New Jersey
Winds of change PAGE 26
Creating Cultures of Leadership PAGE 38 2018, ISSUE 1
NEW JERSEY FOOD COUNCIL
Harnessing Innovation page 22
NJFC | BOARD OF DIRECTORS
officers
DIRECTORS
new jersey food council
Chair Richard J. Saker Saker ShopRites
Associate Vice Chair Michael Biase Mission Foods
Secretary Joe Sofia Wegmans Foods Markets
Vice Chair Michael Murphy QuickChek Corporation
Treasurer Michael Rothwell Pennington Quality Market
President & CEO Linda M. Doherty New Jersey Food Council
Dan Croce Acme Markets
Rafael Cuellar Cuellar Family ShopRites
Lisa Angeles Kraft Heinz Company
Colleen Meares Stop & Shop Supermarkets
Debbie Pregiato Advantage Solutions
Peter Rojek Fairway Market
Howard Kent Krasdale Foods
Jason Ravitz Ravitz Family Markets
James Ostling Bimbo Bakeries USA
Phil Scaduto Food Circus
James J. McCaffrey III McCaffrey’s Markets
Frank Mastrangelo Supervalu, Eastern Region
Tony Chicarelli C&S Wholesale Grocers
Andrew Kent Glass Gardens
John Wachter Murphy’s Markets
Anthony Patrignelli Unilever
Kelly Johnston Campbell Soup Company
Jose Castanon Goya Foods
David Maniaci Nicholas Markets
William Sumas Village Supermarkets
Eva Kohn CBA Industries
Joseph F. Pagano Inserra Supermarkets
Sean King Pepsi Beverage Company
Jason Read Wawa
Michael Sullivan Liberty Coca-Cola Beverages
Judy Spires Kings Foods Markets
Leonard J. Sitar ShopRite of Carteret
Paula DiMeglio Whole Foods Market
President & CEO Linda M. Doherty
New Jersey Grocer Editor is the official publication of the Matthew Addeo New Jersey Food Council. maddeo@njfoodcouncil.com
Asst. V.P. for Govt. Affairs Mary Ellen Peppard Director of Public Affairs Matthew Addeo Executive Assistant Office Manager Sandy Malecki Meeting Planner Barbara Yuson Financial Manager Christine Higgins
30 West Lafayette St. Trenton, NJ 08608 (609) 392-8899 (609) 396-6571 Fax www.njfoodcouncil.com For association members, subscription is included in membership dues. © 2018 New Jersey Food Council
For advertising information contact: Corey Gerhard cgerhard@cagrocers.com
CONTENTS | ISSUE 1
FEATURES
COLUMNS President’s Message Reflecting on the Past With a Strong Commitment to the Future. . . . . . . . . . . . . 5
22
Harnessing Innovation to Fuel Business Results In our turbulent business climate, we all seek new pathways to growth and success. Yet winning can be elusive in these times of dizzying speed and ruthless competition.
Chairman’s Message The Value of NJFC Membership. . . . . . . . . 6 Government Relations NJFC Vigilant as New Legislative Session Commences. . . . . . . . . . . . . . . . . . . 8 Guest Editorial Minimum Wage Math Doesn't Add up for Small Business . . . . . . . . . . . . . . 9 Washington Report 5 Priorities for Independents in the 2018 Farm Bill. . . . . . . . . . . . . . . . . . 16
26
Inside the Beltway How to be a Winner With The New Tax Law. . . . . . . . . . . . . . . . 18
Winds of Change
Viewpoint The Retail Apocalypse is B.S. . . . . . . . . . . . 20
Today’s consumers are shopping channels and categories in ways they’ve never shopped before. Nielsen shares insights and data into the how and why this is changing the retail landscape.
DEPARTMENTS NJFC News. . . . . . . . . . . . . . . . . . . . . . . . . 10 Outside the Box New Retail Perspectives. . . . . . . . . . . . . . . 30
32 Redefining the Rules of Engagement, Digitally Digital engagement can be poison if not managed correctly but, for companies willing to embrace the transformation, digital engagement is just what the doctor ordered.
38 Creating Cultures of Leadership What makes for a good leader? How do you foster a culture of leadership in your workplace? Noted expert Drew Dudley shares his insights in finding and how living leadership teaches leadership. NEW JERS EY GRO CER |
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2018 NJFC Sponsors New Jersey Food Council wishes to recognize the following companies for their generous support.
PLATINUM SPONSORS
BRONZE SPONSORS
Acme Markets
Acosta Sales & Marketing
Allegiance Retail Services LLC
Advantage Solutions
(Foodtown)
Cargill Salt, Inc.
Bimbo Bakeries USA
Chase
EisnerAmper
Crossmark
Inserra Supermarkets
Earth Friendly Products
Liberty Coca-Cola Beverages
Glass Gardens, Inc.
Pepsi Beverages Company
Goya Foods
Wakefern Food Corporation
Kraft Heinz Company
Wegmans Food Markets
Mazars USA
Whole Foods Market
Mondelez International
GOLD SPONSORS Saker ShopRites Stop & Shop Supermarkets
Porky/Vrola PSE&G RoNetco Supermarkets Zallie Supermarkets
Village Super Market
SILVER SPONSORS CBA Industries C&S Wholesale Grocers
BRASS SPONSORS Bogopa Service Corporation McCaffrey’s Markets
Kings Food Markets
Murphy’s Markets
QuickChek Corporation
Nicholas Markets
Supervalu
Pennington Quality Market
Wawa
Ravitz Family Markets ShopRite of Hunterdon County Somerset Stores
PRESIDENT’S MESSAGE
Reflecting on the past with a strong commitment to the future L I N DA DO H ER T Y PR E S IDE N T N EW JER S EY FOOD COUN CIL
2018 is special. it represents a personal and professional milestone as i celebrate by 25th anniversary as part of the New Jersey food council. For a quarter century I built my career at NJFC, and today the food industry remains complex and fluid. If there is one thing I have learned, this is an extraordinary association with a visionary Board of Directors, dedicated members, a rich history of accomplishments and a reputation for excellence. When I joined NJFC on a cold winter February day, we were lucky if the fax machine was working and customers used paper checks as payment methods. Our biggest challenges were advancing a civil recovery proposal and the industry was poised to take on competition from wholesale clubs. Fast forward 25 years, emerging trends include home meal delivery programs, e-commerce and home shopping opportunities and new, more efficient digital payment methods for shoppers. Technology plays an expanding role as apps for consumers to track and plan food intake and activity are becoming more popular and helps shoppers make better food choices.
And with the recent passage of significant federal tax reform, growth of economic optimism by consumers is expected to be a positive factor in growing food and beverage opportunities. With a new Administration settling in Trenton in 2018, well-intended regulatory and legislative initiatives can sometimes cause unpredictability in the business community. We will continue our commitment to work alongside government leaders and seek support for the expansion of the NJ food distribution industry. Navigating new food trends and e-commerce disruptors will create its own set of industry challenges so public/private partnerships are essential to our success.
group of accomplished leaders who are thorough, inclusive and principled to take on the challenges before us. For the last 25 years, I am and remain so thankful for the guidance and engagement of our Board of Directors and members to support our agenda and who uphold our mission. It is the uncanny strength and culture of comradery among the membership that gives us hope and determination for the future. Today, I look forward with enthusiasm to expand our tradition of effective legislative and regulatory action. It is our commitment to grow and strengthen our industry in the year to come.
2018 will bring a significant set of critical challenges including a proposed unsustainable $15 per hour minimum wage increase, a progressive labor agenda, state tax hikes, and SNAP and WIC changes in the Farm Bill. Our Executive Committee, led by our thoughtful and highly respected Chair Richard Saker, is an extraordinary NEW JERS EY GRO CER |
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CHAIRMAN’S MESSAGE
THE VALUE OF NJFC MEMBERSHIP
R I C H A R D J . S A K ER N JFC CHAIR MAN OF T HE BOARD S AK E R S HOPR IT E
THE NEW JERSEY FOOD COUNCIL HAD A TREMENDOUS 2017, THANKS IN LARGE PART TO OUR GENEROUS MEMBERS. I EXPECT MORE of THE SAME THIS YEAR. As I begin my second term as Chair of the New Jersey Food Council, I reflect upon last year’s tremendous accomplishments and continued commitment to add value to our membership.
Our efforts in Trenton were also successful in blocking two pieces of legislation that would permit the sale of raw milk and limit indemnity clauses in snowplow service contracts.
working collaboratively with both the Governor and Legislative branches on these issues that are critical not just for New Jersey’s food industry, but for the entire state.
All of these achievements would not be possible without the incredible investments made by our members who have generously supported all of our programs not just financially but with their time and expertise as well.
Thank you to our members, government affairs team, and national partners for making these victories a reality.
I’m confident that when working together we will be able to collaborate and forge forward sound public policy that will benefit our communities and customers.
We can see this through examples such as the growth in member sponsorships with a total of 42 this past year and the rapid expansion of the Educational Scholarship Program which has proudly supported 20 NJFC and member scholarships for a total of $67,000 in 2017. Our hard work and determination can be seen through several legislative victories this year in Trenton and Washington, D.C. We saw debit swipe fee reform preserved in the U.S. House of Representatives and the stalling of legislation that would create a New Jersey only food date labeling program.
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It also brought us great satisfaction to learn the New Jersey Department of Health received approval from the USDA to significantly expand access to the Women, Infant, and Children (WIC) Nutrition Program by repealing the wait list requirement for food retailers to become authorized vendors. Going forward, NJFC retailers will be better able to serve their communities due to the persistent advocacy of NJFC President Linda Doherty, the incoming Chair of the State WIC Advisory Board. We at the New Jersey Food Council also would like to congratulate Governor Murphy and the newly elected Legislature on their victories in November. As we all know, our state is facing numerous challenges and we look forward to
As we kickoff the new year, I would like to thank the members and the hardworking Executive Committee, Board of Directors and membership for their continued support and effort to help maintain our reputation as a strong state association. I look forward to working with each of the members to continue to enhance the New Jersey Food Council’s steadfast position as a leader both in Trenton and nationally among its peer organizations so that we can be in the best position to advocate for the New Jersey food distribution industry.
GOVERNMENT RELATIONS
THE
BOARD OF DIRECTORS CORDIALLY INVITES YOU TO THE
THURSDAY, THE 22ND OF MARCH AT 5:30 IN THE EVENING PALACE AT SOMERSET PARK 333 DAVIDSON AVENUE, SOMERSET, NJ THE
JOIN US TO CELEBRATE OUR ACHIEVEMENT HONOREES
Chris Lane
Kathy Russello
EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT WAKEFERN FOOD CORP RETAIL BUSINESS SERVICES, LLC AHOLD DELHAIZE
Dennis Hickey VICE PRESIDENT KRASDALE FOODS
VISIT WWW.NJFOODCOUNCIL.COM FOR MORE INFORMATION
NEW JERS EY GRO CER |
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GOVERNMENT RELATIONS
njfc vigilant as new legislative session commences M A R Y EL L EN PEPPA R D N JFC AS S IS TAN T V ICE PR ES IDENT OF GOV ER N MEN T R ELATION S
preparing for a progressive agenda. On November 7, 2017, New Jersey residents elected a new Governor, Democrat Phil Murphy. They also chose the 120 members of the State Legislature who were up for election, 40 Senators and 80 members of the General Assembly. While a few seats changed parties, the overall makeup of the Legislature remains Democratic. This is the first time in eight years the Legislature now has a Governor of the same party, and we are prepared for a progressive agenda. Governor Phil Murphy and the new State Legislature have made the promise of a $15 per hour minimum wage mandate a top priority in 2018, however there is not widespread agreement on the details of this legislative proposal. There continues to be much debate and deliberation over the phase in implementation schedule and whether a $15 minimum wage should apply to all workers, and whether certain classes of workers should be exempt, such as minors, seasonal workers, and workers in training. NJFC continues to educate policymakers about the impact a $15 minimum wage with no exemptions would have on our unique industry.
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Such a drastic labor cost increase would result in loss of jobs, loss of hours, reduced access to entry level jobs, reduced employee benefits, and increased costs of consumer goods. We believe our message is resonating and are encouraged by our ongoing thoughtful dialogue with policymakers. In other developments, we're advocating for legislation to extend the designation of all urban enterprise zones (UEZs) for an additional period of 10 years. NJFC was disappointed by the 2016 commencement of the scheduled phase out of the UEZ program, and the subsequent expiration of the program in five major cities. This program has been widely utilized by NJFC members since its inception. Many of our members have been able to establish themselves and create jobs in food deserts due to the tax incentives provided for in the UEZ program. The program's significant savings have enabled our members to expand existing stores or build new ones in areas where it's difficult to realize a return on investment. We are raising concerns about legislation that would permit the sale of cottage food products. While this new bill is an
improvement over similar legislation from last session, we remain concerned that a small home based operation may not be equipped to adequately meet food safety requirements. We are recommending stronger safeguards pertaining to inspections, recalls, and other related provisions. Finally, we have been voicing our opposition to new legislation that would prohibit the sale of menthol cigarettes. Our members who sell tobacco products report that menthol cigarettes comprise approximately 35 to 40 percent of their total tobacco sales in New Jersey, a huge revenue loss which for some members equates to tens of millions of dollars in direct sales. There would be an additional loss in ancillary sales. We have focused our advocacy efforts on educating legislators about the revenue loss to our members, the tax loss to the State, and the black market that would result from this legislation. The Governor presents his State Budget Address to the Legislature in March, and we anticipate a busier than usual Budget cycle as legislators and advocates compete for limited dollars. NJFC is particularly vigilant about the possibility of new or increased taxes on our members.
GUEST EDITORIAL
MINIMUM WAGE MATH DOESN'T ADD UP FOR SMALL BUSINESS J EA N ET T E H O F FM A N PR OTECT JE R S E Y JOBS COALITIO N
as new jersey considers raising the minimum wage, it's critical to proceed with great caution. The Nov. 21 Asbury Park Press editorial “$15 minimum wage could boomerang” on Gov.-elect Phil Murphy’s plans to raise the minimum wage ended with the premise that politicians should proceed with caution, as they may end up “doing more harm than good for those people they are trying to help.” Protect Jersey Jobs wholeheartedly agrees. In New Jersey, businesses large and small share these same concerns. While some consider this idea a reasonable approach for raising the wage floor, this proposed government mandate to increase labor costs by 80 percent could kill jobs, cut worker hours, raise the prices of goods and services, and hurt the very workers the policy intends to help. Throughout New Jersey, small companies like local hardware stores, flower shops, bakeries, restaurants, gyms and many others are already under pressure to make payroll, pay health care benefits, keep
up with high energy costs and deal with bureaucratic red tape. A one-size-fits-all wage mandate will not help workers in these industries keep their jobs in a state with massive taxes and where businesses struggle to stay open. It’s also important to recognize that economic downturns and other unforeseen events have a direct impact on workforce stability. Massive wage mandates during those uncertain times only add to the instability. In fact, politicians in other places have implemented massive wage mandates with disastrous consequences. In Seattle, where the wage mandate is now $13 per hour, a University of Washington study found that the average employee lost $125 a month. It also found that more than 5,000 low-wage jobs were eliminated because of this enormous 37 percent increase. In New York City, where mandatory wages rose to $11 per hour in 2017 and
“If businesses are forced to absorb a dramatic mandatory wage increase, they will face tough choices.”
will continue to rise to $15 per hour by 2019, vacant storefronts line the streets and retail trade experienced its first decline in employment growth since 2009, according to New York Labor Department data. There is a false narrative that job growth has been robust after increasing the minimum wage, but the data tells a different story. According to the U.S. Department of Labor’s Quarterly Census of Employment and Wages, New Jersey has lagged behind national job growth, both in lower-skilled jobs and in total jobs, in almost every year the minimum wage was increased. Imposing new wage mandates comes down to basic math. If businesses are forced to absorb a dramatic mandatory wage increase, they will face tough choices. This includes cutting the workforce, reducing hours, and scaling back benefits. Most businesses will be forced to pass the increased labor costs on to their customers through higher prices. Editor's Note: Jeanette Hoffman is spokesperson for Protect Jersey Jobs, a grassroots coalition of New Jersey businesses. This article originally appeared in the Asbury Park Press. NEW JERS EY GRO CER |
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NJFC NEWS N J FC E L E C T S O F F I C ERS A ND BOAR D AT ANNUAL ME MBE RSH IP MEETIN G The New Jersey Food Council (NJFC) kicked off the New Year with its Annual Membership Meeting on Thursday, February 1, 2018 at Forsgate Country Club in Monroe Township, New Jersey. This meeting served as a start of the 2018 schedule of events and the NJFC Scholarship Program. During the Annual Membership Meeting, NJFC elected its slate of Officers and Board of Directors. The 2018 Board Officers are Chair Richard Saker of Saker ShopRites; Vice Chair Mike Murphy of QuickChek Corporation; Treasurer Mike Rothwell of Pennington Quality Market; Secretary Joe Sofia of Wegmans Food Markets; Associate Vice Chair Mike Biase of Mission Foods; and NJFC President Linda M. Doherty. Also, the Board of Directors for 2018 was formally elected during the program. “The Annual Meeting is an important opportunity for NJFC members to learn of the organizations’ priorities, major events for the upcoming year, and various committees in which they can participate. It’s also a great time for members to learn about government affairs initiatives
to insure that food retailers and their supplier partners continue to have a strong and dedicated voice in the Garden State under the banner of the Food Council,” stated Linda Doherty, NJFC President. This year’s Annual Meeting was particularly special For mer Gover nor because NJFC Officers. President Linda Doherty celebrated her 25th year with the New Jersey Food Council.
NJFC Board Chair Richard Saker said, “Linda’s genuine and fearless leadership for the food industry is a testament to all of our major accomplishments throughout her time here. We all look forward to continued accomplishment with her as President.” The event featured Keynote Speaker Jeanette Hoffman, NJ political news
Jeanet t e H o ff m a n d e l i v e rs th e K e y n ote A d d re ss at th e A n nua l Meeting.
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Dona ld DiFra ncesco sw ea ring in the 2018 NJFC
commentator, who spoke on the "New State of Political Affairs in New Jersey." Ms. Hoffman discussed the opportunities and challenges that the food industry will potentially face with the new Administration in Trenton. Additionally, attendees heard the NJFC Chair's Report to the membership and networked with the state's leading food industry executives and professionals.
NJFC NEWS N J FC P R E S IDEN T A SSUM ES N EW ROLE AS S TATE WIC ADVISORY C H AIR In January, NJFC President and CEO Linda Doherty began her new role as Chair of the State WIC Advisory Committee.
This new rule will allow more grocers to participate in the program and to contain costs for the state.
This two-year term will allow the voice of the food industry to continue our partnership with WIC stakeholders.
In other developments, NJ WIC is now utilizing an App platform. Grocery shopping for foods allowed by the NJ WIC Program can be confusing as food lists are updated and some products discontinued.
The leadership announcement was made in November around the same time the New Jersey Department of Health announced that it received approval from the USDA to significantly expand access of the Women, Infant, and Children (WIC) Nutritional Program by repealing the wait list requirement for retailers to become authorized vendors. NJFC cheered that action.
NJFC P resident & CEO Linda Doherty a t her fir s t NJ W I C Advisory Council meeting a s Cha irperson.
The problem can cause chaos at the front end and create customer frustration. New Jersey just introduced the WICShopper App to help WIC customers shop with confidence.
When using WICShopper, customers can check the eligibility of products while they shop and use their phone to scan products to check their WIC eligibility. To learn more about the App and to download it, visit www.ebtshopper.com.
N EW E S T N J F C L EA D ERSHI P D E VE LOPME NT CL ASS B E GINS NJFC had a fantastic kickoff day with their new NJFC Leadership Development Class! We are excited to mentor these individuals as they become the future leaders in the New Jersey food industry. The members of our class this session are, Matthew Avallone of Krasdale Foods,Tammy Hosgood of Wegmans Food Markets, Stephanie Duffy of Stop & Shop Supermarkets, April Ensinger of Earth Friendly Products, Chrissy Kreber of Wegmans Food Markets, Lindsey Inserra-Hughes of Inserra Supermarkets, Ankur Patel of Stop & Shop Supermarket and Ernest Benson of Liberty Coca-Cola Beverages. Former graduates Howie Kent of Krasdale Foods serves as Chair and Jessica Riley
Scaduto of Food Circus Super Markets serves as Vice Chair. The kickoff session started out with a teambuilding event at the Amazing Escape Room in Montclair, New Jersey with a workshop that took place after at the Wilshire Grand Hotel on the current issues facing New Jersey’s food industry as well as New T he new Lea dership Development cla ss during the i r ki cko ff at t he Jersey’s current political Grea t Esca pe Room. landscape. The day Boathouse attended by the class and NJFC concluded with a reception at McLoone’s members.
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NJFC NEWS
N J FC BOA R D O F D I REC TO RS H OS T S 5TH ANNUAL H OLIDAY RE CEP TION The NJFC hosted its fifth Annual Holiday Reception at Buona Sera Ristorante in Red Bank on December 7, 2017 to raise money for the NJFC Educational
( L t o R) N J F C As s o c ia t e V ic e Ch air man M i chael B i a s e o f M is s io n F ood s, NJ F C C hai r m a n R i c h a rd S a k e r of S ak e r S h op Rite s and N JF C P re s id e n t L in da Doh e rty at th e A nnual H o l i d a y R e c e p t ion .
Scholarship Foundation. The holiday networking event was attended by more than 125 food industry executives throughout the state. Six years ago, the Board of Directors authorized three scholarships at $2,000 each to be given to associates and family members of our member companies. Over the NJFC members enjoying the holida y festivi t i es at B uo na last few years that investment Sera Ristora nte in Red Ba nk, New Jersey. has grown exponentially with administering numerous scholarships the Food Council scholarships growing on behalf of our Board Members and to $5,000 to each recipient while also member companies.
J ERS E Y VOT ES A NN O UN C ES TARGE TE D DIS TR ICT PROGR AM Jersey Votes has begun a new Targeted District Program which will implement and maximize non-partisan employerto-employee engagement activities in key New Jersey U.S. House districts in the 2017-18 election cycle for the specific purpose of educating private sector employers and employees on the importance of elections and public policy
formation; and motivating them, as more informed voters, to help elect pro-jobs candidates to office. The targeted New Jersey congressional districts are CD-2 (currently held by Republican Congressman LoBiondo), CD-3 (MacArthur), CD-7 (Lance) and CD-11 (currently held by Republican Congressman Frelinghuysen) and
A DV IS ORY C O MMI T T EE C A L L S FOR R E VITA L IZ E D NJ AGRI C ULT UR E
Governor Murphy's Advisory Committee wants more state support for agritourism, a revived Jersey Fresh program, and to get more people involved in farming. The Department of Agriculture's transition report underscores that fact, hoping to enhance New Jersey's public image by supporting agri-tourism efforts and bringing back the sidelined and underfunded Jersey Fresh program. NJFC welcomed the announcement.
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activities will include presentations on district candidates, important issues facing businesses, voter registration programs and much more. These engagement activities will have a direct and tangible impact on the employee-voters of these districts and, thereby, in determining whether a pro-jobs majority in the US House of Representatives will exist at the start of the 116th Congress. Please contact Matthew Addeo at (609) 392-8899 or email maddeo@ njfoodcouncil.com for details on how to participate. To learn more about Jersey Votes you can visit www.jerseyvotes.com.
NJFC NEWS
218 T H S TAT E L EGI SL AT URE REORGANIZE D In January, members of the State Senate and General Assembly gathered in Trenton to be sworn in as the 218th New Jersey State Legislature. The 120 Senators and Assembly members sworn into office include a significant number of freshmen legislators and a new Assembly Speaker, Craig Coughlin (D19). Senator Steve Sweeney (D-3) will remain the Senate President. Other top leaders of the Legislature will remain the same. Loretta Weinberg (D-37), will stay on as Senate Majority Leader; Tom Kean Jr. ( R-21), as Senate Minority Leader; Lou Greenwald ( D-6), as Assembly Majority Leader; and Jon Bramnick ( R-21), as Assembly Minority Leader. The 14 new legislators are below. • Senator Chris Brown (R) - District 2 (Previously served in Assembly) • Assemblyman John Armato (D) - District • Senator Troy Singleton (D) - District 7 (Previously served in Assembly) • Assemblywoman Carol Murphy (D) - District 7 • Assemblyman Ryan Peters (R) - District 8 • Senator Vin Gopal (D) - District 11 • Senator Declan O'Scanlon (R) - District 13 (Previously served in Assembly) • Assemblywoman Serena DiMaso (R) - District 13 • Assemblyman Roy Freiman (D) - District 16 • Assemblywoman Yvonne Lopez (D) - District 19 • Senator Joe Cryan (D) - District 20 (Previously served in Assembly) • Assemblyman Hal Wirths (R) - District 24 (Former NJ Labor Commissioner)
GOVE R N OR PH IL MU RPH Y IS S WORN IN AS NE W JE RS EY' S 56TH C H IE F E XECU TIV E On January 16, 2018, Governor Phil Murphy was sworn in as New Jersey's 56th Governor just before noon by State Supreme Court Chief Justice Stuart Rabner at the Gov. Phi l Patriots Theater at the War Memorial in Trenton.
Mur phy
Before taking his oath of office, Governor Murphy was introduced by his wife, Tammy, who in turn was introduced by their four children Sam, Charlie, Emma and Josh. All of them stood together as he took his oath on the same Bible that President John F. Kennedy used to be sworn in 57 years ago as President of the United States. In his Inaugural Address, Governor Murphy touched on all of his promised progressive policy proposals made on the campaign trail.
• Assemblywoman Shanique Speight (D) - District 29 • Assemblyman Christopher DePhillips (R) - District 40
GOVE R N OR O P ENS T ERM WI TH MINIMUM WAGE ROUNDTABLE Governor Phil Murphy reaffirmed his commitment to signing laws that raise the minimum wage and require employers to provide sick pay during a roundtable with several progressive groups. No significant New Jersey business groups were invited to participate.
However, he did not offer any details on how or when he and the Democraticcontrolled state Legislature would get it done. During the Reorganization of the State Senate, State Senate President Stephen Sweeney (D-3) highlighted his agenda for 2018 which included a $15 minimum
wage. Adding to that, he offered the caveat that the wage increase be responsibly imposed to not hurt business. More discussions will need to take place before the bills are introduced and hearings are held because lawmakers and the Governor disagree on the details as to how they should accomplish these goals. NEW JERS EY GRO CER | 13
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WASHINGTON REPORT
5 Priorities for Independents in the 2018 Farm Bill 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
Congress has the chance to strengthen the food security safety net, also known as the Supplemental Nutrition Assistance Program, or SNAP, for recipients and retailers in the 2018 Farm Bill. Every five years, Congress must pass a comprehensive omnibus bill that’s one of the single most important pieces of legislation in the food and agriculture industry: the Farm Bill. The practice dates back to the 1933 when the first Farm Bill was enacted into law as part of President Roosevelt’s New Deal. Its three original goals – keeping food prices fair for farmers and consumers, ensuring an adequate food supply, and protecting and sustaining the country’s vital natural resources – have largely stayed the same over the past 80 years. The agricultural and food industries authorized under the 2014 Farm Bill include 12 sections: 1) commodities; 2) conservation; 3) trade; 4) nutrition; 5) credit; 6) rural development; 7) research, extension, and related matters; 8) forestry; 9) energy; 10) specialty crops and horticulture; 11) crop insurance; and 12) miscellaneous. Lawmakers are aiming to reauthorize the next Farm Bill in the fall of 2018, with congressional hearings already underway in Washington. This includes Jimmy Wright, single-store operator of Opelika, Ala.-based Wright’s Market, testifying before the
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Senate Agriculture Committee on issues retailers face while administering SNAP benefits on behalf of the National Grocers Association (NGA). Below are five of the most important provisions NGA is working hard to ensure make it into the next Farm Bill:
1
Strengthen the Food Insecurity Nutrition Incentive (FINI) Grant Program. FINI grants are awarded to nonprofit groups and government agencies to conduct programs that provide point-of-sale incentives for the purchase of produce. While the program is popular in the independent supermarket industry, grocers have received a smaller share of funding despite longer operating hours and ability to reach more low-income consumers. Congress should help increase grocery store participation by allowing supermarkets to apply directly instead of restricting eligibility to nonprofit organizations and government entities, helping stores to overcome technical challenges with program implementation, and maximize federal resources for grocery stores.
2
Preserving Consumer Choice in SNAP. It’s crucial that lawmakers not place burdensome regulations on supermarket operators by restricting what SNAP customers can purchase with SNAP benefits. Today, there’s more than 300,000 food items in the marketplace with over 15,000 new food items being introduced each year. Placing restrictions on SNAP purchases would significantly increase burdens on independent supermarkets by adding new costs and administrative burdens to an already highly regulated, low-margin industry.
3
Fighting Swipe Fees on SNAP Authorized Retailers. A major credit card brand is asking Congress to lift the legislative prohibition on swipe fees for SNAP transactions. If card networks are allowed to charge the average swipe fee of about 48 cents per transaction, retailers could face an additional $1.3 billion – yes that’s billion with a B – a year for accepting SNAP payments. While these fees might prove to be a nice cash windfall for the megabanks and major card brands, they would unfairly and significantly increase retailers’ SNAP costs.
WASHINGTON REPORT
4
Protecting Private SNAP Retailer Sales Data. While Freedom of Information Requests (FOIA) provide a means for citizens to know about the activities of their government, the release of store-level SNAP redemption data would harm competition within the independent supermarket industry. In fact, the annual and monthly nationwide and state level SNAP redemption data has long been available. The availability of site-specific data would simply create a windfall information for big box stores, who will gain a competitive advantage and poach the customers and revenues of smaller independent grocers.
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Rejecting a SNAP Tax on Retailers. Last year, the Trump Administration proposed a SNAP retailer application fee. While stores currently do not pay a fee to become authorized, retailers take on large equipment, compliance, and training expenses to participate in the program. Under the proposal however, fees would range from $250 for the smallest businesses, such as convenience stores, to as much as $20,000 for the largest retailers. Requiring retailers to pay SNAP application fees won’t deter fraud in the program, however it would simply serve as a new tax on Main Street businesses, which is contrary to the Administration’s goal of lowering taxes and costs on small businesses.
It’s an honor for NGA to spend the association’s time fighting on behalf of the independent supermarket industry. ■
NEW JERSEY FOOD COUNCIL 2018 EVENT DATES Thursday, March 22 5:30 p.m.
Night of Distinction Palace at Somerset Park, Somerset, NJ
Wednesday, May 16 Trade Relations Conference 3:00 p.m. – 6:00 p.m. Harrah’s Resort, Atlantic City, NJ Thursday, May 17 9:00 a.m.
Trade Relations Golf Outing Galloway National Golf Club, Galloway, NJ
Monday, July 30 8:00 a.m. and 1:00 p.m. Shot Gun Start
Annual Golf Outing Suburban Golf Club, Union, NJ
Wednesday, October 3 8:30 a.m.
Good Government Breakfast Forsgate Country Club, Monroe Township, NJ
Thursday, November 1 8:30 a.m.
Loss Prevention Conference & Exhibition Forsgate Country Club, Monroe Township, NJ
Thursday, December 6 5:00 p.m.
Holiday Reception Buona Sera Ristorante, Red Bank, NJ
30 W. Lafayette Street Trenton, NJ 08608 (609) 392-8899/(609) 396-6571 Fax
NEW JERS EY GRO CER | 17
INSIDE THE BELTWAY
How to Be a Winner w i t h t h e N e w Ta x L aw J EN N I F ER H ATC H ER S EN IOR V ICE PR ES IDEN T GOV E R N MEN T AN D PUBLIC AFFAIRS FOOD MAR K ET IN G IN S T ITUTE
In every bill, there are winners and losers. FMI worked hard to try to secure as many wins for the grocery industry as possible with the new tax law and there are quite a few! In December, Congress passed the most significant overhaul of the U.S. tax code in 30 years, delivering a landmark legislative victory to President Trump and Republicans. The bill provides for a number of wins for the grocery industry. Some of the highlights are listed below. It is important to note you should work with your accountants and tax professionals to make sure you are able to utilize the provisions of the law could apply to your business and associates. Also, if you run across issues that you think could be addressed in a technical corrections bill, forward them to the Food Marketing Institute. As quickly as this bill moved through the legislative process, there are likely to be errors or mistakes that will need to be corrected this year. Below are some highlights and wins of particular interest to the supermarket industry:
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• The use of LIFO (last in first out accounting) is preserved with no changes. • There is no BAT (border adjusted tax). • The tax rate for “C” corporations is set at a flat 21 percent, down from 35 percent, goes into effect in 2018 and is permanent. The corporate alternative minimum tax (AMT) is permanently repealed. • A 20 percent deduction for qualified business income is established for pass-through businesses. Passthrough businesses operating through estates or trusts are eligible for the 20 percent deduction – a big win for second and third generation companies, secured with the help of key FMI members. After this deduction is taken, additional income tax is paid at the individual rates. The 20 percent deduction should create the equivalent of a top marginal rate of 29.6 percent. This goes into effect
in 2018 and expires at the end of 2025 unless extended or made permanent prior to that time. • The bill nearly doubles the standard deduction to $12,000 for a single filer and $24,000 for a joint filer (up from $6,350/$12,700). This will hopefully be a boost to associates and customers. • The individual AMT remains in place but the exemption is increased to $109,400 for married filers and $70,300 for all other taxpayers. The phase-out threshold is increased to $1 million for married filers and $500,000 for other taxpayers, but expires at the end of 2025 and reverts to current law unless extended. • The current system of state and local tax deductions is replaced with a new “hybrid” approach. Filers will be able to take up to a combined $10,000 deduction for state and local taxes, sales taxes and/or property taxes. • Unfortunately, the estate tax was not repealed and remains in place at 40 percent. However, the exemption for estates from the tax was doubled to $11 million for individuals and $22 million for couples. The gift tax exemption is also doubled. However, both provisions expire at the end of 2025.
INSIDE THE BELTWAY
“...you should work with your accountants and tax professionals to make sure you are able to utilize the provisions of the law could apply to your business and associates.” • Full expensing is allowed for qualified property placed in service between Sept. 27, 2017, and Jan. 1, 2023. The proposal phases-down in 2023 and beyond. Both new and used property can be included in the calculation. 2023 – 80% 2024 – 60% 2025 – 40% 2026 – 20% • Sec. 179 expensing (aka “small business” expensing) is also made more generous with the maximum increased to $1 million and the phase-out threshold set to $2.5 million. This is permanent, but you may want to consider full expensing in the years it is allowed. • The deduction for interest expenses is limited to 30 percent of a taxpayer’s adjustable taxable income. The formula for how adjusted taxable income is calculated changes in 2022. It uses a more generous EBITDA formula for the first four years and than a less generous EBIT in later years. An important rulemaking will determine what will be included in the formula! • The bill does not repeal the individual mandate of the Affordable Care Act, despite some reports along these lines. It does reduce the tax penalty for individuals failing to purchase health insurance to $0, making the
mandate toothless. The repeal of the tax penalty does not begin until 2019 – so individuals are technically able to be fined in 2018. This likely will not have a significant impact on business aspects of the health care law, however, left unresolved it could make health insurance markets more unstable, which will have ripple effects for the whole system. • The tax code eliminates carry-backs and limits the use of net-operating losses (NOLs) to offset up to 80 percent of a company’s taxable income. • A temporary tax credit of 12.5-25 percent is created for businesses that provide employees with paid family or medical leave depending on how much of the employees’ wages are paid above 50 percent. Consult your accountants.
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• It removes the ability to deduct the cost of legal settlements if a violation of the law takes place. Also prevents write-off of sexual harassment claims if an NDA is attached. • The Work Opportunity Tax Credit and New Markets Tax Credit are preserved. • The deduction for expenses related to employee meals is repealed but employees can continue to exclude the benefit from income. However, the tax act also expands the 50 percent limit to de minimus fringe benefits to onsite eating facilities until Dec. 31, 2025. Afterwards, employer costs for providing food and beverages to employees through an onsite facility are not deductible. ■
• The deduction for state and local lobbying expenses is repealed. • The use of like-kind exchanges is basically limited to real estate transactions. • The deduction for domestic manufacturing operations (Sec. 199) is repealed. Some in the industry may currently use this provision to help write-off expenses associated with central kitchens, etc.
NEW JERS EY GRO CER | 19
VIEWPOINT
The Retail Apocalypse is B.S.
K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M
“I love the smell of napalm in the morning.” – Apocalypse Now “Retail apocalypse” seems be a word pairing that has entered the lexicon. Everybody is writing about it. (I just checked, and Google News offered me more than 53,000 results for the phrase.) Everybody seems to accept it as a current reality. Well, I’m getting really tired of it. I think it represents an awful lot of hand-wringing, whining and glass-is-half-empty thinking. I think it is so much B.S.
But…it isn’t going to happen today. Or tomorrow. Not for everybody, anyway. That doesn’t mean, however, retailers can rest easy. In fact, just the opposite. The retailers that rest easy are the ones who are in the most trouble, because complacency is a primary sin for anybody trying to succeed in this marketplace.
I’m not saying it’ll never happen. Never is a long time, and I’ve decided to get out of the never business. It doesn’t pay very well, and experience shows that when you say “never,” there’s a pretty good shot that you’re going to be wrong. Eventually.
The ones that will succeed, and even thrive, are the ones who understand they have to be constantly listening hard to their customers and then going beyond what they hear to innovate in fundamental ways, adapting to changing consumer behavior, impulses and mindsets as quickly as possible.
I’m also not saying that there aren’t retailers in trouble. Big trouble. Like, say, Sears… which has been a dead-company-walking for so long that it qualifies for a guest appearance on “The Walking Dead.”
They are the ones willing to take risks, challenge legacies and traditions, and accept the inevitability that risk means failure, but also not taking risks means irrelevance and obsolescence.
There’s no question even retailers that had decent end-of-year holiday shopping seasons in 2017 are facing some significant challenges in 2018. For some, the bombs are ready to be dropped, and there is little they can do to avoid the competitive napalm used by bigger, better funded and more innovative competitors.
These retailers are far less likely to be devastated by any sort of apocalypse because they understand that they cannot simply be an alternative for shoppers. They have to offer distinct and differential advantages.
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They understand that if 80 percent or more of the products they sell also are sold by the competition, they have to find ways to focus on and draw shoppers’ attention to
the things they offer that are not available in a competitor’s store, or on a competitor’s website. I also think it’s going to go beyond products. Bricks-and-mortar stores, I believe, are going to have to evolve past where many of them are now. And fast. I think that if any retailer is planning or building a store without factoring into the plans: a) where the click-and-collect depot will be, and b) how e-commerce can be run out of the store, they ought to be charged with retail malpractice. I think that more retailers ought to be looking to companies like Michigan’s Westborn Market for inspiration. Westborn found an old and decommissioned post office in Plymouth, Mich., and converted it into a beautiful and food-driven store that uses things like mail boxes as design cues; it offers great food and a shopping experience that can’t be replicated online. More companies ought to be looking for unusual venues for stores of varying sizes that compel shoppers to walk in the front door. One other thing that Westborn does is hire great people and invest in them – because in that way, employees will feel invested in the business, creating connections between shopper and (to use an old-fashioned term that ought to be revived for the current age) shopkeeper.
VIEWPOINT
This isn’t just the purview of up-market stores, by the way. There are value-driven retailers out there that turn their employees into owners, thereby assuring that they’ll feel invested in the business and act that way.
There are lots of reasons to bemoan a coming retail apocalypse, but there are many ways to avoid such a fate. Retailers just have to work at it, and probably get outside their comfort zones. Sometimes way outside.
Another thing that retailers absolutely have to do is figure out the best way not just to collect actionable data about shoppers, but actually use it. There was a retailer last year who did an interview in which he expressed concern that Amazon has more data about its shoppers than he does, which puts him at a disadvantage.
I was talking to a fellow the other day who suggested that one of the ways some retailers will remain relevant is by creating a convenience version of a food truck, and then use data to figure out when and where to position these trucks and assure that the merchandise they carry is targeted and relevant to people who live or work in those locations.
“The ones that will succeed, and even thrive, are the ones who understand they have to be constantly listening hard to their customers.” iStock
I’d agree with that conclusion – it will give Amazon an advantage… one that it will not hesitate to exploit over and over and over. But in this case, the retailer made a decision not have any sort of card, loyalty or data collection program. That’s the retailer’s right, and defensible… though I’d disagree with it. But this is a choice, not an inevitable fact of retail life… and I would argue that nobody can afford to this approach in 2018 and beyond.
Now, to be honest, I’m having a little trouble wrapping my head around the logistics of this concept… but I also didn’t see how drones were going to work as delivery vehicles when they were first proposed. The failure here may be in my lack of imagination, or my ability to figure out how such an idea would be implemented. I suppose that’s why I’m a writer… I can tell stories about the people who conceive and create these concepts, as opposed to actually doing it myself. Besides, I’m out of the never business. ■
NEW JERS EY GRO CER | 21
HARNESSING Innovation to fuel
BUSINESS RESULTS
By Josh Linkner
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In our turbulent business climate, we all seek new pathways to growth and success. Yes winning can be elusive in these times of dizzying speed and ruthless competition. Companies like Tesla, Amazon, Netflix and JetBlue soar while their respective counterparts – Oldsmobile, Borders Books, Blockbuster, and PanAm – are merely tombstones in the business graveyard.
Cultivating creativity and innovation is leadership job No. 1 if we want to enjoy sustainable growth and progress. But how do innovators think and act? How can we build a culture that fosters innovation rather than restricts it?
Too often, once great companies become intoxicated by their own success. They fail to adapt, fail to innovation, and then simply fail.
As human beings, we are hard-wired to be creative, but many of us have lost our imagination over the years. The good news is that we can all tap into a giant reservoir of creativity, which can fuel our businesses and lives.
To avoid this trap in times of massive upheaval and change, we must exploit our most powerful weapon: human creativity. It is the one thing that can’t be outsourced or automated, and has become the currency of success.
Luckily, you don’t have to be a mad scientist in a lab coat, or an eccentric billionaire to embrace them. You just need an open mind and an open heart, a willingness to inject fresh approaches into everyday situations. Continued on page 24 ▶
NEW JERS EY GRO CER | 23
◀ Continued from page 23 ◀ Continued from page 15
Having studied hundreds of the most innovative people in history, I’ve discovered five core beliefs that transcend industry, geography and upbringing. These patterns are easy to understand and can be implemented directly into your daily work to drive growth and success:
1. Get Curious
4. Get Scrappy
It turns out that curiosity is very much the building block of creativity. The more curious you are, the more creative you’ll become. The best way to tap into your natural curious state is to ask a lot more questions instead of making fast decisions. Too often, we make decisions (big and small) based on what worked or what didn’t work in the past. If we lived a static world, that would be great. But today we live in a rate of change like none other in history.
We often believe our ability to innovate is tied to external resources such money, headcount or raw materials. The truth is, the real DNA of innovation has nothing to do with outside resources and everything do to with grit. Determination. Tenacity. Resilience.
As a result, your instincts based on previous results can be misleading. Instead, pause whenever possible and ask more questions about the problem at hand or your proposed solution. Try questions that begin with “why”, “what if ”, or “why not?” When you ask these questions, it forces you to imagine the possibilities and explore fresh approaches.
2. Crave What’s Next It’s easy to think success is a permanent condition, yet that has been the downfall for far too many organizations. Instead, we must lean into change, embracing new approaches rather than clinging to old ones. Too often, we overestimate the risk of trying something new but underestimate the risk of standing still. Innovators have an insatiable appetite for new tech, products, trends, concepts, etc. They want to be first, on the bleeding edge of change. They also embrace a willingness to let go of what was in favor of what can be.
3. Defy Tradition Family traditions can be wonderful, but traditions in our professional lives can be deadly. Blindly doing things in a traditional way has been the downfall or far too many companies and careers. Instead, when you find yourself approaching your work in a traditional way, examine the tradition carefully and see if you can flip it upside down. What would the polar opposite move look like? Don’t change just for the sake of it, but at least put your traditions under a microscope to explore if they are still relevant and optimized. Or, perhaps there’s an oppositional approach that could yield a better outcome. This is the point where breakthroughs occur.
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Internal resources fuel creative approaches, which is why startups are able to upend industry giants. Getting scrappy is about doing more with less; finding elegant and more creative ways to solve everyday problems. Instead of blindly throwing money at a problem, try throwing your imagination at it instead. You may enjoy a far better result.
5. Adapt Fast It’s easy to believe that innovation occurs as a single lightning bolt of an inspiration, followed by mindless execution. In fact, initial ideas are usually flawed. Only through a series of setbacks and mistakes, failures and pivots, tweaks and microinnovations, does an idea gain any real merit. Take the weight of the world off your shoulders… you don’t have to invent some game-changing concept. Instead, apply your creative energy to small, fast, creative bursts. Rapid-fire creativity, practiced as a daily habit, can be far more important than the potency of an initial ideal. Experiment, learn, adapt. Rinse and repeat. While many adults don’t feel creative, the research shows otherwise. Creativity, in fact, is 85 percent learned behavior. In other words, it is a skill, a muscle, that each of us can build and use to drive our companies and careers to the next level. Embrace the five obsessions of innovators, and you’ll be well on your way to unprecedented achievement. Push the boundaries, shake it up, explore what’s possible. Inject innovative approaches into your everyday work and the results will be stunning.
MICROINNOVATIONS The concept of innovation can be completely overwhelming. Images of Edison inventing the light bulb, or Henry Ford revolutionizing manufacturing push the idea of innovation outside the reach of us mere mortals. If we define innovation as a gigantic, changethe-world, cure-cancer type breakthrough, the concept is relegated to a select few: billionaires, mad scientist inventors, CEOs, and super-geniuses.
With that kind of pressure, it’s no wonder that most of us restrict our creative output. On the other hand, micro-innovations are accessible to us all. Each of us – regardless of role, tenure, age, or title – has the ability to develop creative solutions that lead to real progress. In this sense, innovation becomes a daily habit rather than a big, scary, overwhelming phenomenon. We all can be innovators, not just those in lab coats or with fancy degrees.
“While game-changing breakthroughs are glamorous, small acts of “everyday innovation” are the stuff of greatness.” Yet the vast majority of human progress is crafted differently. In fact, it’s the little creative shifts – what I refer to as microinnovations – that most often carry the day. These mini innovations can be subtle, but add up to significant results en masse. Maybe it’s implementing a fresh way of conducting your weekly sales meeting, or reimagining the physical layout of your shop floor. It could be a modern twist to the format you use to conduct job interviews, a novel way to manage a customer complaint, or a new item on the menu. The folks at Procter & Gamble were fighting hard to gain share of the $7 billion detergent marketing. Instead of inventing some revolutionary magic serum, they used a small packaging change to win big. Tide Pods were launched to allow customers to drop a small pod in the wash rather than pour from a messy bottle. This microinnovation led to stunning success – over $500 million of revenue in the product’s first year. While game-changing breakthroughs are glamorous, small acts of “everyday innovation” are the stuff of greatness. Too often, we put the weight of the world on our shoulders and believe we only have two choices – world-shifting innovation, or do nothing.
Take a look at your daily work, whatever it may be. While totally disrupting your entire industry may be daunting, ask yourself what little creative twists could make a small difference. Apply creative wonder to your product or service, production, culture, sales and marketing, recruiting, customer experience, and internal processes. While micro-innovations may not land you on the cover of a magazine, they can absolutely fuel your performance. Not to mention, they’re tremendously fun. View your work through the lens of an artist, looking to add just a little splash of creativity to even the most mundane tasks. Remove the burden to develop gigantic a-ha moments of brilliance, and focus on a high output of micro-innovations. Each change or twist may be small, but your results over time will be anything but puny. ■ Editor’s Note: Josh Linkner is a five-time tech entrepreneur, New York Times best-selling author, and venture capitalist. He is a soughtafter keynote speaker on innovation, creativity, and hyper-growth leadership. He’s also a proud Detroiter and professional-level jazz guitarist. For more info, visit JoshLinkner.com.
NEW JERS EY GRO CER | 25
WINDS OF CHANGE Understanding Who’s Eating What and Where in a Blurred Channel Marketplace
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Laurie Rains, Vice President, Retail Commercial Strategy, Nielsen Kate Duffy Client Manager, Growth & Specialty Retail, Nielsen
IT’S NO SECRET THAT CHANGE IS IN THE AIR. Today’s consumers are shopping channels and categories in ways they’ve never shopped before. Powered by expanded options, enabled by technology and driven by shifting consumer demand, we are currently witnessing the convergence of traditional and alternative food retail channels. This merging of tables and aisle is redefining our industry’s topography where convenience stores are becoming quick-service restaurants, meal kit delivery services are menacing grocery businesses and grocery stores by way of grocerants and food halls are taking a bite out of traditional sit-down restaurants. All of these changes are causing the lines between food service, retail, home delivery and restaurants to become increasingly obscured. However, as lines continue to blur, maintaining the traditional channel parameters that once provided structure and order to our industry, has become less relevant and a non-factor towards future growth. Instead, today’s grocery retailers and restaurateurs need to recalibrate and gain their bearings around the
new consumer demand landscape that is reshaping our industry. In this brave new retail world, understanding the new ways Americans purchase and consume across the food and beverage landscape, is key to getting ahead – and surviving – in 2018 and beyond. So, what does this new demand landscape look like? Here are a few things to know:
Eating at Home vs. Eating Out According to data from the U.S. Department of Agriculture and Economic Research Services, until very recently, consumers allotted about two-thirds of our food and beverage spend for in-store purchases – the bread and butter of the traditional supermarket. We can trace this trend as far back as the early 1900s. Back then, U.S. consumers spent less than 10 percent on eating out, and rounded out the remaining portion, about 25 percent, with home production through farming and backyard gardens. By the 1970s, Americans were still spending the same share at the store, but our eating out and home production trends had flipped: we spent about onethird of our food and beverage allocation on eating out, while home production spend dropped to about 3 percent.
Continued on page 28 ▶
NEW JERS EY GRO CER | 27
◀ Continued from page 27
Fast forward to present day and we see “away-from-home” spending now leading and our “at home” share declining to 49 percent. In fact, a recent Harris Poll survey found that 70 percent of 18-34-yearolds commit only about 35 percent of their total food and beverage spending to grocery stores (See Figure 1). The good news is that the total amount of money consumers spend on food is growing. However, the downside for grocers is that they’re not attracting as much of the overall spend as they used to. Eating out has grown immensely popular, representing a bigger challenge to retailers than even online ordering and discounters. But, as you know – the disruption is bigger than consumers just opting for a restaurant over a supermarket. Looking deeper into the data we are now able to see the true impact of channel blurring on both a national and regional stage.
On the West Coast: Who’s Eating What and Where? According to Nielsen Buyer Insights data, consumers on the West coast are spending relatively fewer credit and debit dollars at traditional, mass and grocery retailers. And, when it comes to restaurant spending, 20 percent of credit and debit card dollars are going to casual dining restaurants and 9 percent to fast food. The West spends significantly more (relatively speaking) at club stores (See Figure 2).
Figure 1 Source: U.S. Department of Agriculture Economic Research Service
Total US 10%
A New Lens for Understanding Shoppers 20%
9%
9%
49%
8%
7%
Figure 2
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Mass
Convenience
Casual Dining
Pure Play
Club Store
Drug
2 – Nielsen Homescan and TDLinx used to establish average ppercentage of dollars spent on food categories across Consumer Packaged Goods Channels.
23%
51%
Fast Food
1 – If channel rounded to 0% not labeled within pie chart. This consists of Meal Kits, DMOD, Fine Dining, and Pure-play E-grocery
Northeast 8%
1% 1%
Total Grocery
Source: Nielsen Buyer Insights Food 7 Beverage Study April 2016 – March 2017, 15% Nielsen Homescan 52 weeks Ending 8/19/17, Nielsen TDLinx 1% (Drug) 2% (Convenience) 1%
Helping to bring further clarity to this blurred landscape, Nielsen has developed four distinct, data-driven consumer segments to better describe the new ways Americans purchase and consume across the food and beverage landscape. Each segment differs in terms of spending and preferences for channel, occasion and location. These dimensions shed light on each group’s priorities to gain a better understanding on how to best serve them.
Traditionalist Food Shoppers Older and are relatively more likely to be retired, with no kids in the household. They spend two-thirds of their total food dollars at grocery, mass merchandisers and club stores. They’re much less likely than other consumers to use a smartphone or other device at any point along the path to purchase and they value convenience above all else, followed by taste and the ability to have a speedy experience.
Restaurant Occasion Lovers Younger and more ethnically diverse living in suburban areas. They are more spread out in terms of age, compared to the Traditionalist. If they have kids, the kids are more likely to be teens. Members of this segment are not heavy users of digital technology to make their food choices or purchases. This group doesn’t spend as much per household on food and beverage as other segments, even though they tend to eat out more. They value taste above all else, followed by convenience and value.
“TODAY’S GROCERY RETAILERS AND RESTAURATEURS NEED TO RECALIBRATE AROUND THE NEW CONSUMER DEMAND LANDSCAPE THAT IS RESHAPING OUR INDUSTRY.”
iStock
Traditionalist Food Shopper (n=763)
Restaurant Occasion Lover (n=637)
Digital Adopter (N=196)
Multi-Channel Adapter (n=479)
% U.S. Adults Resisting in West
35%
34%
9%
22%
% Total U.S. Adults
37%
31%
9%
23%
% of U.S. Food Spend
28%
31%
17%
24%
Avg . U.S. Monthly Food Spend
$310
$405
$705
$415
Avg. U.S. HH Size
<3
<3
>3
<3
Digital Adopters Most likely to be younger, urban parents, highly educated with high incomes. They are the most willing to experiment with digital tools and will therefore have the strongest influence on how digital technology affects food shopping. These shoppers value taste first and foremost, followed by value and the ability to order online.
Multi-Channel Adapters Multi-Channel Adapters spread their food and beverage spending across different channels more than the other segments do, and are more likely to use each channel for its dominant purpose (i.e., grocery stores for at-home consumption, restaurants to eat out). They use different channels for different meal occasions, and they seek clearly distinct benefits from those channels. They want convenience and a speedy experience from small formats (i.e., convenience stores, and fast food outlets) and good taste from casual dining establishments. Their general priorities mirror those of a Traditionalist. From a regional perspective, Restaurant Occasion Lovers are relatively more likely to live in the West. These shoppers value taste above other benefits like being convenient, healthy, or quick. Traditionalist Food Shoppers and Multi-channel Adapters are slightly underrepresented in the West. Digital Adopters are proportionately represented (See Figure 3).
Standing Out When the Lines are Blurred So, what does all of this mean? We’re in a period of disruption in the U.S. food and beverage industry. Consumer demand is shifting toward the increasing use of digital tools to purchase, while expanding numbers of offline players are competing for a smaller share. As they have expanded the options they offer, the traditional “in-home” and “out-of-home” channels and occasions have given way to a more complex landscape.
Today’s grocery retailers and restaurateurs need to leverage data to gain a better understanding of the new consumer demand landscape and clearer portrait of the new ways Americans purchase and consume across the food and beverage landscape. It is important for grocery retailers to understand that there has been a historic transfer of power, from retailers and manufacturers to the consumer. With this shift, knowing your consumer is now more important than ever. Finally, producing for, distributing to, or retailing in a particular channel is no longer sufficient. Nor can a company simply add channels without changing the way it does things – it's impossible to be all things to all consumers. Instead, retailers and restaurants must develop food and beverage strategies at the intersection of shoppers’ desired occasions, locations and experiences, focusing on the key combinations where they are poised to excel. ■ Download the full report at www.nielsen.com/us/en/insights/ reports/2018/merging-tables-and-aisles.html to learn more about shifts in the demand landscape and how to go-to-market and engage key shopper segments.
NEW JERS EY GRO CER | 29
!
OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES
Strategic Sales
Being a retail icon doesn’t shield you from losing sales to online sources. What’s to do? Sell some real estate. This is what Lord & Taylor, the 114-year-old retailer did. The retailer, which has been operating on Manhattan’s Fifth Avenue since 1914, sold its 12-story flagship building to WeWork, operators of shared work spaces. L&T and its parent Hudson’s Bay Co., is using the proceeds to pay down debt. Not a bad deal since the building appraised for $650 million a year ago was sold for $850 million.
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SWEATING
IT OUT iStock
In an effort to attract younger women, UK-based Debenham’s department stores are installing instore gyms called Sweat! In three stores, offering studios for spin classes and aerobics, free weights and other equipment. The move will also enable the chain to take advantage of cross-marketing opportunities.
ROOM
iStock 30 | NE W J E R S E Y G R OC E R
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FOR GROWTH
It’s been said that the hardest part of supply chain logistics is the last 100 feet. Amazon.com has come up with a delivery solution that consists of taking over package rooms at large apartment buildings in order to get products to consumers more efficiently. The company has reportedly signed contracts with apartment owners and managers of about 850,000 units to install Amazon lockers, many of which were available before the peak holidays. Apparently, packages, not building maintenance are the landlords’ biggest problem.
ON-THE-GO When one part of your business is slowing down what do you do? Look for something else to pick up the slack. That’s exactly what WHSmith, the retail chain with locations in airports, railroad stations, hospitals, and even post offices, did as the magazine and newspaper business became more challenging. Their answer is to expand its food-to-go business with its Munch line of healthy snacks and convenience foods and is beefing up a new format with M&S Food-To-Go.
OUTSIDE THE BOX
fava beans &
Furniture
Sainsbury supermarkets in the United Kingdom is growing the one-stop shop concept by expanding mini Habitat stores selling furniture upholstery, lighting, housewares and textiles. The stores include a healthy 600 items, but they are clearly a showcase for the 4,500 items that Habitat sells online through its own website.
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GENDER EQUALITY iStock
A new study in a recent issue of the Journal of Financial Economics indicates that CEOs who have daughters have a greater tendency toward equitable treatment of women and their company has a higher level of corporate responsibility.
Housebound Consumers in New York City no longer have to leave their apartments to get prescriptions. CVS Pharmacy has launched a same-day prescription delivery service offered free of charge. Orders placed by 11 a.m. are delivered by 4 p.m. and orders placed by 4 p.m. are delivered by 8 p.m.
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dog days Barkbox, the monthly delivery service with 500,000 subscribers that tailors products to individual dogs size and sensibilities, has surveyed subscribers and found that about 44 percent of millennials consider their pets to be “starter children” and that’s the way it’s handled online. “About 85 percent of our content doesn’t even mention Barkbox. We form relationships with people around dogs in general,” Barkbox told AdWeek.
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NEW JERS EY GRO CER | 31
REDEFINING the rules of
ENGAGEMENT:
DIGITALLY
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By Craig Rosenblum Manufacturers and retailers of fast-moving consumer goods know all too well that price reigns supreme for attracting and retaining shoppers.
Today’s well-informed shopper has more purchasing options than ever before. Despite being time-starved, shoppers are willing to forgo convenience for savings, which promotes channel-hopping and threatens brand and banner loyalty.
The brighter side of digital transformation
In response, retailers turn to promotions to gain a slight, albeit temporary, competitive edge. According to a recent benchmark report by Retail Systems Research, one-third of respondents report they are increasing the number of promotions and, at the same time, offering steeper discounts.
Despite the dark introduction, digital transformation does not mean gloom and doom. Digital engagement can be poison if not managed correctly but, for companies willing to embrace the transformation, digital engagement is just what the doctor ordered. It’s the shot-in-the-arm that has eluded the industry for decades.
This approach is something of a doubleedged sword for while it’s driving increased sales, it’s accelerating the race to the bottom as razor-thin margins are being shaved even more. Ironically, in the same report, the No. 1 job for a retailer’s pricing strategy was identified as maximizing gross margin.
Implementing digital engagement strategies can take many paths. Ultimately, the approach must consider the organization’s existing position in the marketplace and its ability to manage disruption. Some of the steps along the path require proper sequencing.
Price as a competitive lever may be further neutralized as digital technologies increase price transparency across banners, formats and channels. Digitally-savvy shoppers – willing to shop across the spectrum of omni-retailing, will cherry-pick products “on deal,” regardless of brand. This further erodes loyalty, which can lead to a death spiral.
For example, merchants must understand shopper behaviors before they can create targeted offers. However, there are no prerequisites for retailers migrating from pricing strategies based on Known Value Items (KVIs) to strategies using Personalized Known Value Items (PKVIs).In fact, implementing PKVIs is among the least disruptive solutions and delivers a rapid time-to-value return in terms of sales gains and competitive positioning. Below is a sample path for leading retailers to effective digital engagement.
Note: Sequenced items are grouped together. • Implementing Personalized Known Value Items • Understanding Shopper Behaviors and Defining Shopper Demographics • Segmenting and Weighting the Value of Each Shopper or Household • Creating Targeted Offers • Executing Influencer Marketing Continued on page 34 ▶
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◀ Continued from page 51 ◀ Continued from page 33
For decades retailers have driven their price-value image by focusing on KVIs. These KVIs, which may include as many as 600 product lines, are believed to disproportionately improve the shopper's value equation. Retailers assume these items, and their corresponding price points, appeal to the majority of their shopper base. While this approach does have merit, it is far from optimal. Thousands of households may not consider a particular subset of products to be relevant, or may fail to notice the retailer's aggressive prices. This dilutes KVIs as a key competitive pillar and further erodes margins by needlessly lowering prices. Conversely, PKVIs ensure shoppers are getting the best-in-market prices on the products that matter most. Using proprietary analytics and historical transaction data, PKVIs redistribute incentives by household to maximize impact – all while protecting margin. The path to personalization begins by analyzing product purchases at the household level. These products are then weighted and ranked based on household penetration and PKVI density. 1 Products with high household penetration and high PKVI density become storewide KVIs with lower prices offered to all shoppers. This process typically reduces the number of store-wide KVIs by about 70 percent. The remaining products become candidates for PKVIs based on specific shopper behaviors. Figure 1 illustrates product classifications before and after PKVIs. 1
PKVI density reflects the likelihood of a product being in Personal Known-Value
Understanding Shopper Behaviors and Defining Shopper Demographics Using shopper analytics, trading partners can develop strategic initiatives to increase sales and drive category growth while improving bottom-line performance. Critical analytic outcomes include: • Defining core shoppers and understanding their purchase behavior • Understanding category-specific drivers and identify opportunities for growth, differentiation, and loyalty • Increasing ROI on promotion spending by increasing offer relevancy • Quantifying category growth by attracting new shoppers into the aisle 26%
25% PERCENTAGE OF CUSTOMERS
Implementing Personalized Known Value Items
19% 15% 11%
4%
Item baskets.
18–24 BEFORE STORE– WIDE KVIS ■
BANANAS CHIQUITA
■ ■
CAMPBELL V8 JUICE PLST 100%
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CAPRISUN FRUIT PUNCH 10PK 10%
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CARROTS PEELED 1 LB.
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MRS. JONES‘ PKVIS
45–54
MR. ADAMS‘ PKVIS
Figure 2
■
70% FEMALE
■ ■
CELESTE PEPPERONI PIZZA
■
■
■
■
IMPERIAL MARGARINE QUARTERS
■
■
NESTLE COFFEEMATE HAZELNUT 32 OZ.
■
POLAND 24PK 16.9Z SPRING WTR
■
55–64
Mean age: 46 years old
■
DAISY LIGHT SOUR CREAM
30% MALE 88% MARRIED
■
■ 12% SINGLE
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PREGO SPAG SCE MEAT
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PRIVATE LABEL BUTTER QUARTERS
■
SABRA HUMMUS GREEK OLIVE
■
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SIMPLY OJ HIGH PULP 100%
■
■
STROHMAN BRD D'TAL PLAIN
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71% KIDS
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■ Figure 1
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35–44
AGE
AFTER
STORE– WIDE KVIS
BISON COTT CHSE PINEAPPLE
25–34
29% NO KIDS
Figure 3
65+
Segmenting and Weighting the Value of Each Shopper or Household
Creating Targeted Offers (Intelligent Offers and Exclusive Offers)
Analyzing purchase dynamics enables manufacturers and retailers to quantify the value of each shopper based on basket size, number of trips, store penetration, and leading lifestyle indicators. Once values have been determined, high-level profiles are developed to classify each shopper by user type, such as:
Targeted offers help manufacturers and retailers capture greater return from every promotion-allocated dollar. Inmar’s most recent Shopper Behavior Study reported that 73 percent of shoppers want coupons loaded onto their store loyalty cards for regularly purchased items.
HEAVY USERS
MEDIUM–HEAVY USERS
MEDIUM–LIGHT USERS
LIGHT USERS
Similarly, 79 percent of shoppers say they would be more interested in receiving promotions from a brand if they felt those promotions were targeted to products they normally buy.
AVERAGE BASKET AMOUNT (ALL TRIPS) $69 $57 $50
Using actual shoppers’ purchase behavior, intent data and recent brand engagement metrics, manufacturers can run concurrent offers optimized against multiple, unique shopper segments. For example, within the same campaign, offers can be designed to drive trial among one segment and grow loyalty among others. Providing highly relevant, targeted promotions can increase redemption rates by 2.5-4.5x, while improving ROI by 10-20 percent.
$41
AVERAGE # OF SHOPPING TRIPS PER YEAR 73 56
Continued on page 36 ▶
41 29
AVERAGE # OF CATEGORIES PURCHASED PER YEAR 108 95 77 58
AVERAGE # OF CATEGORIES PURCHASED PER TRIP 9.8 8.5 7.5 6.4
Figure 4
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Intelligent Offers Intelligent Offers are specific offers based on the shopper’s previous brand or category engagement. Digital delivery helps brands take a more strategic approach by aligning offers with shopper behaviors. This granular approach empowers brands to: • Split national or retailer-specific promotions into multiple offers of varying face values, purchase requirements, and/or promoted UPCs based on actual shopper data • Simultaneously deliver these offers to carefully selected segments of the population • Maximize efficiency and optimize ROI by achieving multiple objectives with the same campaign
Studies have shown that 83 percent of consumers say they “completely or somewhat” trust the recommendations of friends or family. 2 Affinity, relevance and trust drives engagement among today’s advertising-averse shoppers. Social influencers cultivate, and activate, large, loyal audiences through creative and compelling storytelling that resonates with these readers. These influencers become digitally connected with their followers through the sharing of interest and lifestyles. And, the numbers are showing that influencers – serving as trusted brand advocates – are moving the sales needle. For example: • 74% of shoppers use social media to make purchase decisions • 71% are more likely to make a purchase after a social recommendation
BRAND COMMITTED
MODERATORS
BRAND
BRAND LAPSED
BRAND NON-BUYERS
CATEGORY AFFINITY NON-BUYERS
UNTARGETED
OFFER: $0.75 OFF ANY 2
OFFER: $1.00 OFF ANY 1
OFFER: $1.50 OFF 160Z +
OFFER: $2.00 OFF ANY 1
OFFER: $3.00 OFF ANY 1
DEFAULT VALUE
Figure 5
• 90% trust recommendations from their peers 3
Digital Engagement Drives Loyalty and Loyalty Drives Sales
Exclusive Offers Exclusive Offers are even more granular and are typically developed to address specific objectives such as: • Find high affinity shoppers for new item trial • Re-engage lapsed buyers or retain/reward existing buyers after a product recall • Defend against a competitive launch • Move inventory during a key drive period, clear inventory, or retain shelf space • Grow cross-category engagement across a portfolio of brands
BRAND COMMITTED
BRAND MODERATORS
BRAND LAPSED
BRAND NON-BUYERS
CATEGORY AFFINITY NON-BUYERS
CUSTOM
OFFER: $0.75 OFF ANY 2
OFFER: $1.00 OFF ANY 1
NOT TARGETED
OFFER: $2.00 OFF ANY 1
NOT TARGETED
NOT TARGETED
Note: A similar approach can be deployed for retailers’ digital circulars. Figure 6
Executing Influencer Marketing Influencer Marketing continues to drive value among digitallyconnected consumers. And with an average return of 2x on advertising spending across all categories, influencers are helping reshape shopper marketing. Those at the center of this strategy – social influencers – are driving true engagement for retailers and brands by delivering relationshipbuilding content to millions of shoppers. This approach is continually validated through sales gains and improved loyalty. 36 | NE W J E R S E Y G R OC E R
• 61% have made a purchase based on a blog post
We all know that the real change agents are the shoppers. They are embracing all aspects of digital engagement and are willing to share their information to be better served. Other trends are validating the growth of digital engagement. For example, digital coupons (Load-to-Card) have experienced five consecutive years of double-digit growth in share of redemption. And, for the first time, shoppers in 2016 reported using Load-toCard offers more than Free-Standing Inserts (FSIs). For that same year share of redemption for FSIs was down 10 percent while share of redemption for Load-to-Card offers grew 20 percent with these offers setting a new record for rate of redemption. Perhaps the most important trend among digitally-engaged shoppers is their spend rate, which is 33 percent more per trip than nondigitally engaged shoppers. In addition to building bigger baskets, the digitally-engaged are becoming more loyal and loyalty translates into more visits and less channel hopping. Many manufacturers are willing to invest in retailer digital programs in order to test and learn. And rightly so given that some retailers report 19 percent larger baskets after targeting shoppers with highlyrelevant, Load-to-Card offers based on actual purchase history. This approach has also resulted in retailers seeing the number of shopper trips to their stores increase by as much as 38 percent – further validating the need to redefine the rules and the tools of digital engagement. ■
2
Nielsen, Winning Strategies for an Evolving Media Landscaping, 2015
3
VisionCritical, Nielsen, HubSpot, SproutSocial
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Creating
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Cultures
of Leadership
Imagine you you gathered gathered every every one one of of your your employees employees in in aa room, room, stood stood up up and and asked asked Imagine them, “by “by show show of of hands, hands, how how many many of of you you in in this this room room are are comfortable comfortable with with calling calling them, yourself aa leader?” leader?” yourself How many many hands hands do do you you think think would would shoot shoot up? up? How Unfortunately, whatever whatever number number you’ve you’ve got got in in your your head…it’s head…it’s probably probably lower. lower. Unfortunately, Significantly lower. lower. Significantly That’s not not intended intended to to belittle belittle your your employees employees or or your your personal personal leadership. leadership. It’s It’s based based That’s on ten ten years years of of actually actually asking asking that that question. question. I’ve I’ve posed posed it it to to over over 1,000 1,000 different different on audiences around around the the world. world. They’ve They’ve represented represented aa wide wide variety variety of of ages, ages, background, background, audiences and industries. industries. They’ve They’ve been been comprised comprised of of all all kinds kinds of of different different roles roles and and responsibilities: responsibilities: and front-line service service workers, workers, middle middle management, management, and and senior senior executives. executives. front-line Continued on page 40 ▶
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◀ Continued from page 39
How frequently do you think more than half the people in the room have raised their hands? It’s been less than 1 percent of the time. That makes me confident in saying that most of the people who work with you and for you are not comfortable calling themselves leaders. That’s a problem, because decisions made by employees who see themselves as leaders are quicker, more creative, and more beneficial to the organization. You don’t have to create more leadership positions to build a better organization – but you do have to increase the number of people who engage in leadership behaviors. Unfortunately, we’re fighting a culture that has taught us from a very young age that leadership is not something to which everyone can or should aspire, and so many people don’t. We internalize the idea that leadership is characterized by a level of charisma, power, money and influence present in only a small percentage of the population, and we’re not one of those select few. It’s a perspective that turns too many people into what I call “I’m just a…” employees. Our organizations are filled with “I’m just a…” employees. “I’m just a cashier”; “I’m just a stockboy”; “I’m just middle management”. It’s likely that each one of us has said something similar about ourselves, or at the very least, what we were attempting to do: “I’m just trying to get through this paperwork”; “we just have to figure out a way to deal with this”. I’ve followed several C-suite executives around for a day simply recording the use of the word “just”. On average they use it 17 times a day. They use it in front of their employees. They used it in front of their kids. By doing it, they teach it.
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The problem is, every time we use the word “just”, we’re telling people that who we are and what we’re doing is unimportant. Every time we say we’re “just” something we’re giving people permission to expect less from us. Our lives and workplaces are filled with extraordinary people who regularly diminish themselves in this way, and in the process, many convince themselves that it’s true. As such, I believe that one of the simplest but most powerful things we can do to enhance our personal leadership is to refuse to allow people to diminish themselves in front of us. A commitment to banishing the word “just” from our vocabulary and our workplaces can have a profound impact. After all, in many organizations, the employees who have the most consistent contact with those outside the organization (and therefore play the biggest role in what people think about your organization) are often those who are paid the least. And even those who take pride in their job and recognize they make valuable contributions do not miss the fact that their position has been judged less monetarily valuable. Often, no matter how hard we try, or how little sense it makes, we cannot avoid allowing our sense of self-worth to be tied to where we fall on the spectrum of financial compensation. Each of us can play a small role in helping to counteract that phenomenon, and help ensure that the leadership of those who are too quick to say they’re “just” something is recognized by others, and by themselves. We can’t assume the people who most regularly interact with our customers understand how profoundly important a leadership role they hold in our companies. Recently I was reminded how some of the most powerful impactful people in an organization see themselves as anything but. You see, I’ve been incredibly lucky to be able to travel around the world and share ideas with audiences of all kinds. They’ve included some of the world’s largest and most well-known organizations, representing billions of dollars in sales. Some of those presentations were intimidating. Some were downright scary. But none compared to the day I was invited back to speak at my old high school.
I don’t care who you are, or how accomplished you’ve become: as soon as you walk through the doors of your old high school, you revert to the person you were in high school. And let’s just say high school wasn’t the easiest time in the world for me.
“
However, there was someone who made my difficult time at high school a little bit easier: a man by the name of Mr. Peters. Mr. Peters was the head custodian at our school, had been there for over 20 years, and was one of the most remarkably kind men with whom I have ever crossed paths. He knew every student’s name; he was a friend to those who were bullied; he congratulated people on their athletic achievements and on their acceptance to universities.
We have come to believe that our value is measured by how well we become one of the few. He even anonymously laid gifts and cards
"
in front of lockers when people lost family members. He took tremendous pleasure in the growth and happiness of the people after whom he mopped up. As I waited in the Principal’s office before heading down to the presentation (an odd sensation at the age of 35), I was shocked to see Mr. Peters spot me through the window, beeline into the office and embrace me in a huge hug. I told him I couldn’t believe he remembered me after so many years, but that I had thought of him often, and was so grateful for what he had added to my life during what had often been a scary time. “Aw,” he said, “I’m just a janitor lucky enough to know you before you hit the big time.” “Just a janitor.” Our lives and workplaces are full of remarkable individuals like Mr. Peters who think like that. Who have convinced themselves that they have no right to think of themselves as leaders because of what job they’ve ended up doing, or where in the
corporate hierarchy they appear to have peaked. What’s more, according to the social rules we’ve accepted, Mr. Peters’ perspective makes total sense. After all, I’d worked hard to get great grades and earn scholarships to good schools. I’d done the things necessary to win awards, get promotions, and eventually start my own company. I’d made a bunch of money. With every step in my career, there were fewer and fewer people like me. The rules say that makes me more valuable, and that’s what he was acknowledging. Those rules convince us it makes more sense to chase money and titles than it does to chase what Mr. Peters has achieved. But what he has achieved needs to be better recognized. You see, thousands of students have walked the halls of my old high school. Thousands of them have been touched by the actions of Mr. Peters. They have gone on to be doctors, lawyers, architects, engineers and CEOs – the type of jobs we’re taught deserve our admiration and respect. And I’ve interviewed dozens of them as part of my work. I’ve sat down and asked them for their insights on leadership, life and business. At some point in each interview, I ask each one, “hey…do you remember Mr. Peters?” And every single one of them have smiled at the mere mention of his name. Twenty years after the last time they saw him. That is a remarkable life. That is a life of leadership. We have come to believe that our value is measured by how well we become one of the few. Our lives and our organizations are filled with leaders who have adopted that perspective, and as such, are unable to recognize their role as leaders. What if we all worked to create a culture where it is recognized that the true measure of our life is how many people smile when our name is spoken twenty years down the road? What if we could aim to live a life, and create workplaces, where that objective is advanced as our primary motivation?
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How do we identify and recognize the unsung leaders in our lives and organizations? I do it by asking this question: If I was not permitted to consider, wealth, position, or prestige – if those things were no longer part of the equation – who would I look up to? Whose life would I truly admire. For me, it would be Mr. Peters. I think it’s important that when we identify the people in our lives and organizations who are living their lives and doing their jobs in ways that impress us, we take a moment to let them know they are leaders. We can’t just tell them that we value them, or that what they do matters, or that we care about them—we have to tell them that they are leaders to us. Walk the halls of your offices or the aisles of your stores. Look for the cashier using a regular customer’s name and asking about their kids. Look for the employee stocking shelves at full speed even though no one’s watching. Notice the employee who stops what they’re doing to ask “can I help you”.
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Watch for the employees who create moments of powerful interpersonal impact. Who make people walk away feeling just a bit better. Look for the people who think they’re “just” something. Make sure you tell them otherwise. Make clear that in your organization, leaders aren’t defined by titles, they’re defined by actions. Leadership recognized is leadership created, and creating leadership is living leadership. Live it and you teach it. ■
About the Author Drew Dudley is recognized as one of the most dynamic speakers on leadership in the world and has addressed more than 250,000 people worldwide.