amazon. These two behemoths struck a deal that will make Walmart products available to people using the Google Express shopping platform – the first time that Walmart has made its products available in the U.S. outside the walls of its own stores or beyond its own websites.

At the same time, Google will enable Walmart to use its Google Home platform, which uses a voice-controlled speaker as a personal assistant, to place orders on Google Express for Walmart products.

This is all an answer to how Amazon is expanding its ecosystem through its Echo/ Alexa platform, and the partnership reflects the fact that both companies see Amazon as a threat.

As should every retailer out there.

In my day job, as Content Guy for MorningNewsBeat, I got a number of emails after the closure of the Amazon-Whole Foods deal was announced, with a variety of people suggesting that it would have absolutely no impact on their companies.

I hope they’re right. But they’re only going to be right if they get aggressive about competing with Amazon/Whole Foods, finding ways not just to blunt their combined advantages but to build on their own strengths in new and even unexpected ways.

VIEWPOINT

“The ones that survive, I believe, will be the stores that understand they are not so much selling products or brands…but actually ought to be in the business of creating informationbased solutions to the problems people face in their lives.” iStock

If they think that they’ll be successful simply by doing things the way they’ve always done them, then I think they have a problem.

One of the more common conversations that I have when out talking to retailers usually starts out with being asked the following question: “Do you really think e-commerce is going to kill all the bricks-and-mortar stores?”

Of course not. I actually think the question is the wrong one, and reflects many retailers’ desire to think in absolutes.

Here are the questions that ought to be asked: “Do you think that e-commerce in general and/or Amazon in particular could steal as much as 10 percent of my business?”

“Can I afford to give up 10 percent of my business?”

“And, how do I compete with a juggernaut like this?”

My answers are pretty simple.

Yes. (But maybe 5 percent. Maybe 15.

We’ll see.)

It depends, perhaps, on what 10 percent you’re talking about. (Betcha that there are a bunch of unprofitable, non-differentiating sales that could be lost, but could be compensated for by more profitable sales that actually burnish and reinforce a retailer’s broader value/values proposition.)

You compete by creating a retail experience – physical and virtual – that is relevant to the shopper and resonates with the shopper.

(Pretty simple, huh? I concede, by the way, that it is a lot easier for me to say these things than for you to do them. Call it the advantages of being a pundit.)

There are studies out there that show people – even millennials – like stores… though they don’t necessarily like shopping the way their parents did. And at the same time, we know the nation is over-stored, so it seems entirely likely that there are going to be some closures and failures out there. Maybe even some big ones.

The ones that will survive, I think, will be the ones that recognize they need to occupy almost any space but the middle of the road, and that, in fact, they should not be thinking in terms of occupying space as much as creating their own differentiated and distinct ecosystems…being where and when the customer needs you to be, being less transaction-based and more focused on lifetime customer value.

Information-based, because the ability to provide background info about food products as well as use-centric data (recipes, menus, nutrition, etc…) will turn them into a resource for the shopper, not just a source of products.

Everything, I believe, is pointing in this direction.

This is the season for both breaking down old processes, procedures and silos, and building up a new relevance and resonance to the shopper.

Now. Fast. Because the retail world continues to turn, turn, turn. Falling behind is an untenable option. ■

The ones that survive, I believe, will be the stores that understand they are not so much selling products or brands (good timing, since young people are far less brand loyal than their elders), but actually ought to be in the business of creating information-based solutions to the problems people face in their lives.

CAL I FO RNIA GRO CER | 9

CGA NEWS

NORTH STATE GROCERY EXEC NAMED GOVERNMENT RELATIONS CHAIR Michel LeClerc, North State Grocery Co., has been named Chair of the CGA Government Relations Committee. He succeeds Mary Kasper, formerly of Unified Grocers, Inc. LeClerc is Chief Financial Officer for North State Grocery, Inc., a northern California, 100 percent employee-owned grocery chain, where he oversees finance, legal and compliance, fiduciary, corporate governance, and risk management matters.

He serves on the California Grocers Association Board of Directors and its Legal Committee.

LeClerc also serves on the board of directors for the non-profit Ascension Project, which develops leadership skills of young men and women through tennis.

Prior to North State, LeClerc spent 20 years in private practice, with the last 10 as partner of Hansen LeClerc, LLP in Redding, Calif. He earned a doctorate of jurisprudence from the University of Oregon School of Law in 1989, after completing his undergraduate studies at CSU Sacramento.

Michel LeClerc

SEC TOURS NEW PAVILIONS AND SAVE MART The second stop in this year’s CGA Supplier Executive Council 2017 Store Tour series featured the new Pavilions i n Rancho Santa Margarita, Calif.

The tour provided SEC members to walk the entire store with members of the Pavilions executive team including Lori Raya, President, Southern California Division and Jim Wallace, Vice President, General Manager, Pavilions, both part of The Albertsons Companies.

The SEC’s third 2017 Store Tour stop was at a newly renovated Save Mart Jim Wallace, Pavilions, talking about the importance Randy Slentz, Save Mart, (right) welcoming SEC Supermarket in Los Banos – the seventh of their produce department. members to the Los Banos store. store under the Save Mart banner to incorporate the brand’s fresh, updated look and new features geared toward convenience and service. Two tours were led by General Manager Randy Slentz along with Executive Director of Customer Solutions Greg Calistro and Senior Director of Customer Experience Denny Wraske.

For more information on becoming an SEC member, contact Sunny Porter at sporter@cagrocers.com, or call (916) 448–3545.

“Our store tour series is a fantastic way for our supplier members to hear first–hand from top retail executives as they provide valuable insights into store operations,” said CGA President and CEO Ron Fong.

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CGA NEWS

NEW MEMBERS CGA welcomes the following members:

ALTO USA 1101 Brickell Avenue South Tower Fl 8 Miami, FL 33131-3105 Contact: Karl Langhorst, Executive Vice President Email: klanghorst@alto-us.com Tel: (513) 374-1510 Website: www.alto.us

Millennium Packaging & Distribution, Inc. 4102 Loop 337 New Braunfels, TX 78130-6968 Contact: Carlos Anzorena, Director, Sales – West Coast Email: carlos.anzorena@mpgroupinc.com Tel: (323) 348-1952 Website: www.mpgroupinc.com

Murphy’s Markets, Inc. 785 Bayside Rd Arcata, CA 95521-6723 Contact: Dave Breisacher, Controller/HR Director Email: dbreisacher@murphysmarkets.net Tel: (707) 822-7665 Website: www.murphysmarkets.net Oliver’s Market 1721 Ditty Ave Santa Rosa, CA 95403-2659 Contact: Eric Meuse, General Manager Email: emeuse@oliversmarket.com Tel: (707) 285-2550 Website: www.oliversmarket.com PPI Worldwide Group (HK) Limited 27047 Fairway Ln Ste 59 Valencia, CA 91381-0670 Contact: Gerado Perez, Marketing & Business Development Email: gperez@ppiwwg.com Tel: (818) 303-1365 Website: www.ppiworldwide.com

Rocateq, LLC 4155 Blackhawk Plaza Cir Ste 200 Danville, CA 94506-4613 Contact: Michelle Stratton, Sales Email: michelle.stratton@rocateq.com Tel: (925) 960-5179 Website: www.rocateq.com/usa

Zanotto’s Market 1970 Naglee Ave San Jose, CA 95126-1934 Contact: Fred Zanotto, VP, Operations Email: fredz@zanottos.com Tel: (408) 294-9151 Website: www.zanottos.com

CAL I FO RNIA GRO CER | 11

GOVERNMENT RELATIONS

NIMBY – Not in my backyard

A A RO N M O R EN O S E N IOR DIR ECTOR CGA GOV E R N ME N T R E LAT ION S

California is facing a new housing crisis that will have a profound impact on the grocery industry.

It’s a phrase often bandied about at the local level by residents protesting a change in zoning or development proposal that have the potential to change the face of a neighborhood by causing more noise, or traffic, or pollution.

And to be honest, it’s hard to begrudge someone for having this type of reaction.

For the vast majority of people, their home is their biggest investment and most valuable asset. Nobody wants to stand by idly as the value of their nest egg is dragged down by what they most certainly see as preventable outside sources – hence the NIMBY view.

Many times, those who scream NIMBY have their concerns addressed by local governments in the form of shrinking the size of the development in question or, in the most extreme of cases, scrapping the development altogether.

But what happens when the results of NIMBY reverberate beyond the community in which it is centered?

California lawmakers have been forced to confront this question as NIMBY has joined with the law of supply and demand to create a housing crisis that threatens to inflict

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long-term damage to the future of working families, to their employers, to the state’s transportation infrastructure and to the environment.

Over the past year, CGA has hosted lunches with various legislators and representatives of our member companies. The purpose of these meals, beyond the establishment of relationships with our industry, is for our members to educate legislators about some of the challenges grocers face in an era of greater competition and greater regulation.

Many of the issues the grocery industry faces in California, and that are articulated in these meetings, are ones that we have faced for decades: increased wages, litigation costs, taxes, and Prop. 65. But one issue has started coming to the fore at these lunches. That issue is housing.

It is no secret that housing in California is among the most expensive in the nation for a number of reasons.

This is for a number of reasons. Yes, there are a number of state and local regulations that increase the cost of building a new home in this state. There are also taxes that make the purchase of a new home expensive. But at the end of the day, it just boils down to supply and demand.

The supply of land available for development has shrunk year after year while the demand has only increased. In many communities, NIMBY has helped to shrink even further the supply of land available for housing development and this has put many governments and businesses in a bind.

A lot of the best land for housing was developed years ago. This has led to cities and counties growing further out from their cores as these hinterlands are often the last remaining spaces that are viable for development.

This is where NIMBY often begins to rear its head. What happens is that the residents of the once outlying housing developments begin to object to the negative impacts they feel these newer developments will bring.

Whether it be fear of losing home value or concerns about traffic or concerns about the type of housing, local governments and the elected officials who run them are the first to hear them and are forced to respond, lest they lose their next election for being unresponsive to the needs of their constituents and seen as shills for greedy developers.

When faced with opposition for new suburban projects, both local governments and developers looking to meet the demand for housing, the next place they often look is in the city or county core.

GOVERNMENT RELATIONS

“infill projects have extra NIMBY as they are often accused of spurring gentrification and displacing existing longtime residents.” iStock

These infill projects have been de rigueur in planning circles over the last decade as they are viewed as being more environmentally friendly by creating less vehicle traffic miles per person because they are often built near transit hubs or occupied by those who work and play in the city center. They are also seen as a way to jumpstart fading urban areas.

These projects face NIMBY as well, with existing residents often expressing the same concerns of those in the existing suburbs.

And these infill projects have extra NIMBY as they are often accused of spurring gentrification and displacing existing longtime residents.

These two sorts of NIMBY have created a situation that most often hurts working families, first-time homebuyers and renters.

With a low supply of housing, the cost of a new home has become so expensive that those looking to buy a home often have to look at places to buy that are too often far, far away from where they work.

For renters, the low housing supply has caused such a big jump in rent that they too are forced away from the urban cores where they have chosen to live because of the proximity to employment.

These cost pressures have made it more difficult for grocers and other businesses to attract new workers and keep existing ones. In our lunches with legislators, store operators have described the plight of some workers who have taken on nightmare

commutes because there is simply no reasonably priced housing in a reasonable proximity to their job.

This struggle is most evident in the San Francisco Bay Area and Los Angeles County where the tiniest of homes can go for almost $1 million and rents, in San Francisco for example, average over $3,000 a month. It is nearly impossible for even the most generous of companies in our competitive industry to provide the wages needed to live anywhere close to where some of our stores are located.

The result of this is workers spending more time away from their families, trapped in traffic, which has negative impacts on the transportation infrastructure, air quality, and perhaps most importantly workers’ pocketbooks in the form of vehicle wearand-tear, fuel costs, and for those that commute, transit costs.

There could be some hesitation by some legislators to put up such a vote because of the other supermajority votes they were forced to put up to raise taxes on gas and extend the cap-and-trade program.

But even if the legislature does pass all of these measures, and there is new money dedicated to build affordable housing around the state to help workers and businesses, will it be enough to overcome the law of supply and demand for the cost of land?

And more importantly, will it be enough to overcome the NIMBY that exists at the local level that has gotten us here in the first place?

Only time will tell. ■

Legislators have heard from our industry and others and as of the writing of this story they are currently considering a number of measures to help facilitate the construction of new housing. One would reduce some of the regulatory hurdles that developers face in the building process, others would raise funds dedicated to the construction of new, affordable housing.

These legislative proposals, though laudable, face a tough vote in the legislature as the fundraising measures would require a two-thirds vote of the legislature, a difficult threshold in even the best of times.

CAL I FO RNIA GRO CER | 13

NEW!

Customized Grocery Workplace Harassment Prevention Training Mandatory training for supervisors and managers specific to the grocery workplace The California Grocers Association Educational Foundation proudly launches the first-of-its-kind, on-line supervisor training for workplace harassment prevention. This new, easy-to-use two-hour training module is customized for the grocery industry and fully compliant with California law AB 1825 and AB 2053.

CUSTOMIZED TR AINING FOR GROCERY SUPERVISORS

• Tailored for the grocery industry • Real life in-store, office and warehouse scenarios A F F O R DA B L E

• Quantity discounts • CGA-member savings • Save up to 75% off your current solution E ASY TO IMPLEMENT

• Completely tablet/desktop ready • On-demand training for your employees • Customized reporting for compliance tracking & verification

Purchase Today!

To learn more about this effective, affordable and easy-to-use training, including special pricing, visit cagrocers.com/workplace-harassment.

CGA Educational Foundation | www.cagrocers.com/workplace-harassment | (916) 448-3545

CAPITOL INSIDER

Falling on the Sword LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F K HAN, S OAR ES AN D CON WAY, L L P

Former Assemblymember Chad Mayes voted for what he believed and it cost him his leadership.

Brown

Earlier this year, the Assembly Republican Caucus voted in a new leader, Brian Dahle.

The election happened soon after the legislature returned from Summer recess, following more than a month of drama inside republican circles because of Chad Mayes’, at the time republican leader, decision to support the extension of California’s capand-trade climate change policy, along with six other Assembly Republicans.

Many in the Capitol community had hoped the month-long recess would drown out the cries of the far-right element of the party calling for the resignation of Mayes.

Unfortunately, time only provided greater opportunity for this group to muster up the support it needed to force Mayes from office.

Fortunately, Mayes saw the writing on the wall and orchestrated the election of Dahle to provide some level of continuity in the Capitol and keep the caucus from veering too far off the rails.

This was the not the first time the Republican Party in Sacramento sacrificed a leader for making decisions that were in the State’s best interest, and not necessarily the party.

In 2009, former Senate Leader Dave Cogdill was voted out of his leadership position just after midnight in February after agreeing to a budget balancing deal from Gov. Schwarzenegger that included raising taxes.

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For Mayes, the decision was to either negotiate the best deal possible on an extension of the State’s cap-and-trade policy or let it fail. The decision seemed simple from the perspective of the California Chamber of Commerce, California Manufacturers and others whose members are working under the cap-and-trade policy; extend it.

Senate Bill 32 had been passed the year before on a majority vote placing in statute goals for the State to reduce its carbon emissions by 2030. Without a cap-and-trade extension, the State would move forward with a command and control methodology, which most in industry unanimously agreed was untenable.

Cap-and-trade was also publicly popular, supported by a majority of democrats and more than 40 percent of republicans.

Because of this popularity, Mayes saw the vote by republicans for cap-and-trade as not only what was best for the state, but also as an opportunity to show voters, especially independents that republicans could lead on an issue important to them. So, why did this vote lead to the replacement of Mayes as Assembly Republican Leader?

The Assembly democrats held 54 seats, which equals the super majority needed to pass two-thirds vote bills. However, when the

vote came down not all democrats voted for the bill, including two members targeted by the republicans in 2018 election.

Allowing two targeted members to avoid a tax extension vote has been labeled by some “political malpractice”.

If it were only that simple.

In fact, the vote was far more than just two democrats laying off. In the end, four voted no and two abstained. Many in the environmental community, including statewide organizations like Sierra Club, opposed the extension of cap-and-trade because it continued, in their words, a ’pay to pollute’ policy. The final vote was 55-22; seven republicans voting aye.

This vote while not popular among party activists will save many in the manufacturing and food processing industry tens of millions of dollars over the next 12 years, thousands of jobs and millions in tax revenue to the State. Yet, it led to Mayes losing his position.

There are times in Sacramento where members are forced to lead and do what is right for the State, even if party leaders think otherwise. Chad Mayes took that opportunity and claims he would do it again if given the chance. Unfortunately, the business of politics often stands in the way of members doing policy. Fortunately, Mayes and his colleagues chose the latter. ■

CGA EDUCATIONAL FOUNDATION WOULD LIKE TO THANK THE FOLLOWING COMPANIES FOR THEIR SUPPORT OF THE CGAEF SCHOLARSHIP ENDOWMENT

CGA Educational Foundation has announced the creation of the CGAEF Scholarship Endowment honoring their 25th anniversary of supporting the grocery industry with financial assistance and educational opportunities.

The CGAEF Scholarship Endowment will support student success and opportunity by creating a permanent funding source for college scholarships, offering relief to the rising costs that keep many students from completing their education.

California is a place of opportunity—and no industry embodies this promise more than the grocery industry.

California Grocers Association Educational Foundation

1215 K Street, Suite 700, Sacramento, CA 95814

(916) 448-3545

foundation@cagrocers.com

cgaef.org

INSIDE THE BELTWAY

W h y N e w Yo r k C i t y M at t e r s T o C a l i f o r n i a J EN N I F ER H ATC H ER S EN IOR V ICE PR ES IDEN T GOV E R N ME N T AN D PUBLIC AFFAIRS FOOD MAR K ET IN G IN S TIT UTE

Californians don’t typically worry about New York City and the policy decisions made there, but this time, New York City matters to California.

On May 23, 2017, New York City announced it would be ignoring the review and delay (until May 7, 2018) of the federal menu labeling rule that FDA put in place and would begin educating and then fining covered entities (beginning August 21, 2017) for violations of the New York City rule.

The rule would apply for companies that have 15 locations nationally – even if only one was located in New York City.

The Food Marketing Institute’s Board of Directors decided the association needed to step in as a litigant to intervene, not just to protect our members in New York City per se, but to protect FMI members around the country because of the potential precedent this could set for other municipalities outside of New York City.

You can imagine the challenge for retailers operating in different jurisdictions (think California and the variations in plastic bag fees across localities), if local jurisdictions were able to unilaterally decide whether or not they were going to follow a federal law or rule or wanted to implement it in a different way.

18 | CAL I FOR N I A G R OC E R

In this context, we can’t have municipalities deciding how to design a menu labeling law in a way that works for them – this is the basic principle behind having a preemptive federal standard in place.

You can also imagine the confusion and frustration customers would experience with those variations.

Thankfully, federal preemption has prevailed for now. On August 25, FMI and its co-plaintiffs reached a settlement in the U.S. District Court for the Southern District of New York in which New York City agrees not to fine or sanction retailers for alleged non-compliance with calorie and nutrient information disclosure for menu labeling requirements prior to a new May 2018 compliance date established by the U.S. Food and Drug Administration (FDA).

FMI was pleased it was able to reach a settlement with New York City that both protects retailers from fines prior to the federal compliance date and also serves as a strong deterrent for other states and localities from prematurely enforcing the federal menu labeling rule prior to the federal compliance date.

The City’s agreement, along with the United States Statement of Interest that was filed in the case, is a further testament to our position that a municipality’s premature enforcement is preempted by federal law, regardless of the municipality’s location.

In the settlement, FMI agreed to encourage retailers attempting to comply with the menu labeling rule to continue their work, subject to any future modifications or clarifications of the federal regulation. At the same time, FMI will continue its work with FDA and the Congress to address the substantive implementation problems with the final rule prior to May 2018.

As we continue to see a rise in advocacy efforts at the state and local levels, we are encouraged by the outcome in New York City that federal preemption will allow for national standards to reduce confusion for our member companies and their customers no matter where they are located. ■

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WASHINGTON REPORT

Time for Washington to Deliver Solutions PET ER L A R K I N PR E S IDE N T AN D CEO N AT ION AL GR OCER S AS S OCIATIO N

Despite numerous Administration distractions, Congress continues to pursue an aggressive policy agenda.

President Donald Trump’s first year in office is quickly approaching, however much of Washington continues to be consumed with high-profile turnovers within the Administration, leaks, and an ongoing Russia investigation.

Despite this, lawmakers have been pursuing an aggressive policy agenda, but continue to face slipping deadlines on things such as health care reform and tax reform.

That “to do” list is likely to be crunched by upcoming deadlines to pass a budget resolution for Fiscal Year 2018, a continuing resolution to keep the government funded beyond the end of September, raising the debt ceiling, and on the Senate side, confirming the Administration’s nominees.

As always, there’s no shortage of issues before Congress that affect the independent supermarket industry. Below are policy issues that our government relations team is actively engaged in on behalf of independent grocers.

Durbin Amendment/Debit Card Swipe Fee Reform This May, the independent supermarket industry and entire retail community scored a major victory after House Republican leadership announced lawmakers would no longer include a provision in the Financial CHOICE Act (H.R. 10) that would have repealed debit swipe fee reform.

NGA worked tirelessly to help ensure this provision was removed from the measure and played a leading role in the coalition to defeat the efforts. If debit reforms were repealed, retailers would have seen their swipe fees increase by a staggering 200 percent despite already paying the world’s highest swipe fees.

The annual Supermarket Industry Day in Washington fly-in took place while the House Financial Services Committee marked up the legislation, giving supermarket operators the opportunity to meet with their lawmakers before the bill was advanced out of Committee.

This fall, we’ll be keeping an eye out as Congress takes up its appropriations bills to ensure that no policy riders are attached that will repeal the Durbin amendment. However, our victory this spring means it’s unlikely that Congress will be eager to address the issue again any time in the foreseeable future.

Health Care Reform After an initial failed attempt to repeal and replace the Affordable Care Act (ACA), the House was eventually successful in its repeal efforts through the passage of the American Health Care Act this May. The effort then moved onto the Senate, where Republicans faced similar challenges in gathering support among its own caucus to pass a bill.

Several legislative proposals were made, but at the end of the day lawmakers in the upper chamber rejected an alternative bill known as the Better Care Reconciliation Act, which would have repealed and replaced the ACA. They were also unable to pass a straight repeal bill and voted down the “skinny” repeal bill that would have ended the employer mandate.

Since then, Senate Majority Leader Mitch McConnell (R-KY) has said it’s time for Members of Congress to move on from repeal and replace attempts, leaving the future of health care unknown.

Continued on page 24 ▶ 22 | CAL I FOR N I A G R OC E R

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WASHINGTON REPORT ◀ Continued from page 22

Tax Reform One of President Trump’s largest promises on the campaign trail included modernizing the tax code – something that hasn’t been done in over 30 years since Ronald Reagan was in office.

In July, Republican leaders from the Administration, the House and the Senate released a long-awaited document that outlined where Congress and the White House hope to go on tax reform.

A provision that was not included in the document: the border adjustment tax (BAT).

With the exclusion of BAT, it does leave questions as to where Congress will look for the revenue to offset any tax cuts included in reform. One of the places that Congress could look to for revenue is the last-in, firstout (LIFO) method of accounting.

Prior to the release of this framework, NGA participated in a roundtable discussion at the White House on our industry’s priorities for tax reform, including lowering the tax rate across the board, maintaining the interest expense deduction, creating parity between pass-through entities and C-Corporations, preserving LIFO, rejecting a BAT, and permanently repealing the estate tax.

It’s expected that the Administration will take that feedback and incorporate it into a more detailed framework by September. After that, the tax-writing committees in the House and Senate will be charged with hammering out the rest of the details.

Rep. Kevin Brady (R-TX), Chair of the House Ways and Means Committee, has said he hopes to have a package on his desk by the end of the year.

FDA Menu Labeling Regulations There wasn’t much downtime in between the menu labeling regulation being delayed to May 7, 2018, and our attempts to find a solution that creates the flexibility needed for grocers to feasibly comply.

In July, the House Energy and Commerce Committee held a markup on the Common Sense Nutrition Disclosure Act (H.R. 772) and approved the bill. A companion bill has been introduced in the Senate, and we continue to encourage our legislative champions to push for a floor vote in both the House and Senate this fall.

On the regulatory front, NGA submitted written comments to the FDA highlighting industry’s concerns with the proposed menu labeling rule. NGA also worked with member companies to file comments with the agency as well. ■

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MEMBER PROFILE

California Fresh Markets

BY LEN L E WIS

Greg King hasn’t gone very far in life – if you look at distance!

Greg King, a partner in California Fresh Markets, started in the grocery business with Safeway in Pismo Beach, Calif. – only a block away from where one of his stores is located today.

But his three stores – two under the California Fresh and one under the El Rancho banner – are worlds away from where he started and he and his partners have created what one of his customers called “an amusement park for food.”

Another customer took it a step further, comparing the shopping experience “to a kid in Disneyland.”

The analogy might not ring true to everyone.

But California Fresh has become a unique retail experience built on the highest levels of customer service, healthy/natural foods, top quality local meat and produce an extensive selection of prepared foods, wines and baked goods that are ahead of the curve in customer demand.

The company operates three stores: Pismo Beach, a 26,000-square-foot store; San Luis Obispo, 17,000 square feet; and Solvang, 16,000 square feet – the only one still operating under the El Rancho banner.

“The store was opened in Pismo Beach in 1966 by my partner Alfred’s father, Helmut Holzheu, who was a meat cutter at a Safeway store in San Luis Obispo.” King says.

“It was under the El Rancho banner and was more of a meat market with a small grocery department.

King says Holzheu’s goal was to create a local store that would focus on fresh, fairly priced products. That vision was to continue when his son Alfred took over the business from his father in 1987.

“We roasted coffee under the California Fresh name, squeezed our own orange juice and made salads from scratch,” King recalls.

“The new name was a natural.”

This strategy continued since Sean Walwick, who became a partner in 2002, was one of the architects of the upscale Elephant Bar restaurant chain, whose reputation was also built on making foods from scratch using locally sourced ingredients.

As time went on, people misunderstood what the company was all about, says King.

Walwick was instrumental in putting together the property purchases for both the Pismo Beach and San Luis Obispo stores, King said.

“Some thought we were a Hispanic store,” King says. “We have Hispanic items and customers of course, but we’re more of a high-end natural foods supermarket.”

By 2013, the three men became partners and opened the second El Rancho market whose name was quickly changed to California Fresh.

California Fresh was a private label brand used in the Solvang store at the time and as the company grew, the partners decided the name better represented what the other two stores were all about.

“We opened in November and honestly it was something of a struggle. It’s hard when you’re in a college town and everyone leaves for the holidays,” King quipped.

“Alfred remodeled the store three times and the last time included a service deli which were not particularly common at the time,” King notes. “Today all our salads, sides and proteins are made in store. Even our potato salad is made from whole potatoes.”

King joined the company in 2001 as General Manager and his broad experience in supermarket retailing with Safeway, Vons and Albertsons came in handy when California Fresh opened in Pismo Beach in 2012 as the company continued to refine the customer experience.

However, the name and the format caught on quickly with the company purchasing as much as it could from local vendors.

But if you ask King about the crux of the company’s strength, his answer isn’t based solely on product offerings, but also the company’s deep community roots, customer service and its employees.

“We’re involved in everything in Solvang,” he shares. “One example is the senior breakfast, which we’ve been doing for years. After the graduation ceremony we cook breakfast for the kids at school.”

Continued on page 29 ▶ CAL I FO RNIA GRO CER | 27

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MEMBER PROFILE

Caliofrnia Fresh Market ◀ Continued from page 27

In Pismo Beach, King says, the entire front of the store is covered with letters from the community thanking the retailer for events it’s supported – everything from surf contests to color runs.

“They also frequently comment online about what we do to promote healthier lifestyles with vegan and gluten-free foods and about the huge supplements department at the store in Pismo,” he says. “Our slogan is ’bringing you fresh food, fair prices and the very best customer service every day.”

This includes the juice bar, which makes fresh, organic juices every day, fresh sushi, smoked meat and fresh ground hamburger.

“We do breads, pot pies and cakes from scratch in the bakery,” he says. “We have the largest selection of local fish and local wines in the area and we even have a local guy who distills bourbon. All this differentiates us from our competitors.”

According to King though, the company’s real strength lies in its people and his focus has always been on finding the right people for the right job.

Along with helping design the store layout at his Pismo Beach store, he said that hiring the best people for specific jobs was one of his hardest challenges.

“I am so proud of the hard-working people we employ and I get a lot of satisfaction seeing them grow with the company,” he beams.

El Rancho Market

“I am so proud of the hard-working people we employ and I get a lot of satisfaction seeing them grow with the company.”

King emphasized that people influence the way stores go to market.

“For example, I have one checker who, if you come through her checkstand and write a check will notice if it’s your birthday,” he says.

“She stops and gets the whole front end to sing happy birthday. It’s a way of celebrating people for shopping our stores.”

Even the unconventional way that the stores stock the shelves has enhanced customer service, according to King.

“When people have an idea we encourage them to bring it to us,” King says. “We have an item called Mississippi Caviar. It’s basically a dip containing onion, black-eyed peas and Italian dressing. An employee brought this to the store 20 years ago and it’s still a huge seller.”

King hasn’t gone far from his roots along California’s Central Coast, but over the years his stores have come a long way and he sees that as a very good thing. ■

“I grew up in the business where night crews were common,” King recalls. “We don’t have one. We always considered it detrimental to life and the opposite to how people live in the world.

So, King says, he has a morning crew with six or eight people stockings the shelves.

It can be a bit inconvenient for customers, but it also creates better customer service since more employees are in the store to help shoppers.

Meanwhile, those same store associates can be big contributors to the company’s product lineup.

CAL I FO RNIA GRO CER | 29

Congratulations to

Kathleen Smith

and thank you for your leadership of

www.cartretrieval.net 1-800-252-4613

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CSCRC and CCRC are RMS companies – 1020 North Lake St., Burbank, CA 91502

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congratulates The California Grocers Association for more than 115 years of representing the California grocery industry.

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OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES

Opening an ice cream shop in the summer seems like a no-brainer and a potential cash cow. But Andia’s Homemade Ice Cream in Cary, N.C. – the middle of the lucrative area known as the Research Triangle or Silicon Valley East – is bringing a new twist to the business with flavors like baklava, lemonbasil sorbet and a rotating vegan option made with coconut milk. There will also be doughnut ice cream sundaes and ice cream cannoli.

Not exactly diet food, but who cares? iStock

MILK WARS iStock

iStock

Remember the neighborhood milkman who delivered daily to your door – he’s back!

Illinois-based Oberweis Dairy has begun delivering “gently pasteurized” milk in glass bottles, cheese, ice cream and other products to homes in Morrisville, N.C., in an effort to muscle in on territory claimed by two other local dairies. Seems like an old-fashioned price war is shaping up with the new kid on the block offering a free cooler and a reduced delivery fee, although product prices are about 10 percent higher than local supermarkets.

Maybe Amazon will want a piece and start drone deliveries to the front porch!

KING ANYMORE

Cheers

If you’ve never heard of Cheerwine don’t worry – few people have. This soft drink has been a Southern staple since it was introduced in 1917 and the North Carolina-based company recently brought the cherry flavored beverage to the White House as part of American-Made week. But there’s a newer twist. Cheerwine has partnered with Krispy Kreme for a soda that tastes like the doughnut’s original glaze. If you listen closely you can hear the cheers from dentists all over the Carolinas.

32 | CAL I FOR N I A G R OC E R

CASH AIN’T

iStock

The annual payments survey by the Retail Bulletin has found that in the UK debit cards have surpassed cash as the top payment method. New rules by the EU Interchange Fee Regulation are delivering savings of nearly $600 million to retailers and customers. However, cash isn’t going to disappear any time soon due to the relatively high cost of processing card payments. Meanwhile, the survey found that credit card payments continue to fall an indication of where investments in technology should be.

OUTSIDE THE BOX

Unicorn Juice

CRYPTO CONFUSION

iStock

While the Washington swamp is mired in discussions over excess regulation, the ephemeral world of crypto-currencies is making fortunes without any regulation whatsoever.

Recently, two unnamed companies with no sales raised $400 million from investors.

Instead of the usual Wall Street IPO, this was done through an ICO or Initial Coin Offering, which is totally unregulated. This exploding business, for which over $1 billion was raised in offerings this year, not only includes Bitcoin, but also names like Blackcoin, Burstcoin, Potcoin and Zcash.

These offerings, which investors use to purchase this digital currency, rose in value 3,350 percent in the first half of 2017, proving once again that you don’t have to make a product to sell it.

SAFETY NET iStock

The merger of longtime rivals QVC and the Home Shopping Network (HSN), which made fortunes on items like the Miracle Mop and the George Foreman Grill, are hoping the $2.1 billion deal will give them some leverage against Amazon.

Things are getting nasty in the land of the latte.

In the hipster haven of Brooklyn, N.Y., a small coffee shop called The End, a barista pours a blue liquid in a cup and tops it with frothy coconut milk, goji and pomegranate powders and fluorescent pink vegan sprinkles and calls it Unicorn Juice.

But the company is suing Starbucks’ Montauk Juice Factory for trademark infringement to the tune of $10 million, for selling a pink and blue concoction called a Unicorn Frappuccino. A judge will rule whether the lawsuit is as mythical as the creature it’s named after. iStock

MISSING MILLENNIALS Analysts say Nike hasn’t done enough to capture the millennial market. But this could change. The company has decided to start selling its products on Amazon and Instagram – a move that’s likely to boost its stock price as well as sales as sporting good sales increasingly move online and into social media.

The trick will be to highlight athletic products more as fashion statements and not just performance apparel.

Both companies were early adopters of e-commerce and are not under the same pressure as brick-and-mortar retailers. But sales at both companies have been declining precipitously over the past year courtesy of Amazon. iStock

CAL I FO RNIA GRO CER | 33

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The Changing face of

Grocery

By Cassandra Walker Pye

The 2015-2016 edition of the annual “UC Davis Study of California Women Business Leaders: A Census of Women Directors and Executive Officers” cited data around gender diversity in the boardrooms and executive suites of corporate California.

The study is meant to drive awareness among companies, business leaders and policy makers to take meaningful action toward greater female representation at the top levels of business.

The report concluded a majority of California companies still have no women among their highest-paid executives. The percentage of women who were reported to be highest-paid executives rose to 10.5 percent in 2015 from 7.8 percent in 2007, the first year those data were collected, for a 35 percent increase over that time.

There is little specific data around the number of women executives in the grocery industry, however, one only needs to look to industry trade groups where the percentage of female leaders serving is trending upwards. Eight of the 48-member Board of Directors for the California Grocers Association are women. The Western Association of Food Chains (WAFC) 33-member board also has eight women leaders.

Donna Tyndall, Senior Vice President for Operations for Los Angeles-based Gelson’s Markets, is one of those women. In 2016, Donna was inducted into the CGA Educational Foundation Hall of Achievement.

“You’re starting to see a change,” says Tyndall. “Rarely do I go to industry meetings anymore and I’m the only woman. I think companies realize women are going to bring something to the table.”

36 | CAL I FOR N I A G R OC E R

Kendra Doyel Senior Director, Human Resources and Labor Relations, Ralphs Grocery Company

Kendra Doyel calls herself a “big science nerd.” That’s because she is one.

Doyel was fresh out of pharmacy school in 1998 when she landed a position as a pharmacist with Fry’s in Phoenix, Ariz., then quickly rose to pharmacy manager, then pharmacy district manager. Science might have won out, had it not been for Mike Donnelley (then Division President at Fry’s), who saw a different path for her.

“Mike asked me to create the public relations department at Fry’s – public relations, communications and media – in 2005,” she recalls. Three years later, Doyel moved to Ralphs/Food4Less to take on the same role in California with an added focus on government relations.

She’s served in that role until recently, assuming the reins for the human resources and labor relations function for Ralphs and Food4Less in June. The company is searching for her replacement.

“It’s exciting to take on this new role with a greater focus on our people,” Doyel says.

“The change in my role keeps me out of my comfort zone and driving to fulfill a purpose.”

She believes times are “fluid” for the industry.

Kroger offered voluntary retirement to a broad group of associates in March, meaning a lot of institutional knowledge departed the company.

“For me, now more than ever, one of the most important things we can do as leaders is to communicate in a very transparent and open way,” she says. “If you don’t have great communications, you’re splintered all over the place. Telling the ‘why’ is paramount to anyone’s success, as we focus on our associates and our customers.”

Doyel says the best advice she’s received is to pull up as you climb up.

“When I look at my life in total, I’ve had incredible people who have been mentors – from Mike to my daughter to everyone in between,” she says. “I’ve been really blessed by a lot of people who have taught me a lot.

I truly believe that women in this industry have an opportunity to pay it forward – none of us will get to the next level unless we bring people with us. Every chance we have to mentor one another we should take – to be mutually beneficial to one another.”

There are plusses and minuses to being a woman in the grocery industry, says Doyel, but suggests that’s likely the case anywhere and in any industry.

“I didn’t take a traditional career path, but have been able to bring my voice and unique perspective to the table,” she states. “I was willing to bring a unique voice and, most importantly, Kroger allowed me to do it. We understand the only way we’ll succeed is if we bring a diverse group of voices to every discussion we have.”

“When I start to reflect, I always think about those people who got me here – my grandmother, my parents, my many mentors,” she says. “I would not be successful without those people.”

Doyel says one of the most important lessons she’s learned is always to be her most authentic self.

“Early in my career, I’d try and model behavior of people I thought were successful,” she reflects. “When I bring my true and honest self to the table, I do well.

When I’m my authentic self, I’m successful.”

Lynn Melillo Vice President Asset Management, Bristol Farms

How does she manage?

“A typical day is atypical,” she says. “You’re influenced by the outside – the unexpected media story, action in the Legislature – and you have to use your aptitude for flexibility.

But it’s important for me to do so in an efficient fashion. I’m wired that way. It’s why I went into the science field. I want to be consistent and compassionate for my colleagues; they know what to expect from me, and me from them.”

Doyel has been married almost 19 years to John and is mom to Karsen, 14, and Beck, 10. She credits her Outlook calendar with helping her keep the trains running on time.

“I kept a calendar at home for a long time – my kids, events, parties, soccer games – and then one for work,” she says. “All of a sudden I asked myself ‘why two calendars and one Kendra?’”

She successfully launched a merger.

“My Outlook calendar might now say ‘Strategic Planning Session,’ followed by ‘Cookies to the Swim Meet,’” Doyel says.

She takes a moment to reflect on her success, near the end of our conversation.

If there was something called grocery industry royalty, Lynn Melillo would be considered a princess.

Her wedding ceremony and reception in 1984 was attended by then-giants of the California food industry, including several former CGA Chairs. Lou Amen.

Bill McAloney. Roger Hughes. Morrie Notrica. Al Morasca. Jim Lee. Everett Dingell. Al Harb.

The fairy tale began in 1980 when Melillo was hired as a cashier for Louis Foods in Pasadena, Calif. The family-owned business included her future father in-law (Chairman of the Southern California Grocers Association from 1978-1979) and his three sons.

After cashier, she worked the accounting office, then became store director. Melillo married one of the Louis sons in 1984 and, shortly after, she took over the company’s West Covina store. Louis Foods operated as many as four stores until 1996.

“Things got tough that year and I needed to earn money while my husband stayed on with the ship,” she recalls. She signed on with Bristol Farms as a cashier trainer then moved to the training department full time.

Continued on page 39 ▶ CAL I FO RNIA GRO CER | 37

◀ Continued from page 37

Melillo worked her way up to assistant store director with Bristol Farms then took a position as manager of operations for training and practices. She says she loved the schedule – which allowed her to spend weekends with her children – and she relished having the opportunity to write policies and procedures for the company.

The role has evolved to something much bigger, to what it is today.

“I never said no,” she recalls. “Whenever an opportunity came up, I would take it. The company added more and more responsibility to the position over time and I was able to create a department that hadn’t existed before. I took over a lot of areas.

That’s where we are today.”

Melillo and her team of four are responsible for employee safety, customer liability, auditing Bristol Farm’s central kitchen for safety and quality, monitoring stores for audits and looking for loss prevention anomalies in the operation.

A typical day in Carson, Calif., begins with emails, calls to stores, customers – happy or angry, contacts with the health department, and putting out fires.

“I’m usually dealing with a different issue every day because there are so many moving parts involved in running a grocery store,” she says. “You have to have your hand in every area to be sure you’re not surprised.”

Melillo has two sons – Reed, 24, a graduate of UCLA who works in the commercial real estate industry and Aaron, 20, a sophomore at Pasadena City College – and she admits the business can be tough for women with families.

“It’s a sacrifice and sometimes there is regret,” she says. “We worked many weekends and holidays. But, for me, it was always quality, not quantity when it came to time I spent with my boys. When I was with them, I was fully present.”

Melillo said she and her husband “begged, borrowed and stole” to have someone stay inside their home with their sons during the toddler years because she believed it was important for the boys to remain in their own environment.

She and her husband also carefully plotted their schedules to be present for their sons and, as they grew older, she kept

them scheduled and busy with a host of extracurricular activities. “I didn’t want latch-key kids,” she says.

Melillo may be royalty but has refused to rest on her laurels. She strongly urges women to take advantage of the plethora of educational opportunities to move ahead in the industry.

“I believe school is very important for women coming up in the grocery industry,” she says. “When I came up, it was work, work, work.”

Melillo graduated in 2014 with a certificate in Business Administration, Human Resources Management from UCLA. She says women should keep their skills relevant by applying themselves to certificate programs, seminars and webinars.

“You can find your niche, and you can grow,” she says.

Nicole Pesco Chief Executive Officer, The Save Mart Companies

Like most industry leaders, Nicole Pesco’s grocery career began in high school, where she spent her summers as a service clerk.

She says she enjoyed the energy of the stores and – because she was 16 – really liked making her own money. When she went away to college, she didn’t expect to return to the grocery business. Pesco earned a degree in fashion design in Italy and headed to New York to work for a high-end shoe company after graduating.

“People asked me all the time, ‘are you going to get into the grocery business?’” she recalls.

“I rebelled… little.”

Nicole Piccinini Pesco grew up in the grocery business as the daughter of the late Robert “Bob” Piccinini, longtime owner and chairman of Save Mart Supermarkets. With those genes, it was an easy decision to return to the family business.

“Since I’ve come back, my passion for this business has continued to grow,” she says.

“Though glamorous in some ways, there’s something missing in the fashion industry – there’s a down-to-earth sensibility in the grocery business.”

Pesco served as Co-President and Chief Strategy and Branding Officer for Save Mart before being named CEO in December 2016.

She had already parlayed her experience in marketing and branding into the launch of Save Mart’s first concept store format in more than 20 years with the introduction of Lucky California in the Bay Area.

“I think the biggest thing I took from my fashion background is really around branding and the customer relationship,” she says. “Dad used to say, ‘everyone’s got to eat.’ That’s the way you used to approach the business.

“Today, consumer expectations are different, lifestyles are different, the industry is different,” she adds. “Branding – especially in grocery – has become more important. My background in fashion made it easy to have the conversation in the grocery space.”

Pesco had the ideal mentor in her father.

“The amount of business advice, wisdom and guidance I received from my father can’t be replaced,” Pesco says. “I was back for about six years when he passed away so we didn’t have a lot of time together but I tried to gain as much wisdom as I could. A lifetime wouldn’t have been enough. He also taught me a lot about life. He was my idol. I adored him. With my dad, what you saw was what you got.”

Her father’s best friend, Lou Giraudo, has also been her mentor and she cherishes having his guidance now that she’s assumed the helm of the business. Giraudo is Chairman of the Board for The Save Mart Companies.

“My uncle and I talk on a daily basis,” she says. “He and my father were like brothers – similar and different in a lot of ways. So, the combination of the two of them as mentors has been priceless. Both have had a huge influence in terms of helping me understand who I am. Both have given me support and guidance to be who I am and not question that.”

Continued on page 41 ▶ CAL I FO RNIA GRO CER | 39

◀ Continued from page 39

The support and mentorship of two great men must now guide Pesco in her new role – that of working mother. Like so many new moms, she is finding her way.

“I’m in the midst of a lot of life changes – I have a one-year old at home,” she says.

“Every day is about trying to find balance between my responsibilities at home and at the office. I want to be a good leader and a good mom.”

Pesco cites the guilt of “choosing work over family, choosing family over work” as one challenge but she’s also called out another.

distribution operations. Pesco’s priority is to grow market share and reinvigorate each brand.

“I’m not going to ever feel like there’s enough time in the day but I’m giving it the best I can in both arenas,” she states. “At the end of the day, I love what I do and I love my family.

That makes it very easy to have the energy I need to attempt to do it all. It would be harder if I weren’t so passionate about both.

But I’ve got enough passion to go around.”

“I’m learning to compromise my ’Type-A’ personality,” Pesco says. “As much as I love doing things to the point of perfection, I’m learning that on some days I have to live with good enough.”

“My uncle has drilled into me that is it’s ok to ask for help,” Pesco says. “I don’t have to have all the answers, just the right people around me with the answers. He’s told me to do my best – it’s not always going to be perfect. I’m learning what good enough is. I don’t mean settling. I don’t mean relaxing my standards.

Pesco says she’s got a lot of support at home and at the office. Her husband Nick tradesoff child care duties with her and, in her words, helps her keep it all together. And, she says she’s got a great executive team who don’t mind meetings at odd times and pitching in.

“But it’s going to be messy and ugly at times and we’re going to get there – in both my personal life and my business life,” she share.

“Knowing when to let go and when to ask for help and when to focus on the progress instead of focusing on the imperfection.

That’s what I’m learning.

“We’re taking it day by day in the Pesco house,” she says. “He’s in day care most days although there have been days I’ve had to bring him into the office.”

But, she muses, there are 200 willing babysitters at the ready. Her son is also doing his part. “He’s a relatively easy baby; he plays while I take conference calls,” she adds.

Pesco says she is, by nature, very disciplined but has learned that all-important lesson that most new parents learn – she’s no longer in control. She’s also got positive role models to lean on.

“I have a few people outside the industry – who have somehow managed to do it all – raise good families and have good careers,” shes says.” My best friend is a mother of four and a nurse. I look at her and think, ‘Ok, if she can do a 12-hour shift and make it work, I can make it a 7 a.m. meeting with my hair brushed.’”

The Save Mart Companies operates 206 stores – under the Save Mart, Lucky and FoodMaxx banners, two distribution centers and is a voting partner in Super Store Industries (SSI) which also operates several

Lori Raya President, Albertsons, Vons, Pavilions – Southern California Albertsons Companies Magic Johnson. Stephen Curry. Steve Nash.

Lori Raya.

Like all the great point guards, Lori Raya got her start on the basketball court, playing on a scholarship for Mesa State College in Grand Junction, Colo. She returned home after her last year of college and her mom suggested she get a part-time job while she completed her studies.

So, in her words, she “walked across the street” to the Englewood, Colo. Safeway and took a job as a courtesy clerk.

“I did just about every job in the store except cut meat,” she recalls. Raya, who was also a high school basketball coach at the time,

worked in produce, dairy and even managed the floral department. “My family thought that was funny but I like to think I owe my success there to the fact that my grandfather had a green thumb.”

Raya went through Safeway’s leadership training, became a store director in Colorado Springs, Colo. then moved in 1998 to company headquarters in Pleasanton, Calif. to assume the position of manager, corporate retail operations.

She reported to Executive Vice President Larree Renda and was charged with identifying talented store directors.

“Our job was to communicate with the divisions in this role; I was the voice of the company for them. It was a training role but it kept me in touch with the stores,” she recalls. “And, I worked for a strong female leader who inspired me and helped me navigate the business.”

And navigate she did: Raya moved to Vons in 2001, working as a district manager in San Diego, Calif. for a year, moved back to Pleasanton to dually report to Larree Renda and Brian Cornell (current CEO for Target Companies) and to lead the same team she once worked with as Vice President of Corporate Retail Operations.

She was an Area Vice President in Northern California, responsible for 100 stores then, three years later, she landed in merchandising. In that role, she reported to Kelly Griffith, who insisted she take her skills to another side of the organization. “I was writing ads,” she recalls.

In 2009, Raya joined the perishable marketing team as Group Vice President for deli, food service and bakery, and was promoted to Senior Vice President, with added responsibility for dairy, deli and frozen food, then moved to nonperishable, beverage, snack, meals and ingredients.

She was promoted to president of Vons in 2012. In 2015, she was selected to run the Southern California Division of the Albertsons Companies after the merger, where she leads the largest division in the company and directs a very large team.

Raya calls Renda her “number one” mentor; but also cites Kelly Griffith’s decision to move her into the merchandising and marketing side of the business as the opportunity which Continued on page 43 ▶ CAL I FO RNIA GRO CER | 41

CONGRATULATES LEADING WOMEN IN CALIFORNIA GROCERY

Kendra Doyel Ralphs Grocery

Lori Raya

Albertsons Companies

Lynn Melillo

Nicole Pesco

Kathleen Smith

Nicole Townsend

Bristol Farms

Albertsons Companies

The Save Mart Companies

Raley’s

www.supervalu.com

◀ Continued from page 41

positioned her to be president.

“His leap of faith set me up for success,” she suggests. It was Cornell, she says, who taught her the importance of branding.

“I believe we should conduct ourselves at all times as if there was a camera on us,” Raya says. “This is how branding is defined, how you behave every day – what you want to be remembered for. I want to be seen as a positive, upbeat leader who teaches people, learns from them and who’s a mentor.”

“I never thought that I’d wind up being a president of the largest division in this company,” Raya explains, then uses language that a point guard might use to describe her game. “The great thing about the grocery business is there are never two days or even two hours that are the same. I like things to be fast-paced and this business is dynamic and constantly changing.”

Her organization includes 355 stores, more than 35,000 employees and two distribution centers, as well as dairy, beverage and bread manufacturing plants.

“I work with lots of talented people,” she says.

“If I’ve learned something from someone every day and can teach someone something every day – I’m satisfied. It’s tied to my passion for teaching and coaching.”

Raya also has a supportive home team.

Husband Sam retired 14 years ago after a 35-year career at Vons so he understands and shares his wife’s passion for the business.

“Sam keeps me grounded and real and reminds me that, when I’m home, I’m not the president of my house,” she adds. It’s a team effort and family bonds are very strong, she says. Raya’s family includes a stepdaughter and her husband, nieces and nephews and two Jack Russell Terriers. She also loves offroading – “going fast and getting dirty” – and a good round of golf.

“What I find refreshing about golf is that, even though I’m an athlete, it forces me to be there in that moment and push everything else out,” she says. And like most athletes, Raya knows her limits.

“If I don’t rest myself mentally, I’m no good for my team,” she says. “When I reach my tipping point, I stop and recharge for a few days.”

“The point guard is the director of the court,” says Raya. “You’re the one who gets the ball, runs the play, you’re the general in charge of the court. You need to know the strengths of your team and the weaknesses of the others.

“As the game, or the business goes, you need to put the team on the court, direct them, but more importantly, get out of the way and let them run,” she says. “I use a lot of my background in my work – when I analyze my teams…and the competition.”

“They bugged me and bugged me,” she recalls, “So, I went to talk to them.”

She was hired as a loss prevention manager in the Bay Area, was promoted to work in Seattle then returned to California as a director. In 2002, Smith was promoted to Vice President, Corporate Asset Protection.

There were very few women in the field but she was able to draw upon her perfect combination of skills.

Point guards are also described as the “coach on the floor” – with the duty to get the ball to the player in the best position to score.

Raya says it’s important to be kind and encouraging and to give recognition to her teammates as often as she can.

“You have to be a cop – working with law enforcement and speaking their language – in addition to being a business partner,” she says. “You want to be someone who understands the difference between a burglary and a robbery, you can’t be afraid to say things that confront the situation.”

“You never know what people are going through or what they’re dealing with on the inside,” she asserts. “The way you treat them could make a difference in how they perform. As Maya Angelou says, ‘…people may forget what you say to them, but they won’t forget how you made them feel.’”

“People typically think about shoplifting when they think about loss prevention – it’s actually a very small part of what we’re trying to manage,” Smith says. “We’re protecting all of the company’s assets – employees, product, consumers, customers, our manufacturing facilities.

Kathleen Smith Vice President, Corporate Security, Albertsons Companies

How is it that a former high school teacher with a BA in Psychology, an MA in Communications and an LA County Deputy Sheriff ’s badge could find success in the food business? Just ask Kathleen Smith.

Smith moved to Northern California in the early 1980s after a law enforcement career in Los Angeles County. She was being recruited by the FBI at the time but decided she wanted a change of scenery.

Her original plan was to apply her psychology and detective skills to a career in jury selection, or something related to it, but her parents suggested that she talk to Safeway – they knew a few executives there.

“I have to be up and operational in the midst of any type of disaster – the public needs to eat, pharmacies need to dispense medicine, first responders have to have water,” she says.

“We work on disaster planning and business continuity. Yes, we focus on theft for personal gain but it can be far more sophisticated than that.”

Smith’s role, she says, is more important than understanding crime.

“You have to raise the visibility of the position and demonstrate you’re a business partner – that you understand the business well enough to offer sage advice,” she says.

Smith believes she was selected for the role because she was the best person for the job.

“We’ve been through many different regimes so it’s important to be an expert in your field. I have to know everything that’s going on in my field so that no matter who comes to speak to me about it gets a knowledgeable answer from me.” Smith says she was fortunate to have attained her law enforcement and educational background before starting in the industry. “It’s hard to go back and get those things once you get started. I was two or three steps ahead Continued on page 45 ▶ CAL I FO RNIA GRO CER | 43

44 | CAL I FOR N I A G R OC E R

◀ Continued from page 43

already.”

Republic.

Smith has one son, now almost 30. Her role calls for her to travel constantly – usually three weeks each month.

“It was important to learn how to interact and talk with people, to ask questions, to listen. Those were skills I needed as a journalist,” she recalls. “And they are skills I still rely upon today.”

“It’s a challenge, it wreaks havoc on your personal life,” she admits. “But, I don’t want to make concessions because I’m a woman.

I know it’s hard to give 100 percent to a spouse, a child and a job. One – or even two – of them is going to suffer at any given time.

I devote myself to my son and my work. I expect the same things of myself that I expect of my fellow directors.”

The world has changed in her tenure, especially when it comes to the types of threats the industry faces.

“I’ve been at this for a while,” Smith says.

“The title has changed – we were security, now we’re asset protection. I have the same job but more responsibility. We’ve all obviously become much better at doing more with less.”

She reflects her career with a little humor.

“I should be shaking hands and kissing babies at this point in my career,” she muses.

“I thought I had everything managed, herding cats but in the same direction, and then we merged with Albertsons. That doubled our footprint and I was selected to stay with the new group and over all of it.

“I’ve learned that you have to continue to sell the position to a whole new set of leaders,” she concludes. “That’s not a bad thing. It helps you reflect a little on what got you to where you are. You should never get stale.”

Nicole Townsend Vice President, Talent Development & Communications, Raley’s

Nicole Townsend’s childhood dream was to become a reporter.

And a reporter she became, working just after college for two Northern California newspapers – first for the Sacramento Bee’ s Neighbors section and then Fairfield’s Daily

Perhaps her people skills were fine-tuned during her stint as a courtesy clerk at Raley’s in Roseville, Calif.. She was in high school when she applied and those were coveted entry-level positions at the time.

“I would drive to the store every other day to check in, say hi. ’How’s it going?’ ’Do you need a courtesy clerk yet?’ I really wanted that job,” she recalls. Even then, she says she believed Raley’s would be a great place to work and gain exposure to the public.

Townsend admits she was pretty shy at 17 and believes the customer-facing position served to boost her confidence. She remained in the courtesy clerk role through college and credits Raley’s with strongly supporting her educational goals.

She completed her studies in journalism, worked for five years as a reporter then as a media relations specialist before returning “home” – to Raley’s. She assumed the corporate communications role in 2001. She credits her dad, a local business leader and consultant (he passed away four years ago), with helping her find her way back to Raley’s.

“He found the job posting in the newspaper, circled it in red and encouraged me to apply,” she recalls. The rest, as they say, is history.

When she rejoined Raley’s, Townsend started at the entry level, specializing in internal and external communications.

She was later named Director of Marketing Communications. She currently leads Human Resources, as Raley’s Vice President of Talent Development and Communications, responsible for leadership development, talent management, learning and development, internal communications and talent acquisition. She sits on the company’s executive steering committee.

“I love bringing people into the industry and showing them how they can make a difference in people’s lives,” she adds. “It’s really what we’re about: infusing life with health and happiness by changing the way the world eats, one plate at a time. It’s a big cause and a bonding purpose. It’s exciting to see people come in, help them unveil their talents and recognize what makes them unique.”

Townsend manages a pretty broad portfolio and she very much relies upon the support of her own family and her Raley’s family to maintain balance.

Her husband, Lloyd, took responsibility for running the household five years ago, staying home with their 13-year old son, Alex, and 10-year old daughter, Davis. Her mom lives within minutes of her family.

“I have a very supportive family that shares my love for Raley’s and believes in the company and in me,” she shares. At work, there is an emphasis on family, and Townsend learned she could balance family and career there.

“It’s been helpful to see so many women inside the company with families and have them share their experiences,” she says.

When you work in a “people business” like grocery, she adds, you can learn something from everyone.

“There are people who have stayed with me,” Townsend says. “I try to learn something from each leader in my career. And then I try to bring that out in my leadership. I’m very fortunate to work with some amazing leaders – men and women.”

One such woman, a former boss, shared advice with Townsend on facing challenges: Stay positive and believe in what is good – a common cause and purpose.

“I carry that with me,” she says. ■

“It’s an incredibly exciting time for Raley’s – a company that’s been around for more than 80 years and three generations,” she says. “These are interesting times for both our company and our industry, and I enjoy working in this role as we honor the past that brought us here and envision the future.

CAL I FO RNIA GRO CER | 45

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Finding Growth in Challenging Times

By Andrew Mandzy, Nielsen

iStock 48 | CAL I FOR N I A G R OC E R

There is a systemic change happening in today’s retail landscape that is effecting where, how and why consumers are shopping.

This historic shift is making growth for retailers and Fast Moving Consumer Goods (FMCG) manufacturers seem elusive. More than ever before, consumers are paying close attention to what they are buying.

Driven by several macro health trends, the “why” and “how” behind products have now become just as important as the product itself, often times becoming the primary decision-making criteria that drives a purchase. This has added an entirely new layer of complexity to the way FMCG companies develop and market their products and how retailers capture the attention of consumers.

Additionally, with $100 billion in grocery sales expected to move online in the coming years, grocery retailing is at a digital tipping point, where every aspect of the shopper’s journey will soon be influenced by digital, and increasingly enabled by digital platforms.

With Amazon’s recent acquisition of Whole Foods, the merging of technology and health and wellness has become a retail reality. Therefore, in order to win in this new challenging environment, today’s retailers and manufacturers must have a sharp focus on the opportunities around health and wellness, transparency and digital.

Understanding the Consumer’s Need is Key Consumers are paying attention to product details, and the health and wellness movement is a key driver of that. A rising portion of the population is shopping with an eye focused on product attributes, whether it be for ailment management, lifestage, the need for sustainable products, or just general wellness. Across the store, health and wellness is winning, and understanding the needs of consumers in this important space is key.

For instance, there is value in looking beyond the over-the-counter and pharmaceutical needs of those suffering from ailments. For many consumers who

suffer from ailments, there are food factors that are also at play, which may indicate an opportunity for growth.

Diabetics, outside of taking specific medicines to manage their condition, are also looking for foods that are low glycemic and low in salt. Another example can be seen with older shoppers who disproportionately look for functional ingredients like fiber, antioxidants, heart-healthy ingredients, and vitamins in their products.

However, consumers, especially younger generations, are equally interested in both the products and the companies that make them. They want to feel good about their purchases, and that means they’re spending more with companies that focus on things like fair trade, sustainability, social responsibility, environmental preservation, and high ethical standards.

Due to the increased importance of transparency, claims like “natural,” “organic” and “gluten free” have become common on the packages of products throughout the store. These claims are driving notable sales increases. Sales of products that make organic claims, for instance, are up 10 percent from a year ago.

And according to Nielsen’s “2017 Fresh Guiding Principles Report,” organic continues to be a differentiator for top fresh retailers, too. Organic share of sales saw dramatic growth due to the power of organic produce shopper. In fact, 32 percent of households are organic produce buyers – of varying degrees.

Andrew Mandzy is Director of Strategic Insights, Health & Wellness for Nielsen. Andrew and Laurie Rains, Group Vice President, Nielsen were the Keynote Luncheon speakers at this year’s CGA Strategic Conference. Andrew also moderated a Whiteboard Session entitled “Health & Wellness: What’s Trending and What’s Next.”

Boiled down, the consumer demand for transparency is ultimately a conversation about trust. Consumers want to trust the brands they engage with. Data suggests that there is currently a lack of trust, as only 44 percent of consumers globally say they trust industrially prepared foods.

That means that more than half (56 percent), on some level, don’t trust these products – marking a real growth opportunity for retailers and manufacturers.

Continued on page 51 ▶ CAL I FO RNIA GRO CER | 49

◀ Continued from page 49

“To prep for a digital world, retailers and manufacturers must evolve and grow with the emerging demand for e-commerce."

Clearly, health and wellness is a strategic growth area across all channels. In addition to focusing on services like in-store health clinics, successful retailers have started to change their assortment to more healthfocused products across all categories, and they’re developing private-label products with product transparency in mind. They’re also training associates like dieticians to help consumers make better choices in store, among other initiatives.

Manufacturers are also following suit, by reformulating their products to contain fewer artificial ingredients, using simpler ingredients, and looking outside their own walls and acquiring companies that focus on transparency as part of their brand ethos to stay in the game.

E-commerce Planning Needs to be a Priority Running parallel to the health and wellness movement is the digital disruption being felt across the industry. Nearly nine out of 10 dollars of FMCG retail growth came from online channels over the last year.

The changes happening on this front are occurring at lightning speed. As seen in the Amazon and Whole Foods acquisition, Amazon wasted no time in shaking up the grocery retail industry. Acting quickly on the objective of making health and wellness more affordable through the immediate price reductions across the store, may be just the tip of the iceberg of how Whole Foods and ultimately, the grocery industry, will be impacted.

The overlap of Whole Foods and Amazon Prime customers opens the door to allow for more personalization via price and assortment, more targeted marketing, more cost effective distribution for

Amazon, helping them reduce the cost of that “last mile” delivery and more opportunity to entice consumers to purchase groceries online.

According to the “2017 Nielsen FMI Digitally Engaged Food Shopper Report,” online grocery shopping could grow five-fold over the next decade, with American consumers spending upwards of $100 billion on foodat-home items by 2025. In fact, consumer purchases show that some categories are going online faster than others.

Categories like personal care, household goods, snacks, dry packaged goods, and canned and bottled goods will continue to grow penetration. However, other categories, such as fresh, have been challenging to shift online.

That said – there is a golden opportunity here. A sure sign that consumers are willing to purchase fresh products online comes with the growth of meal kits. Nielsen’s recent research shows that one in four U.S. adults have purchased a meal kit in the past 12 months and 75 percent of those are still actively purchasing meal kits after trial. About 81 percent of meal kit purchasers believe meal kit dinners are healthier than prepared foods purchased from a grocery store.

To prep for a digital world, retailers and manufacturers must evolve and grow with the emerging demand for e-commerce. In order to do this, retailers and manufacturers must have e-commerce at the center of their strategy. It is important to recognize that the digitally-engaged shopper is an omnishopper, shopping across all channels without regard from where the product is coming.

Consumers expect frictionless, relevant experience accessible from anywhere.

Sometimes that is a store. Sometimes that’s a smart phone in our pockets. And for many,

that’s working with the smart assistant that lives in the connected devices sprinkled throughout our homes. The world is certainly changing – and you must be ready to meet the challenges of those changes.

Summing It Up Consumers are evolving, and while growth is difficult, there is opportunity to win in today’s marketplace.

Retailers and manufacturers should understand that there are two areas of growth to focus on: health and wellness, and the shift towards e-commerce and omni-channel purchasing. And while these two growth areas are likely not new to most retailers and manufacturers, it is critical that we all understand the consumers in these two spaces because it is not a onesize-fits all.

A diabetic thinks about their health and wellness differently than a younger consumer who is focused on sustainability. But both cohorts matter, and it is upon us to understand how to get the right products to these consumers.

The channels that the industry has created do not exist in a shoppers mind, shoppers buy their products wherever and whenever is most convenient for the need state at the time, and more and more of that is happening online. We can’t ignore that e-commerce is blurring the lines of how and where consumers purchase products.

Brick-and-mortar stores will continue to be a relevant source of consumer purchasing, but will need to create a reason for a shopper to visit in person, for the experience, a unique or local item or your instore expertise. ■

CAL I FO RNIA GRO CER | 51

Congratulations

to the following leading women in the industry Thank you for your service!

KENDRA DOYEL Ralphs Grocery

LYNN MELILLO Bristol Farms

NICOLE PESCO

The Save Mart Company

NICOLE TOWNSEND Raley’s

THE SILVER BULLET RETAIL BUDGETS ARE TIGHT, ESPECIALLY IN THE SUPERMARKET INDUSTRY. THIS IS NOT A NEW DILEMMA.

BY DAVID GEORGE Those of us who have had the privilege of serving the complex world of grocery have had to master the ability to squeeze large financial returns from miniscule financial means. With profit margins so thin, executives within the grocery vertical are forced to make tough decisions on a daily basis, forcing asset protection executives to follow suit.

Spending the majority of my career in asset protection within the grocery arena, I understand the complexities of building a successful loss prevention program with minimal resources. With a vast array of shrink-reducing solutions available in the marketplace, choosing the best solution in which to invest can be an extremely daunting task.

Most, if not all, of the available solutions will deliver a positive financial return. However, it is incumbent upon the asset protection executive to ensure their capital investment is providing the greatest return.

SOMETHING TO PONDER Imagine as an asset protection professional you were only provided enough budgetary dollars to invest in one solution to reduce shrink. Which would you choose? Be careful not to answer too quickly. Each of us have at least one success story in which we implemented a shrink-reducing solution and received better than expected results.

However, that doesn’t necessarily mean the chosen solution delivered the best possible financial return relative to the amount of capital invested. The truth is it’s impossible to know with certainty whether a particular shrink-reducing solution delivered a greater return over all other possible solutions unless each solution available was implemented and the results analyzed.

Therefore, we have to change the way we think about shrink causation before we can even begin to consider which solutions would deliver the best results.

Changing the way we think must start with identifying commonalities within shrink causation categories. First, let’s consider the typical epidemics contributing the most to shrink: external theft (shoplifting), internal theft (employee dishonesty), vendor fraud and paperwork/administrative errors. Is there any one thing that can be identified that each of these categories share?

To find the answer, one has to look no further than the most recent issue of California Grocer.

THE COMMON CULPRIT A search within California Grocer (2017, Issue 3) reveals one important commonality that is the cornerstone of all things shrink: Behavior. Nearly every article in this issue contains some reference to behavior and how it can negatively affect shrink, safety and all other types of loss.

we can help to change the operational thinking and behaviors associated with profit optimization.”

Still not convinced? Then perhaps this quote found within California Grocer article by Cassandra Pye, “Workplace Harassment: Low Profile, High Price Tag,” will push you over the edge: “You want your people to know you’re holding them to the same standard of behavior that you have.”

Let’s break it down in the simplest form possible: Shoplifting? Behavior problem.

Employee theft? Behavior problem. Vendor Fraud? Behavior problem. Paperwork and administrative errors? Behavior problem.

If this seems like common sense, don’t be so sure. Many shrink-reducing solutions on the market are designed to detect loss rather than prevent it. Sure, one can argue that detecting and resolving a loss-causing issue Continued on page 56 ▶

In the article entitled “Shrink: A Roundtable Discussion” by Len Lewis, Al Hrubeniuk of Smart & Final Stores says, “We’re also getting into exception reporting systems and analysis to identify abnormal behavior and trends with register transactions as well as electronic shopping cart containment systems and technology that prevents bypassing payment at the registers.”

Supporting this idea further, the article in this same issue of California Grocer entitled, “Aligning Loss Prevention with CEO Goals”

by Larry Miller of Smart Retail Solutions, says, “When we see our BIG every day and understand the mandate to be sales driven,

David George is Managing Partner of the Calibration Group, LLC and a featured presenter at the CGA Loss Prevention Executive Summit at this year’s CGA Strategic Conference.

CAL I FO RNIA GRO CER | 55

◀ Continued from page 55

lends itself to preventing loss, but modifying behavior to the extent that losses are truly prevented from occurring in the first place is truly the only thing that can get us to a loss prevention dream state.

MODIFYING BEHAVIOR Behavior modification is not just a significant part of the most successful loss prevention and asset protection programs.

It is the entire root system. Although many shrink-reducing solutions do have the potential to play in the behavior modification sand box, supplemental programs typically

have to be created to support them.

For example, POS Exception reporting software solutions are designed to identify losses caused by dishonest employees, training issues and systemic pricing issues However, some of the most successful loss prevention programs maximize their POS Exception reports by also rewarding cashiers for things like low item voids, high rings per minute and other metrics their respective organizations deem important.

This not only increases morale, but also lets cashiers know that a system is in place to monitor their activity.

“THE MOST EFFECTIVE WAY TO COMMUNICATE A LOSS PREVENTION MESSAGE IS DIRECTLY FROM THE LOSS PREVENTION LEADERSHIP TO EACH INDIVIDUAL EMPLOYEE”

Modifying behavior is the most important attribute of any loss prevention program.

Employees not only need to be told what is expected of them, but they also need to be inspired to actually do what is expected of them.

This cannot effectively be accomplished in a new-hire orientation class. It also cannot be done by hanging an occasional shrink education memo in the employee lounge area. And, much to the surprise of many, it cannot be done by store managers regurgitating the loss prevention message-ofthe-month to the employees during weekly huddles or team meetings.

The most effective way to communicate a loss prevention message is directly from the loss prevention leadership to each individual employee, and that can only be done with a comprehensive loss prevention awareness program that communicates relevant information in a way that inspires employees to perform at the level expected of them.

Rethink the way you dispose of something as simple as an orange peel.

56 | CAL I FOR N I A G R OC E R

NUMBERS DON’T LIE In my experience as a loss prevention executive for Harris Teeter supermarkets, my team and I utilized a loss prevention awareness program to help successfully reduce total shrink to well below 1.00 percent (as a percent to sales) for over eight consecutive years. Understanding that the average shrink as a percent to sales for grocers hovers around 2.70 percent, this was quite a feat. We also used the awareness program for safety messaging, which helped decrease the annual Accident Frequency Rate (AFR) from 7.65 to 4.26 and the General Liability AFR from 1.11 to 0.52 in just one year. Hotline calls also increased by 79 percent in that same time period.

My experience with effective loss prevention awareness programs didn’t end there. While leading the asset protection efforts for Dollar General, the nation’s largest small box discount retail chain, my team and implemented a loss prevention awareness program that helped yield a nine-basis point reduction in shrink in just the first

year. In fact, hotline calls increased by 206 percent in the first six weeks of the program’s implementation.

For those of us who have retail loss prevention running through our blood, we understand with a high level of certainty that store managers cannot effectively communicate the loss prevention message that needs to be communicated to employees to modify their behavior. It is not because they are incapable.

It is simply because they have a dozen other people telling them to communicate their message as well, such as what’s on sale this week, upcoming coupon promotions, new product offerings, and how to upsell cheese while working behind the deli counter.

Loss prevention executives need to have the ability to communicate their message of honesty and integrity directly to each and every employee. When a loss prevention executive can use an effective loss prevention awareness program to deliver an allencompassing monthly message to each and every employee that lets the employees

know they matter, they are part of the team, and they are needed to help serve other employees and customers by reducing shrink and eliminating unsafe behaviors, surprising results will be immediately apparent.

Employees want to do a good job. They want to be part of something bigger than themselves. It just takes the right method of communication to make the emotional appeal that inspires employees to act. ■ David E. George, CFE, CFI, is Managing Partner of Calibration Group, LLC Previously, David served as Vice President over Asset Protection for Dollar General Stores. Prior to that he was Vice President of Asset Protection for Harris Teeter Supermarkets, Inc., a regional chain based in Matthews, N.C., and had previous loss prevention leadership roles with Kmart Supercenters. For more information about Calibration Group, visit www.calibrationgroup.com.

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Fresh

discover

what’s

next

1 5 MINUTES WITH…

Sekou Andrews PO ET, ACTO R, LEADERS HIP G U RU

BY LEN L E W IS

He’s been a full-time poet, actor and leadership guru. But Sekou Andrews’ most important job has been helping people and companies communicate with each other and their customers.

California Grocer spoke with Andrews on the eve of his presentation at the CGA Strategic Conference about his ideas and his advocacy of the “poetic voice” to move business forward in the future.

CG: You talk about the importance of a “poetic voice” and its use in business. But what is it?

Andrews: “The simplest definition is a new category of speaking that blends inspirational speaking with spoken word poetry. It’s a synthesis of the business approach to speaking and the artistic approach to performing.”

Do poetry and business really go together?

“They are sometimes perceived as mixing oil and water. But when fused correctly they really create an elixir that can solve problems in a way you didn’t expect.

And much of that is based on helping organizations tell their story and get their message across in uniquely powerful ways whether it’s about technology, social media or human resources.”

It sounds very subtle. What’s the endgame?

“To create something that’s unlike traditional speaking – a seamless experience where you can’t tell where the storytelling ends and the business content begins.

“It creates this constant ’leaning in’ effect among listeners who are getting a constant stream of engagement. The audience is being educated, entertained and inspired at the same time, and they can’t get ahead of you the way they can with a traditional speaker.”

It comes naturally to you because your background is in acting and speaking, but how can retail leaders develop that poetic voice?

“My goal isn’t so much to teach people the art form of poetic voice but to teach them how to communicate more effectively with people in their organizations and with their customers. The goal is to teach people to see their industry through a new lens in order to open up possibilities in the way that only strategic storytelling, dynamic communications and inspiration delivered through information can.”

How so?

“Think about the emotional connection that art creates. If you apply that to business you bring an emotional connection to cerebral content. This way you can see supermarkets through new non-linear lens that is more than just data driven.

“I want people to step back from their daily grind and look at the power that lies in their collaboration in unique ways and how that will help them overcome the challenges facing the industry.”

You have to admit that collaboration is always a difficult process.

“Absolutely. Working together in concert requires us to learn how to de-silo ourselves and connect with each other in uncomfortable ways. It’s one of the challenges I have when doing senior leadership training and trying to get them to become more connected communicators.

“But I can’t teach you how to become a better storyteller until you insist you are one and insist on delivering your data though stories.”

How do you go about that?

“By empowering your team to take on concepts like embracing failure, challenging convention and thinking like a startup.

This can ultimately create a companywide swell of innovative thinking. It all starts with leadership opening up to a range of communication.

“Leaders have to realize they’re not speaking to business cards or titles, they’re speaking to human beings, and the best way to connect is to be human. This brings value and competency to their leadership. If you resonate innovation there will be a ripple effect throughout the organization.”

Continued on page 62 ▶ CAL I FO RNIA GRO CER | 61

15 MINUTES WITH…

◀ Continued from page 61

CG: You’ve also talked about sustainable capitalism. What does that mean for business?

“For example, one of the things companies are grappling with is maintaining their market share as it relates to millennials. But they sometimes don’t realize there’s been a shift in societal values. It’s not exclusive to millennials but they are leading it in unexpected ways. We’re seeing a higher value being placed on community, purpose and responsibility.

“Companies need to recognize the return on inspiration and connect with people on a purposeful level – people who will spend their money with the organization that helps them become part of something greater than themselves.”

Is that a sustainable shift in business thinking?

“I hope so. The world isn’t going away.

Capitalism without the wisdom to be anything but self-serving is incredibly destructive. So much of the damage in the world was done because of profit over everything and thinking the only purpose of business is to make money.”

What’s the answer?

“More businesses taking responsibility for their actions and being accountable for their place in the global, national and local communities. Business plays an incredibly positive role in society. The more responsibility it takes, the greater the impact on the world. It’s not just about creating the highest margin, but having more people experience the return.”

“Real wealth is not defined on whether I can pay for it but whether I can pay it forward.” ■

62 | CAL I FOR N I A G R OC E R

“Leaders have to realize they’re not speaking to business cards or titles, they’re speaking to human beings, and the best way to connect is to be human.”

COMPLETING THE

LOSS PREVENTION

PUZZLE

BY LARRY MILLER SMART RETAIL SOLUTIONS

Editor’s note: In Parts 1 (Issue 3) and 2 (Issue 4) we covered “Aligning Loss Prevention with CEO Goals and Objectives” and “Loss Prevention’s Role in Optimizing Fresh/Perishable Profit.” This article completes the loss prevention puzzle by covering “Center Store Shrink Prevention” and “Technology for Total Store Profit Improvement.”

Continued on page 68 ▶

◀ Continued from page 66

In most supermarkets, center store (defined as grocery, frozen foods, dairy and HBC) accounts for approximately 60 percent of store sales and 35-40 percent of profit loss due to known and unknown shrink loss.

This presents a picture of the inseparable link between sales and shrink loss as the expense of shrink loss in center store is most often expressed as a percentage of sales, or in perishables as the simple miss of budgeted gross margin (see chart on right).

This necessarily requires progressive thinking companies and loss prevention professionals to engage total store shrink loss and total store profit improvement holistically vs. past practices of focusing on catching wrong-doers. For companies to evolve their profit optimization culture, loss prevention needs to focus on the vital links in the chain of profit realization.

This means receiving, training, store operations best practice execution and the measuring of business metrics associated with total store profit improvement – not just shrink control/prevention. This because while there is an acceptable level of shrink

Shrink

Shrink

Center Store Sales: 60%

Sales

loss, 64 percent of shrink loss is the result of a breakdown in the consistent execution of store operations best practices by our employees.

TRAINING

Sales

The first rule of running a profitable store involves training store teams to fully understand the vital role of inventory management and productivity. Regardless of how we say it, we must start with: • Ordering to be in-stock of full variety when shoppers come to buy or we lose sales and the reported percentage of shrink rises.

When constructing a loss prevention strategy, success will begin and end with effective training in best practices for behavior modification.

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• And, staff must be trained to understand, see and feel the importance of following best business practices associated with inventory turns, organization and sanitation, and how they can preempt shrink loss, optimize cash flow and promote optimal labor productivity.

Two quick ways to capture more sales and profit from inventory management: 1. Control Center Store Out of Stocks.

Multiple sources estimate that the average supermarket operates with 7-11 percent out of stocks. As we said before, this causes lost sales and higher rates of shrink loss. Add to this that 5-7 percent of center store SKU’s drive nearly 70 percent of sales and make a strong case for loss prevention and operations collaboration to protect against out of stocks and the associated missed sales opportunity.

2. Backroom Storage/Handling.

Here we can score multiple levels of quick wins. Every manager and supervisor should have a clear picture of what their standards for excellent backrooms and coolers look like. This is where we can train to understand, see and feel inventory productivity, cash flow, true shrink prevention and labor efficiency.

Just picture a full store, with your top 500 sellers in-stock and near-empty back-stock areas (except as needed to carry you to your next deliveries) and you can see and feel a store in position to minimize shrink loss.

Are your backrooms consistently turning inventory, neat, clean and organized?

Excellent inventory productivity and management takes on-going training and consistent manager and supervisor inspection. This linchpin of center store shrink prevention should not be underprioritized.

TECHNOLOGY Retail technology is evolving. In the past 10 years, big data technology has allowed the industry to collect silos of data and inundate store operators with piles of data-based reports. Reports are helpful in many ways but certainly can be distracting in others.

When looking for smart technology to help run more profitable stores, be sure that it serves as a collaboration tool for operations, merchandising and loss prevention.

Technology As A Team Builder: 1. Intuitive Dashboards for store loss prevention that bring it all together by presenting sales, shrink loss, inventory, out of stocks and cashiercaused shrink and productivity.

When one system provides all needed analytics in one place we can streamline end user work and present enterprise users with a clear picture of sales and profit loss in just five minutes a day.

Continued on page 70 ▶

Leading the

Sweetener Category with the

Sweetest Variety of products.

ASR-Group.com CAL I FO RNIA GRO CER | 69

◀ Continued from page 69

2. Correlated Analytics that thinks like a team of operations, loss prevention and merchandising pros looking at store performance every day as a team and directing profit improvement actions and practices every day to improve sales and reduce shrink to grow store profit. Correlation and collaboration is key.

3. Fewer Reports, Plain English

Answers tell what happened and how to improve daily store walks and store visitations with targeted profit improvement.

4. Unlimited Data Query and

THE VITAL ROLE OF INVENTORY CONTROL ?

Shrink

$$ in the BANK

PROFIT 9% Shrink

SALES AT POS

Reporting for answers when needed.

Cross-functional query and reporting on sales, shrink, out of stocks and inventory productivity requires answers when needed. Faster than excel reports and with less stress on IT teams to gather and report. Look for anywhere/anytime analytics.

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Top 5 Best Practice Training Areas for Profit Improvement: Get excellent best practice execution in these areas, but never neglect processes that assure “implementation accountability” via routine inspection and audit.

1. Receiving – Proper receiving is a cornerstone of a strong loss prevention and shrink control system in every store.

The fundamentals have long been known and often neglected. Vital to any receiving process is first to select a capable receiver. This person holds the store’s keys and the wallet. Best practices demands a proper training curriculum and written guidelines for all new receivers and retraining in the 12 steps for backdoor receiving every six months.

2. Ordering for 100 percent in-stock and inventory turns – Eliminate all excess inventory to optimize cash flow, gross margins, and workforce productivity. Excellent ordering standards can eliminate an average of $40,000 of excess center store inventory per store.

3. Mitigate Out of Stocks – The average store can gain $38,500 in sales by focused and conscious effort to be in-stock on your top 500 sellers. The sales gains are substantial and so are the benefits to customer satisfaction and the shopping

70 | CAL I FOR N I A G R OC E R

BUY & PRICE GOODS

22% Shrink

ORDER Goods

6% Shrink

RECEIVE Goods

Profit Building Blocks & Possible Points of Failure: 7% Shrink

DISPLAY/ Space Allocation

17% Shrink

PRODUCTION/ PLANNING/MIX

14% Shrink

HANDLING & STORAGE

Larry Miller was a featured presenter at the 2017 CGA Strategic Conference.

He addressed the topic “What Happens When Fresh Isn’t Fresh” and moderated a Whiteboard Session on “Controlling Store Out of Stocks.”

experience. Your top selling 500 items also have natural affinity items. Being in-stock on your Top 500 carries a 14-18 percent additional sales impact from related affinity item sales and keeping the buying momentum for every shopper.

4. Cross-Merchandising – Excellent cross-merchandising in both intra-department and inter-department. When store teams are trained in whole store cross-merchandising we can capture or create up to 1 percent on new sales that would otherwise not have occurred.

5. Known Loss Tracking and Actions – An effective known loss tracking program has more benefits than most operators imagine when part of a larger porofit improvement program.

Sure, on its surface known loss shows loss. Typically stores only report 60-70 percent of their true known and trackable Known Loss. When known loss programs are properly implemented, we often see an 18-22 percent reduction in departmental shrink within 120 days.

But beyond the obvious, known loss tracking can lead us to its origin and best practice breakdown. The purpose and value of tracking known loss is not the obvious.

Known loss tracking will serve as a portal into your profit and your operational efficiencies it reveals…if you are trained to see it.

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Are You Leaving Profits in the Basket?

10 Secrets to Increase Basket Size Week After Week

By Dan Dashevsky

Dan Dashevsky is Founder and Chief Operating Officer at My Cloud Grocer.

Dan was the Independent Grocers Forum featured presenter at this year’s CGA Strategic Conference.

Independent supermarkets that offer products both in-store and online have an online basket size averaging between $120 and $184, based on the recent Brick Meets Click study. This compares favorably to Amazon Fresh at $84; Instacart, $98; Fresh Direct, $105; and Peapod, $147, as reported by 1010data.

Out of 19 independent banners participated in the BMC study, Breadberry Supermarket in Brooklyn, New York, had an online basket size of $184, the largest reported.

Many of My Cloud Grocer’s clients have similar or even larger basket sizes than Breadberry’s.

These 10 secrets have enabled our clients to achieve such outstanding results.

Speed matters Website visitors tend to care more about speed than about the bells and whistles we might be tempted to add to our websites.

Google did an interesting experiment with regard to load times, asking web surfers if they would rather see 10 or 30 search results at a time.

The users agreed that 30 results per page sounded like a good idea. Google then implemented this on some of their results pages. The shock came when traffic to pages that displayed 30 results dropped an astounding 20 percent.

Google then tested the loading time difference between the 10- and 30-result pages. They found that this was just half of a second.

So page loading time has been shown to be a crucial factor in user retention. It is also becoming a more important factor in search engine rankings.

Product photography The images on a site are another important factor. High-definition, mouthwatering pictures make a big difference when it comes to food shopping. Many website owners opt for the easy solution, and only display product images they can easily obtain from publicly available databases such as Kweeki and Item Master.

These databases do not include all products, and image quality is often poor and inconsistent. The time and effort invested in high quality product photography to ensure that every product carried in the store is online and has a beautiful image pays good long-term dividends.

Less is more Instead of cluttering pages with as much product info as possible, keep it simple. Make the product image and a brief description the center of attention. Then add to the page some relevant and popular products to help customers remember to buy products that they may otherwise forget.

“Shop by recipe” Customers are looking for creative ideas to keep their meals fun. With a “Shop by Recipes” feature, they can find a recipe, click and send ingredients to their shopping cart.

The more interesting it is to browse your online store, the more your customers will buy from you.

“My favorites” Customers complete their shopping list much faster when they start with a prepopulated list of the products they normally buy. Once they are done with the basics, they have time to browse for more products, adding to the total basket size.

Digital circulars Everyone loves savings, and the more the better. Having plenty of items on weekly specials not only increases your in-store traffic but also increases your online basket size. Your printed flyer can only fit a limited number of items before it begins to look like a flea market and becomes impossible to read. Online, there is no limit to how many items you can display on special. Customers simply flip to the next page and keep on adding savings to their shopping cart.

Quick re-order By giving customers the ability to quickly send all the items from their previous order directly to their shopping cart, you’re simplifying their life and minimizing the possibility that they may forget an item or two.

Keep it fresh Let’s face it, shopping for groceries is not a recreational activity, but if you keep on introducing new products, it becomes more interesting, and this too will be reflected in your basket size.

Accurate order fulfillment Customers who are using your online order service are doing so for convenience. They want to save time for other priorities. If you fulfill their order quickly, and most important, accurately, you will see many more orders and higher order amounts now that they have trust in your service. Many MCG clients see increase in online basket size with customers who are placing their third and fourth orders. Once they develop the trust in your service, they will reward you with loyalty and larger basket sizes.

Good customer service As in brick and mortar stores, good customer service is the key to success. This is what differentiates you from your competitors. Be ready to replace the not-so-fresh strawberries that a personal shopper put into a customer’s bag by mistake. Customers will buy more online from you if they are confident that if something is not satisfactory you will take good care of them. ■

SUPPLIER PROFILE

Earth Friendly Products Turns 50

Created during the environmental movement of the late 1960s, Earth Friendly was green long before it was popular.

California has been home to Earth Friendly Products for 40 years. In fact, the company is celebrating its 50th anniversary this year, a remarkable milestone in the green cleaning products industry.

What’s even more remarkable is that the company is still family-owned and operated, despite a recent surge of corporate acquisitions in the industry.

Earth Friendly Products is the maker of the ECOS™ Hypoallergenic Laundry Detergent and over 200 environmentally friendly cleaning products made under the ECOS™, Baby ECOS™, ECOS™ for Pets!, and ECOS™ Pro brands.

As a primary manufacturer based in California, the company operates four production facilities across the U.S. Earth Friendly Products was founded

by Van Vlahakis, a Greek immigrant and chemist from Chicago, who started the company in his garage in 1967. It was a time when harsh chemicals were common in cleaning products and the negative effects of those chemicals on the environment and human health weren’t well understood.

74 | CAL I FOR N I A G R OC E R

The environmental movement was just in its infancy in 1967, but Vlahakis understood the dangers that traditional products posed and continually innovated safer formulas, long before being green was popular.

Vlahakis’s daughter, Kelly Vlahakis-Hanks, company President and CEO, is deeply committed to the company’s mission, which is to “provide the highest quality cleaning products that are safer for people, pets and the planet, made sustainably with exceptional performance, price and convenience.”

Under her leadership, the company has received many awards for its innovations in safer green chemistry, including the U.S. EPA’s coveted Safer Choice Partner of the Year in 2017 and 2015.

She has also taken the lead in corporate social responsibility, implementing one of the highest minimum wages in the U.S., and offering a strong, family-friendly benefits program while continuing to grow the company’s bottom line. ■

Kelly Vlahakis-Hanks, President and CEO

Earth Friendly Products, maker of , Salutes the California Grocers Association EDUCATIONAL FOUNDATION

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KNOW THE LAW

DEALING EFFECTIVELY WITH HOMELE SS TRESPASSERS BY: JO HN DAHL BERG PA R TN E R , D IL L ING H A M M UR PH Y, L L P

Homeless trespassers can create a variety of challenges for grocery retailers, but there are solutions.

Customers avoid grocery stores where trespassers litter, beg, drink, and create disturbances. Homeless trespassers are among those who cause these and related problems. Contrary to what many grocers believe after trying unsuccessfully to rid stores of these nuisances, there are effective ways to protect customers from harassment and stores from disruption. Here are a few: Discourage Trespass Through Active Property Maintenance Some homeless trespassers occupy areas that cannot easily be seen by passing police officers and employees. Grocers (and their landlords) should consider fencing off unseen areas where trespass occurs. Graffiti should be removed quickly. Keep exterior lights bright and foliage trimmed. Dayporter services or employees can be used as needed to clean up these areas as well.

The grocer should also meet with landlords which control common areas and store parking lots to improve conditions as needed. Increased foot patrol by shopping center security officers is also helpful.

76 | CAL I FOR N I A G R OC E R

Strategize with the Police Command Staff Grocers complain they get little help when contacting police about homeless persons who cause problems. That is because the police rank trespass, disturbing the peace and public intoxication (without violence) as low priorities. If the police do arrive while the trespasser is present, they usually will not arrest for these offenses on their own authority. Instead, they might offer only to assist the store manager in making a private or “citizen’s arrest.” This approach is unsatisfactory because it usually results in only a citation of the offender.

Frustrated grocers should not give up on the police. They should instead escalate by meeting with police watch commanders, who can usually be contacted initially through any department’s non-emergency line. Ask the watch commander for frequent patrols and expedited response, especially near closing time. Focus with the police on the persistent and violent offenders, the chronic drunks, and those who use drugs.

If the watch commander is not responsive, escalate again to the Chief’s Office or to City Council members, with help as needed from the grocer’s lawyers, security managers, and public affairs staff.

Many police departments ask the grocer or landlord to execute an agreement authorizing the police to arrest trespassers found on store property after hours.

Use caution and get legal advice about this approach. An offender arrested by the police at a grocery store after the grocer signs an authorization may sue the grocer for the officer’s alleged deprivation of his or her rights. The offender’s attorney will argue that the police were acting together as agents of the grocer, even though the grocer had no control over how the arrest was made by the officer. Such cases are expensive, even if the grocer obtains a pretrial dismissal.

Use the Workplace Violence Statute and Criminal Stay Away Orders Some people, including the homeless, threaten violence when an employee tells them to stop stealing or to leave the store.

The 911 calls to the police usually get a quick response when any violence has been threatened or used. The grocer has tools to keep violent people permanently away from the store once this growing problem arises.

When violence occurs, ask arresting or responding police officers for the name of the offender and the incident or case number. The grocer can use this information in two complementary ways.

First, if the police arrest the offender, the grocer’s security managers or lawyer can use it to contact the appropriate County Deputy District Attorney, who should give them an assurance that he or she will

KNOW THE LAW

“there are effective ways to protect customers from harassment and stores from disruption.” iStock

seek a “criminal stay away order” against the offender. Get a copy of that written order from the District Attorney after the arraignment, which happens early. Keep the order on hand at the store to show any police officer who responds in the future about the offender.

Second, the grocer can file for a civil “workplace violence” restraining order against the offender in its own name to protect its employees.

A workplace violence restraining order can remain in force even if the criminal stay-away order is dissolved. Once either order is served on the offender, the police usually will arrest for a violation, and the District Attorney likely will prosecute.

When other trespassers see or learn of the arrest, they often conclude that they should go elsewhere.

Rebutting Complaints from Local Government City attorneys are under political pressure to get homeless people out of neighborhoods and shopping centers. They can and do threaten and bring civil suits which allege that the grocer is not doing enough to discourage trespass and associated nuisances by the homeless at its stores, causing damage to the community and consuming excessive police resources.

These lawsuits can, at least in theory, result in fines, court orders (requiring the grocer to change its hours and ways of doing business), and even in store closures.

In addition to taking the steps outlined above, the grocer should do the following things to be ready to rebut charges that it is unreasonably encouraging trespass at its stores: a. If the police typically do not respond satisfactorily to calls from the store, keep a call log, noting the nature and date/ time it was made, if and when the police responded, and the outcome. The log may show that the police are not showing up to assist the store with persistent trespass and related problems. (However, if the police are responsive to a high number of similar calls from a store with poor lighting and no private security on hand, the log can be used against the grocer to help prove the City’s typical claim that the store is consuming excessive police resources).

c. Be fully responsive to contact by the police or other officials. A city attorney, county counsel, the police department or code-enforcement officials may call, or drop by the store to discuss the presence of homeless trespassers and associated garbage, harassment and graffiti. Failing to respond may give the city attorney an argument that the court should intercede because the store failed to respond beforehand. ■ Editor’s Note: John Dahlberg represents California grocers and other retailers as well as shopping centers in many subjects including trespass issues, notably how to get rid of aggressive or persistent petition circulators and charities.

b. Document use by homeless trespassers of nearby government property. Homeless people who trespass at stores often camp on nearby public property. Take pictures of nearby encampments on public property.

Be prepared to tell local government that trespass at grocery stores and surrounding residential areas will diminish when it bars overnight trespass on nearby properties it owns, such as parks and under freeway overpasses. A city may be unwilling to sue a grocer for alleged nuisances at its stores caused by people who camp on the city’s nearby property without interference.

CAL I FO RNIA GRO CER | 77

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ROGERS JOSEPH O’DONNELL, PC congratulates the following leading women in the industry

Kendra Doyel Ralphs Grocery

Lynn Melillo Bristol Farms

Nicole Pesco

The Save Mart Companies

Lori Raya

Albertsons Companies

Kathleen Smith Albertsons Companies

Nicole Townsend

CONGRATULATES

THE FOLLOWING LEADING WOMEN IN THE INDUSTRY

Kendra Doyel Ralphs Grocery

Nicole Pesco

Lynn Melillo Bristol Farms

Lori Raya

The Save Mart Companies

Albertsons Companies

Kathleen Smith

Nicole Townsend

Albertsons Companies

Raley’s

Raley’s

Thank you for your service!

78 | CAL I FOR N I A G R OC E R

Thank you for your service!

ADVERTISER INDEX PAGE COMPANY IBC Albertsons Companies

PHONE

EMAIL

925-467-3000

WEBSITE albertsons.com

69

ASR Group

asr-group.com

34

Bimbo Bakeries USA

916-456-3863

wcrocker@bbumail.com

bimbobakeriesusa.com

40

Bristol Farms

310-233-4715

kdavis@bristolfarms.com

bristolfarms.com

23

C&S Wholesale Grocers, Inc.

916-373-4396

pmiller@cswg.com

cswg.com

65

CA Grown

916-441-5302

info@californiagrown.com

californiagrown.org

50

California Lottery

52, BC

Certified Federal Credit Union

909-261-4065

ghurd@vonscu.com

vonsefcu.com

71

CMB Design Partners

916-605-6500

studio@cmbdesign.com

cmbdesign.com

63

Command Packaging

323-446-3303

cchangala@commandpackaging.com

commandpackaging.com

75

ECOS

800-335-3267

craig@ecos.com

ecos.com

56–57 Emerson Grind2Energy

800-845-8345

doug@emerson.com / heather.doughtery@emerson.com

grind2energy.com

31

Gelson’s Markets

818-906-5709

11

Harris Ranch Beef

559-896-3081

bcaudill@harrisranch.com

harrisranchbeef.com

IFC The Hershey Company

717-534-3660

bcotton@hersheys.com

hersheys.com

68

Huntington Security

800-559-7929

smullins@huntingtonsecurity.com

huntingtonsecurity.com

21

Jelly Belly Candy Co.

800-323-9380

gpierson@jellybelly.com

jellybelly.com

26

Kellogg Company

269-961-2000

20

Kimberly-Clark Corporation

28

MillerCoors

46 46

calottery.com

gelsons.com

kelloggs.com dennis.j.belcastro@kcc.com

kcc.com

949-353-9422

jessica.owens@millercoors.com

millercoors.com

Moss Adams

916-503-8206

marci.reynolds@mossadams.com

mossadams.com

Nest Fresh Eggs

877-241-8385

contact@nestfresh.com

nestfresh.com

4, 53 Nestlé Purina PetCare

314-982-4876

14

NuCal Foods

209-254-2225

skoch@nucalfoods.com

nucalfoods.com

7

PepsiCo Inc.

949-330-5804

jen.fulton@pepsico.com freda.dickens@pepsico.com

pepsico.com

24

Producers Dairy Foods, Inc.

559-264-6583

producersdairy.com

44

Raley’s

916-373-3333

raleys.com

38

Ralphs Grocery Company

310-884-9000

ralphs.com

78

RAM Printing

purina.com

ramprintforus@gmail.com

30, 58 Retail Marketing Services

800-252-4613

info@cscrc.net

78

Rogers Joseph O’Donnell

415-956-2828

rjo.com

78

Select Systems Technology

59

Sioux Honey Association

510-888-1511

25

Henkel Laundry & Home Care

916-288-4692

john.wagner@henkel.com

59

Tony’s Fine Foods

916-374-4000

kberger@tonysfinefoods.com

tonysfinefoods.com

19

TruGrocer Federal Credit Union

208-385-5273

cdemaray@trugrocer.com

trugrocer.com

35

Tyson

480-949-6700

robert.bukovec@tyson.com

tysonfoods.com

42, 47 SUPERVALU

selectsst.com siouxhoney.com

supervalu.com CAL I FO RNIA GRO CER | 79

MOMMY BLOGGER

The Family Business L A R A F O N G B A L DW I N BLOGGER

“It’s in their blood, you know,” my father says.

“Maybe they’ll go into the family business.”

Dad and I sit in my living room, watching my kids “play grocery.” My eldest has a paper bag that he loads with wooden produce and plastic sandwich fixings until it is nearly bursting. My youngest then dumps it all onto the hardwood floor with delight. Repeat.

If Mrs. Smith wanted a 13-lb Norbest hen or a 19-lb tom, he would faithfully log each order and deliver the birds himself.

When deer season came he would offer to cut, individually wrap, and label each piece of venison.

The suggestion irks me at first. I like to believe my children will change the world.

Perhaps if “the family business” was curing cancer or winning Oscars, I would be more enthusiastic.

My grandfather worked 14-hour days.

He worked through weekends and holidays during an era when others closed shop.

He worked when his kids were sick and when his wife was in labor. What he couldn’t offer in precut butternut squash or fancy craft beer, he made up for in service and quality. If you needed celery or foil on Christmas Day, you could count on Stan to be open at 8 a.m.

My late grandfather Stanley was a grocer.

In search of “The American Dream,” he emigrated from China and built a business from the ground up alongside his brother.

Over the next three decades they turned it into a family-run Sacramento landmark.

Their combined 11 children learned to make change before they could ride a bike, and grew up stocking shelves, bagging groceries standing atop a crate, and sneaking beef jerky and cola when the store was slow.

Stanley was a self-taught butcher, and a damn good one. He prided himself on custom cuts and a level of personalized service that was second to none. Each Thanksgiving, he would personally take orders for fresh turkeys.

80 | CAL I FOR N I A G R OC E R

There were challenges. Theft. Robbery.

Bad checks. Spoiled meat and produce.

New age frozen meals that wouldn’t sell because the price point was too high.

In the store’s early years there were no scanning machines, no codes for produce, and everything was weighed on a classic mechanical scale.

Yet “Stan the Man” was known for his charisma and compassion. He had relationships with all his regular delivery people – from the meat distributors to the bread man. He knew their families.

As payment from struggling customers, he famously accepted nothing more than an “IOU” in the form of a signed receipt, with no questions asked. During the Vietnam War, Stanley would never fail to ask the wife of a deployed soldier about her husband, a kindness she remembered for years.

He mentored the teens he hired, some of whom are still in the grocery business today.

My late grandfather was more than a grocer. He was a self-made businessman who created strong ties between his store and the community it served. His success was not just due to his business acumen and entrepreneurialism, but also to his enthusiasm, love for people, and his flexibility to changing times.

The store imparted more wisdom than words ever could. It shaped the lives of his children, and his children’s children, by standing as a living example of how to be a pillar of community and anchor a family. If that part of “the family business” can live on in my kids, then pass the paper bag. ■

To us, local means California We’re proud to offer more of what Californians are looking for – from locally grown produce to California-raised USDA choice meat.

Long before local was cool, our family of stores made it a priority to buy direct from local growers.

In fact, some of our current relationships with farmers started over 60 years ago.

We’re working hard to be California’s favorite grocer. In our neighborhoods, we are focused on developing offerings unique to the California lifestyle, we’re dedicated to contributing to the community, and we’re honored to call nearly 70,000 Californians our employees.

To us...

Local means fresher.

Local means better.

Local means California.

California Grocer Online Read California Grocer on your mobile device, or share with an associate.

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

www.cagrocers.com

LORI RAYA

Albertsons Companies

KATHLEEN SMITH Albertsons Companies

CONGRATULATING LORI RAYA & KATHLEEN SMITH

for their service with the CALIFORNIA GROCERS ASSOCIATION We are honored to serve you and your team!