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California

MINDING THE GAPS PAGE 38

JACQUIE SLOBOM: A PASSION TO SERVE PAGE 54 2019, ISSUE 4

CALIFORNIA GROCERS ASSOCIATION

In-Depth Look:

CBD

WHAT’S NEXT? page 20


September 29 – October 1, 2019

Palm Springs Convention Center & Renaissance Hotel | Palm Springs, CA California’s diverse and hypercompetitive grocery business has reached a transitional moment. The

FEAT URED SPEAKE R S

industry’s well-established reputation for predictability has turned towards a future that is fast-paced, experimental and increasingly uncertain.

S C OTT S TR ATTEN UN-traditional Sales, Marketing and Relationships Expert

Evolutionary changes in shopper behaviors and new workforce dynamics have created gaps between the industry’s legacy structures and the new requirements for success. These openings can be seen in the uneven adoption of technology, shifts in corporate leadership and employee culture, and the collaboration gaps from producer to consumer. And where these gaps appear, competitors or new intermediaries are poised to take advantage. With renewed attention, best-in-class companies are adopting a

We’re in the age of disruption but while everything has changed, nothing is different. With humor, passion and candor, Scott Stratten will walk the audience through what is real and what are only smoke screens in the business world today.

R O N TITE Marketing, Branding and Creativity Expert

new mindset to bridge these gaps and more closely connect with

When an organization and all its people

their customers online and in-store. Grocers and their business

think, do, and say the same things, it creates

partners are shifting their resources and deploying novel

complete alignment. But when that fails to

partnerships in order to differentiate themselves and achieve separation from their competitors.

happen the result is an integrity gap. This entertaining and enlightening keynote will not only inspire your people to change their thoughts and actions to align with the organization, it'll also give them the tools to do it.

TEE IT UP!

Start your conference experience teeing off at the Illuminators Annual Golf

Tournament. Join your industry peers at the gorgeous

C H IP C O N LEY Founder, Modern Elder Academy

Mission Hills Country Club in Rancho Mirage on Sunday,

Baby boomer and hospitality veteran

September 29, and help support The Illuminators

Chip Conley believes the future lies in

Educational Foundation scholarship program.

the exchange of wisdom between

To register online, visit: www.cgastrategicconference.com/things-to-do/golf

generations. Chip will explain how a new kind of “modern” elder is emerging at a time when power is cascading to the young like never before and it is their ability to use timeless wisdom to address modern-day problems that makes them relevant.


GE N E R A L S ES S ION

BRAIN FOOD This thought-provoking, TED-style session will capture the spirit of three uncommon voices to challenge your thinking about our industry

MI YOKO SCHINNE R

SH AW N LA N G E

K A R EN H OW LA N D

Founder & CEO | Miyoko’s Kitchen

Founder & CEO | L2F

Managing Director | CircleUp Network, Inc.

WH I T E B OAR D S E S S IO NS These highly interactive group discussions address everything from store merchandising and shopper trends to the workforce development and strategic issues that affect both the grocery retailer and supplier. We have scheduled multiple sessions moderated by top industry experts to help keep the conversation moving.

EN TER P R IS E R IS K P R OTEC TIO N EX EC U TIV E S U MMIT Gallup’s highly popular Clifton Strengths program kicks off six hours of targeted educational programming for loss prevention, safety and risk management directors spanning two days of the Strategic Conference. Attendees will also participate in pre-scheduled one-on-one meetings

From Service Providers to Innovation Partners

with ERP vendor representatives and enjoy all CGA

Diana Medina, Director of E-Commerce Product, Inmar

Strategic Conference educational and networking events.

HEMP Extracts and CBD: Understanding the Benefits, Opportunities and Mechanics Scott Riefler, Chief Science Officer, SōRSE Technology

INDEPENDENT OPERATORS FORUM

The Good, The Bad & The Ugly:

In an exhilarating ride through the “landscape of now,” Michael

Where Does Your Brand Stand

Tchong, an adjunct professor of innovation at the University

John Bajorek, Executive Vice President, Strategic Growth

of San Francisco, paints a riveting tableau of a world recast by

and Innovation, WD Partners

the converging phenomena of Ubertrends –the most powerful waves crashing into our future and reshaping society – and

Is the “Gig” Up For Your Employee Hiring Programs?

disruptive innovations. Don’t miss this opportunity to join

Karen Tynan, Attorney, Ogletree Deakins

your fellow independent grocers for this one-of-a-kind, tailored

Growing Revenue in California’s Multicultural

educational session.

Growth Markets Terry Soto, CEO, About Marketing Solutions, Inc.

NEW! RETAIL TOMORROW EXPERIENCE CGA, Global Market Development Center and the Center for Advancing Retail Technology are partnering to bring a new, innovative experience to this year’s conference. Don’t miss this opportunity to experience the retail of tomorrow, today!

REGIST ER N OW To learn more about this year’s CGA Strategic Conference visit: www.cgastrategicconference.com CAL I FO RNIA GRO CER | 1


CGA | BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

CHAIRMAN APPOINTMENTS Independent Operators Committee Chair DIRECTORS

CALIFORNIA GROCERS ASSOCIATION

Chair Kendra Doyel Ralphs Grocery Company

Second Vice Chair Hee-Sook Nelson Gelson’s Markets

Secretary Dennis Darling Foods Etc.

First Vice Chair Phil Miller C&S Wholesale Grocers

Treasurer Renee Amen Super A Foods

Immediate Past Chair Bob Parriott Twain Harte Market

Kevin Arceneaux Mondelēz International Inc.

Dave Jones Kellogg Company

Lynn Melillo Bristol Farms

Mark Arrington Post Consumer Brands

David Higginbotham Stater Bros. Markets

Doug Minor Numero Uno Market

Denny Belcastro Kimberly-Clark Corporation

Saj Khan Nugget Markets

Ken Mueller Raley’s

Jeanne-ette Boshoff MillerCoors

Nancy Krystal Jelly Belly Candy Co.

Tim Murphy Costco Wholesale

Bob Bukovec Tyson Foods, Inc.

Michel LeClerc North State Grocery Inc.

Skip Nugent Best Buy Markets IGA

Pamela Burke Grocery Outlet, Inc.

Hillen Lee Procter & Gamble

Mike Ridenour The Kraft Heinz Company

Brent Cotten The Hershey Company

Hal Levitt The Save Mart Companies

Casey Rodacker Mar-Val Food Stores

Willie Crocker Bimbo Bakeries USA

John Mastropaolo Chobani, Inc.

Jaclyn Rosenberg Nielsen

Steve Dietz United Natural Foods, Inc.

Jonathan Mayes Albertsons Companies, Inc.

Jeff Schmiegie Superior Grocers

DJ Duetsch California Fresh Market

Mark McLean CROSSMARK

Jeff Severns PepsiCo Inc.

Jake Fermanian Super King Markets

Casey McQuaid E & J Gallo Winery

Greg Sheldon Anheuser-Busch InBev

Damon Franzia Classic Wines Of California

Mario Mediati The Clorox Company

President/CEO Ronald Fong

Senior Director Government Relations Aaron Moreno

Elliott Stone Mollie Stone’s Market

Senior Vice President Marketing & Business Development Doug Scholz Vice President Communications Dave Heylen Vice President Government Relations Kelly Ash Senior Director Events & Sponsorship Beth Wright

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Director CGA Educational Foundation Brianne Page Director Digital Communications Nate Rose Director Administration & Human Resources Jennifer Gold Controller Gary Brewer

California Grocer is the official publication of the California Grocers Association. 1005 12th Street, Suite 200 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com For association members, subscription is included in membership dues. Subscription rate for non-members is $100. © 2019 California Grocers Association

Jeff Sigmen Reyes Coca-Cola Bottling LLC Scott Silverman KeHE Distributors Lee Smith Smart & Final Stores Rick Stewart Susanville Supermarket IGA Joe Toscano Nestlé Purina PetCare Jim Van Gorkom NuCal Foods Michael Walton Unilever Karl Wissmann C & K Market, Inc. Kevin Young Young’s Payless Market IGA

Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Maria Tillman mtillman@cagrocers.com


CONTENTS | ISSUE 4

FEATURES

20

66

To CBD or Not to CBD? Questions Remain While consumer demand for products with CBD continues to grow, and the lack of FDA guidance persists, what’s the industry to do?

COLUMNS

38 Minding the Gaps In the hypercompetitive world of grocery retailing, you have to watch your step or risk falling through gaps in technology, consumer demand, corporate and employee culture, and in relationships with key suppliers.

48 Closing the Gender Pay Gap The gender pay gap has been a socio-economic concern in the United States since at least the years immediately following World War II. While the problem remains, a Cal Poly San Luis Obispo professor says California’s grocery industry has shown real progress in closing the gap

President’s Message Our Shining Star Burns Even Brighter. . . . . 4 Chair’s Message The Power of Education. . . . . . . . . . . . . . . . 6 Viewpoint Your Summer Homework Assignments. . . . . . . . . . . . . . . . 8 Government Relations Growing Our Next Generation of Employees. . . . . . . . . . . . . . 12 Inside the Beltway Retailers Win Battle to Protect Confidential Data. . . . . . . . . . . . . . . . . . . . 16 Washington Report Embrace Technology. . . . . . . . . . . . . . . . . . . . 18 Capitol Insider The High Price of Catastrophic Wildfires. . . . . . . . . . . . . . 28 Mommy Blogger Cart Confessional. . . . . . . . . . . . . . . . . . . . 68

DEPARTMENTS CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 30

54 A Passion to Serve To say Jacquie Slobom, Gelson’s Markets, is passionate about grocery would be an epic understatement. She is equally passionate when it comes to the CGA Educational Foundation, which will serve her well as its Board of Trustees Chair.

Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 36 Know the Law Sexual Harassment Law.. . . . . . . . . . . . . . . 59 15 Minutes With Scott Riefler. . . . . . . . . . . . . . . . . . . . . . . . . 62 Index to Advertisers. . . . . . . . . . . . . . . . . . 65

CAL I FO RNIA GRO CER | 3


PRESIDENT’S MESSAGE

Our Shining Star Burns Even Brighter

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

The CGA Educational Foundation continues to explore new ways of adding greater value to our member companies. For years, I’ve touted the CGA Educational Foundation as the Association’s “shining star.” Its tremendous college scholarship and tuition reimbursement programs have helped hundreds, and perhaps thousands, of deserving CGA-member company employees and their children pursue their educational dreams. Serving as the Foundation’s president these past 11 years has been one of the highlights of my CGA career. Witnessing first-hand the Foundation’s impact on the lives of so many, has been humbling and near indescribable.

Last year I was honored to announce that the Foundation had created a $10,000 Legends of the Industry Scholarship to recognize our Hall of Achievement recipients, both past and future. This year’s recipient is Chad Villanueva of Save Mart Supermarkets. You can read his incredible story of overcoming tremendous adversity beginning on page 66. But we’re not stopping there. The Foundation is working with educational institutions like Cal Poly San Luis Obispo to find new ways of attracting more college graduates into the grocery industry.

Much of the Foundation’s success falls on the shoulders of its inspired Board of Trustees and dedicated staff who, for more than a quarter century, have quietly grown the Foundation into the premiere organization it is today.

We’re helping to mind the gaps in our industry by providing programs like our grocery compliance toolkit and workplace harassment prevention training videos. These programs are a tremendous value-add to Association members.

Did you know that since its humble beginnings in 1992, the Foundation has awarded more than $7.5 million to deserving CGA member company employees and their dependents? The number of college scholarships awarded number in the thousands, perhaps more!

Of course, none of this could have occurred without the generous financial involvement of our member companies. Your unselfish financial and participation support of our fundraising efforts has blessed the lives of so many, and will continue to do so for years to come.

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This year marked a changing of the guard for the Foundation’s Board. After three years as Board Chair, Brad Askeland, North State Grocery, stepped down and handed the reigns to Jacquie Slobom, Gelson’s Markets. The Foundation thanks Brad for his tremendous leadership and we’re confident Jacquie will continue the tradition set by another Gelson’s product Alan Scharn, more than 20 years ago. Her story is told starting on page 54. The Foundation also saw the departure of its first Executive Director, Shiloh Costello. We wish Shiloh well in her new endeavor and thank her for seven years of Foundation service. As the Foundation prepares to enter a new decade, be assured that it will continue to find new growth opportunities and explore exciting new programs to add value to your Association membership. ■


2018 SUSTAINABILITY HIGHLIGHTS Our promise is to Make Every Day A Better Day for our people, customers, communities and planet. Thanks to the hard work of our employees and generosity of our customers, we are contributing to a healthier planet and creating brighter futures for our communities. Learn more at www.albertsonscompanies.com.

PRODUCTS

O Organics® has surpassed $1 billion in sales, featuring more than 1,500 certified organic items

100% of eggs sold under our Own Brands O Organics® and Open Nature™ are cage-free

Generated more than $2 million for community development from the sale of Own Brands Fair Trade products since 2014

More than 705 million pounds of cardboard and 22 million pounds of plastic film recycled from our facilities

100% of our private fleet are EPA SmartWay certified for being cleaner and fuel-efficient

Enabled 70 million breakfasts to kids in need through Hunger Is®

2,000 organizations supported through Foundation grants

More than 4,000 pharmacists trained to administer NARCAN to help tackle the opioid crisis

More than 225,000 employees have completed Diversity and Inclusion training

PLANET

More than 800 energy efficiency projects completed in 500+ stores and warehouses

COMMUNITY

Donated more than $226 million in support to food banks and other hunger relief agencies

PEOPLE

One of the largest retail employers in the United States


CHAIR’S MESSAGE

The Power of Education

K EN DR A DOY EL R ALPHS GR OCERY CO./FOOD 4 LE SS/FO O DSCO

We know that if you give a man a fish, he eats for a day, but if you teach a man to fish, you feed him for a lifetime. The power of education is immense. It has the ability to not only change the life of a student, but the ripple effect is usually much greater to families and loved ones alike. We know that with education, comes opportunity, and that often leads to doors opening and new possibilities. A personal point of pride is the change that the CGA Educational Foundation is igniting in those in our industry. We hear countless stories of the opportunity scholarships give our associates that would have never been possible without CGAEF. Those stories get shared and it inspires others to pursue the same opportunity and larger dreams than ever previously imagined.

busy as we are, we must carve out that time regularly to ensure we continue to grow. An excellent opportunity to do that every year is found at the CGA Strategic Conference. The speakers’ knowledge and insight delivered at this conference are second to none. It’s a time to invest in ourselves, as we all learn from these thought leaders and each other. The return on you and your company’s investment is easily seen long after you return.

The Foundation exemplifies the power to drive real results. It is truly an honor and a privilege to be a donor. I assure you I get way more back than I could ever give as I am afforded the opportunity to see real hope and aspirations come alive in the recipient’s eyes. Thank you for your support of the Foundation. I can’t wait to see all we accomplish together in the years to come. Another essential aspect of the power of education is committing to be a life-long learner. Great success is often found in the continued pursuit of learning, and while as 6 | CAL I FOR N I A G R OC E R

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I look forward to seeing you in the desert as we grow and drive strong business results now and for the future. We are in the grocery business, but I might argue that we are really in the business of people. As an industry, we feed people, we give them jobs, we support communities, and we drive real change, big and small, every day in countless lives in California. I am honored and humbled to be a part of this industry, and all it does to make our world a better place. Continue to drive real change in lives through education and happy fishing! ■


We are committed to ending hunger in our communities and eliminating food waste in our company by 2025. Follow our journey at

TheKrogerCo.com and #

CAL I FO RNIA GRO CER | 7


VIEWPOINT

Your Summer Homework Assignments

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

Hearing from your associates and employees is invaluable. Here are some easy projects you can do. An old friend of mine recently passed away. Richard Coulter was 84 and had lived a good and full life. (Though the older I get, the more I think that 84 isn’t nearly as long a life as I am hoping for.) Richard was a retailer for whom I started working as a teenager, putting myself through a preparatory high school and some of college, even using it as a second job to supplement my income when I started my career as a poorly paid newspaper reporter. In retirement, Richard delighted in building a personal email list and sending us all almost daily jokes. Many of them were cringe-worthy or politically incorrect or just not very funny, but I miss them now that Richard isn’t around to send them anymore. Here’s an example of one of his jokes. An elderly couple is in church one day, and halfway through the service, the man turns to his wife and whispers, “I just had a silent fart. What should I do?” She looks at him and replies: “Get new batteries for your hearing aids.” Okay, it is lowbrow humor. But it still makes me laugh…it reminds me of Richard…and allows me to make a larger point. (Not to mention making me perhaps

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the first columnist ever to use the word “fart” in the pages of this magazine. I like to break ground wherever and whenever I can.) (Editor’s Note: I believe this is the first time in the 32 years I’ve been editing this magazine that the this particular word was used.) The more significant point is this: It is critically important – in both life and business – for people to be attuned to their surroundings. If you’re not, the results can be embarrassing. For a business, the results can be devastating. One of the things that I do each year that I think helps me keep in touch with the marketplace is to teach during the summer semester at Portland State University in Oregon. I’m on the adjunct faculty there, but I always say that I may learn as much from the students as they learn from me – they are younger, considerably hipper (not that this is hard), and have an entirely different perspective on the world. Hearing from them is invaluable, especially as an aging blogger/pundit who sort of depends on diverse voices to keep me in touch.

As an adjunct faculty member, I’d like to assign you some homework for the summer that I hope will keep you connected to what is going on around you. (There will be some writing involved, but I’m an easy grader.) • Within your organization, sponsor a contest that asks employees to submit ideas that will make your business more innovative and disruptive – and the ideas have to be gleaned from other retailers not in the business of selling food. I love to find applicable and appropriate retail ideas that can be used in supermarkets in airports, movie theaters, car dealerships, and even tire stores. Ask your employees to come back with just one great idea each. Give them a deadline, provide specifications for how the ideas will be submitted, and make sure there is a tangible and desirable prize. (The writing part is essential. Amazon has a philosophy that requires people to write press releases for new businesses or initiatives before the company invests time and money in them. The idea is that if you can envision the end, it gives you something to aim at, even if goals get adjusted as time goes on. Plus, the idea is the clear-thinking results in clear writing, and clear writing reflects clear thinking.)


An effort like this is like generating free consulting, and it has the added benefit of getting your employees more connected to your business. • Try a cuisine that you’ve never had before. Better yet, put together a small group of co-workers and turn it into a project – everybody has to pick an unfamiliar cuisine, make a reservation at a place, and you all go together, order different stuff, and share. (Southern California readers have an advantage. Just access the reviews of the late, great Jonathan Gold and use them as a starting point for a gastronomic adventure.)

it in a way that communicates the spirit of the moment, not just the facts. And think about how this meal should inform how you come to market. This is an assignment I have given to my marketing and business students every year that I’ve been teaching at Portland State. It is a great way to get them thinking about food differently…not as bottles and bags and even brands, but as something that can have a deeper meaning in our lives.

how products that we often don’t think of as being special can actually be very special to someone in a specific time and place. What can you learn from your experience – and your essay – that can be applied to your business? That’s it. Class dismissed. Have a great summer. ■

I can tell you right now what the best essay was I’ve ever gotten from a student. He was in his late 30s, and wrote (approximately) the following:

This can be completely eye-opening. My wife – readers of my MorningNewsBeat website know her as Mrs. Content Guy – last summer in Portland ended up joining me at a dinner held at Afuri, a Japanese sushi restaurant that opened an outpost there because it was impressed by the water sourced in the mountains, which its owners believe is similar to that in Japan. The only problem – my wife hated sushi. She found the whole idea repulsive, but this was one of those moments where we didn’t really have any choice. So, we went. She took some guidance from one of the other people at the table (who had more credibility than me largely, I suspect, because she wasn’t related to that person by marriage). And when we left, she turned to me and said, “That was great! Can we go back another night?” (This surprised me even more than when she told me after 36 years of marriage that she was a John Denver fan. Who knew?) We went back. She loved it again. And we’ve had sushi elsewhere and at other times ever since. Great lesson, and all because she was forced out of her comfort zone. Finally… • Write a brief essay about your most memorable meal. Tell me a story…where were you, who were you with, what did you eat, and why was it important/ memorable. Think about this…try to do

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“It is critically important – in both life and business – for people to be attuned to their surroundings.” “My most memorable meal was A-1 Steak Sauce and Minute Rice. It was my Christmas dinner. I was in Afghanistan, and we had just returned from patrol, and that’s all that was left. But it didn’t matter because I was with my brothers. They would’ve died for me, and I would’ve died for them.” Just 55 words. Not by any means the longest essay I’ve ever received, but certainly the most evocative…and a great example of

CAL I FO RNIA GRO CER | 9


As a student that put herself through college... programs such as tuition reimbursement and scholarships afforded me the ability to focus more on my studies than worry about how I’m going to pay tuition next quarter. So ‘Thank you, CGA Educational Foundation!’ for making it possible for students like myself to achieve their goals. HEATHER NAKAMURA ASSISTANT STORE DIRECTOR GELSON’S MARKET 26 STORES – ENCINO, CA

Want to learn more about the Tuition Reimbursement and Scholarship Programs? Contact Sunny Porter to learn more and start the conversation with your fellow industry peers at sporter@cagrocers.com or call (916) 448-3545.

cagrocers.com


GOVERNMENT RELATIONS

Growing Our Next Generation of Employees A A RO N M O R EN O S EN IOR DIR ECTOR CGA GOV ER N MEN T R ELATION S

The undeniable need to attract future employees can make for strange bedfellows. The grocery industry is reaching a crossroads of sorts when it comes to building a workforce for the 21st century. As is the case with many business sectors, we understand there is much work to be done to address the growing wave of baby boomer retirements.

This existential semi-crisis has spurred conversations between representatives from CGA and UFCW. Sometimes CGA’s relationship with labor can be adversarial, but there are times when both groups understand the need to work in unison for the overall good of the grocery industry.

“How do we grow the next generation of grocery workers?” is a question that is being asked not only by CGA-member companies but by labor groups like the UFCW. And the follow-up question is inevitably, “How do we convince this next generation of workers to make the grocery business a career, not just a job to be had for a few years?”

This is one of those times because the solution to this problem goes beyond just hiring new workers. Creating the next generation of grocery workers will require the development of new skillsets that are simultaneously rooted in the industry’s past and the industry’s future.

I’m pretty confident that if you were to ask a recent grocery industry retiree to describe the differences between today’s supermarket and the supermarkets of 30 or 40 years ago, they would regale you with stories about the tremendous changes that have occurred over that period. That individual would likely not have been able to anticipate the myriad of new positions that exist within a store today. From sommeliers to nutritionists to chefs to fromageriers (bonus points if you didn’t need to look that up), grocers now employ more classes of workers who need more specialized training to be successful. But how do we train this next generation of workers? Other trades have long benefited from apprenticeship programs, many of which are funded in whole or in part by either direct appropriations from the state, or state-funded grants. One idea that came out of CGA’s discussion with UFCW was the possibility of creating a grocery industry apprenticeship program to leverage state funds to help pay for the training of future workers. The establishment of such an enterprise, however, would need changes in statute for the state to establish a grocery apprenticeship program that meets the necessary standards to qualify for the available dollars.

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Continued on page 14 ▶


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LOCALLY MADE IN

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GOVERNMENT RELATIONS

◀ Continued from page 12

“How do we convince this next generation of workers to make the grocery business a career, not just a job to be had for a few years?” Enter AB 1459. This measure, authored by Assemblymember Joaquin Arambula (D-Fresno), would authorize the state to establish a grocery apprenticeship program with input from grocery employee representatives (UFCW) and grocery employers (CGA). The bill would create three types of apprenticeships for workers to pursue – produce clerk, nutrition clerk, and service

deli/onsite food preparation clerk. As supermarkets continue to respond to the changing needs of their customers, the hope is that training these workers via a statesponsored apprenticeship program will not only broaden the pool of potential new works to replace the wave of retirees but assure that these new workers are prepared to do these jobs right out of that gate.

Such an arrangement has the potential to save much of the time and money it takes to train new workers in specialized categories. This partnership with UFCW to create an exciting, new opportunity is a reminder that while CGA-member companies may disagree with their labor partners, the fact remains that our fates are, in many ways, intertwined. The effort to pass AB 1459 illustrates how we can combine our collective voices and influence to create outcomes that are mutually beneficial to our bottom lines. Hopefully, we will convince the Legislature that this effort is a righteous one and worthy of passage into law. And, probably, we will find other ways to partner with labor to benefit the industry as a whole, and not just benefit one side over the other. ■

Sponsored by Certified Federal Credit Union

SPECIAL ONE-DAY SEMINAR FOR

STORE LEADERS ed Featur er: Speak

dennis snow REGISTER TODAY! cagrocers.com/events (916) 448-3545

This seminar is recommended for store directors, assistant directors and department managers

Tuesday, Oct. 22, 2019 9 a.m. – 4:30 p.m. Coca-Cola Corporate Headquarters Los Angeles, Calif.

Presented by California Grocers Association • Independent Operators Committee • CGA Educational Foundation

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Congratulations Haley Whalen on your CGAEF Scholarship. You make all of us at Draeger’s proud!


Serving Up the Freshest Eggs for Generations. NuCal Foods Family Farms Producing California’s Freshest Eggs. Our local California Family Farms have been providing farm fresh eggs daily to your stores. In addition to producing fresh, nutritious, high-quality eggs, we take pride in the traditions and values of being good stewards of the land, providing superior care for our hens and giving back to the communities that support us.

CAL I FO RNIA GRO CER | 15


INSIDE THE BELTWAY

R e ta i l e r s W i n B at t l e t o P r o t e c t C o n f i d e n t i a l D ata J EN N I F ER H ATC H ER S E N IOR V ICE PR E S IDE N T, GOVERNMENT AN D PUBLIC AFFAIR S FOOD MARKETING INSTITUTE

A recent U.S. Supreme Court ruling was a major victory for grocery retailers’ rights to keep certain information confidential. We won! By now the news is far and wide that retailers won a landmark U.S. Supreme Court victory in June to protect retailer privacy of confidential store-level data and potentially many other types of sensitive data we share, or are required to share with the government. In Food Marketing Institute v. Argus Leader Media, the Court held that the Freedom of Information Act (FOIA) does not require the government to release confidential storelevel sales data related to the Supplemental Nutrition Assistance Program (SNAP). FMI was joined by a diverse group of amici partners, some that accept SNAP as a form of payment and others who were concerned about the government’s treatment of confidential business data outside of SNAP. In 2011, Argus Leader, a South Dakota newspaper, made an FOIA request to the U.S. Department of Agriculture for five years of store-level SNAP redemption data for every retail location in the country. FMI assisted USDA in resisting this request, arguing that store-level sales data is highly confidential. We also emphasized that aggregated SNAP data is already published on USDA’s website and is parsed in a variety

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data’s disclosure, the government had not met its burden to show “substantial competitive harm.”

of ways – by county, by month, by year, by type of store, and by volume of SNAP sales. The sharing of this plethora of information already addresses the public’s right to know, without the disclosure of sensitive, confidential data.

The government decided not to appeal, so FMI stepped up to protect its members’ interests in the privacy of their data. FMI appealed the judgment to the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit, however, affirmed the decision, continuing to apply this confusing “substantial competitive harm” test.

USDA withheld the information requested by Argus Leader under Exemption 4 to FOIA, which allows the government not to disclose “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

FMI then petitioned the U.S. Supreme Court to overturn the “substantial competitive harm” test and apply Exemption 4 “confidentiality” according to its plain text meaning, which does not mention any harm requirement.

Unfortunately, lower courts considering this exemption concluded that “confidential” also requires proof that disclosure of the requested information would likely cause substantial competitive harm to the submitter – a much more complicated, confusing and inconsistent standard.

In a rare turn of events, in August 2018, the Supreme Court granted an emergency stay of the Eighth Circuit’s judgment so that the Supreme Court could have time to consider FMI’s arguments. In January 2019, the Court agreed to review the case (The Supreme Court accepts roughly 80 out of 7,000 cases that seek review each year.).

Instead, FMI’s attorney argued that the term “confidential” is clear and the Court should not be allowed to set a different standard absent a clear directive from Congress. After a two-day trial in 2016, a federal court in South Dakota ordered USDA to release the SNAP redemption data. The Court concluded that although some competitive harm might result from the

Just a few weeks after our April 22, 2019, oral arguments before the U.S. Supreme Court, the Supreme Court released its decision. The Court agreed with FMI: that store-level SNAP redemption data can be protected because retailers keep it confidential and because retailers


INSIDE THE BELTWAY

participated in SNAP with the government’s assurances that such data would remain confidential. Justice Neil Gorsuch wrote the opinion for a six-member majority of the Supreme Court. The Court rejected the “substantial competitive harm” test as having no basis in the plain text of Exemption 4. The Court called the test “a relic from a ‘bygone era of statutory construction.” Instead, the Court held that commercial information is “confidential” when it is customarily kept private, pursuant to the ordinary meaning of “confidential.” The Court then concluded that “there’s no question” that SNAP data is kept confidential by retailers. The Court also rejected the newspaper’s policy arguments as inadequate to overcome the statutory text.

Justice Stephen Breyer, joined by Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor, wrote a separate opinion concurring in part and dissenting in part. While Justice Breyer agreed that the “substantial competitive harm” test should not be the law, he would have required some proof of harm for information to be considered “confidential” and thus exempt from mandatory disclosure. The Supreme Court’s decision not only protects the 2005 to 2010 SNAP data but will likely protect against future requests for retailers’ SNAP data provided that retailers keep it confidential. The decision may also help limit disclosure of other types of private commercial information that has been submitted to the government.

FMI was joined in this U.S. Supreme Court case by a diverse group of Amici partners and we are most appreciative of their support: the U.S. Chamber of Commerce, the Retail Litigation Center, the National Association of Convenience Stores, the National Grocers Association, the National Retail Federation, the Alliance of Marine Mammal Parks & Aquariums, the Animal Agriculture Alliance, the Fur Information Council of America, the Institute for Marine Mammal Studies, the National Association for Biomedical Research, Protect the Harvest, the United States Association of Reptile Keepers and the Zoological Association of America. ■

Thank you to this year’s honorees of the Chair’s Circle. Criteria: Is a member of the Association in good standing, exceeded a minimum annual participation of $60,000 and participate in a minimum of five individual sponsorship opportunities with the California Grocers Association and/or CGA Educational Foundation. Anheuser-Busch InBev Bimbo Bakeries USA C&S Wholesale Grocers Coca-Cola North America/Reyes Coca-Cola Bottling, LLC Kellogg Company Kimberly-Clark Corporation MillerCoors Tyson Foods, Inc. United Natural Foods, Inc.

CAL I FO RNIA GRO CER | 17


WASHINGTON REPORT

E m b r a c e T e c h n o l o gy

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

Technology is one of the greatest catalysts of change and an area that independent supermarket operators must understand and embrace. Technology continues to have a profound impact, where virtually every detail of the supermarket industry is being touched by new solutions and platforms. I see three technology threads, each entwined with the other. One is the explosion of mobile applications and programs that are turning grocery shoppers into high information consumers. According to Pew Research, smartphone adoption among Americans has more than doubled since 2011. Not only are shoppers becoming more sophisticated, but they are using technology as a way to gain more information, transparency, and convenience. At the touch of a mobile screen, consumers can instantly access to updated information on locally sourced perishables, competitive promotions, price checks, and recipe ingredient lists. In turn, this migration to the digital space is shaping customer relationships with retailers. Today’s shopper does not want to be talked to but instead wants to be a part of the conversation. Data from CPG manufacturers and marketers make up a second technology thread. By analyzing large chunks of customer data and retail sales, 18 | CAL I FOR N I A G R OC E R

initiatives, more effectively leveraging social media platforms, and integrating the latest technologies into their business strategies.

manufacturers, retailers, wholesalers, and service suppliers are exploring innovative ways to touch their target audiences.

With the dramatic pace in which new apps and tech solutions are coming on to the market, it can all seem a bit overwhelming, but technology will play a defining role in the supermarket industry.

Big data though, can be vast and hard to harness. Whether it’s social media, online coupons, or loyalty programs, data from these types of technologies can effectively create many new opportunities for savvy retailers to learn about and to connect with their shoppers to better serve their needs.

Those retailers that are on the forefront of implementing new technology and embrace the hyper-connected, tech-savvy consumer are positioning themselves for success. I’m one who is convinced that these threads will weave into a pattern of rising sales and profits.

The third thread is in the store itself, where technology is increasingly used to improve overall store productivity to program more effective lighting, to boost checkout efficiency, to track shopper traffic flows to improve layout and sales per square foot, or to offer customers immediate cost savings via real-time wifi connections as they shop.

Despite increased competition from all angles, it is an exciting time for the supermarket industry – and we at NGA are bullish about what the future holds for the independent grocers.

While the landscape is quickly evolving, many independent grocers are taking advantage of cutting-edge technologies to engage with their shoppers, find efficiencies, and reach new and existing customers where, how, and when they want. Independents have been making their move into digital. They are hiring dedicated staff, devoting marketing budgets to digital

Known as the true entrepreneurs of the industry, independents are nimble enough to overcome obstacles quickly and are finding innovative ways to respond to changing consumer preferences, which is something they’ve always been good at given their close ties to their communities and the consumers they serve. ■


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Event Produced by California Grocers Association Independent Operators Committee


To CBD

or not

TO CBD? QUESTIONS REMAIN

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


By Jason Dumont Products with cannabidioil (CBD) derived from hemp are in high demand from consumers across the country as expectations and demands have shifted rapidly in recent years.

Safety, quality and marketing are other considerations grocers should consider before devoting resources including valuable store space to CBD.

According to a recent Consumer Reports survey, more than one-quarter of Americans say they have tried CBD and one out of seven of those people have used products with CBD every day.

What is legal CBD?

A Nielsen report showed that one-third of American adults (age 21 and older) are interested in consuming legal cannabis products, and the top reasons for the interest are tied to ailment treatment, prevention and general wellness. Consumers are looking to their local grocery stores for general health and wellness products and many are asking grocers to carry CBD products. Many independent food retailers have responded to this demand and are experiencing growing sales, but others are deterred because of the lack of legal clarity surrounding CBD products.

Typically, CBD from hemp has less than 0.3 percent of tetrahydrocannabinol (THC), which is the chemical responsible for most of the psychological effects from cannabis. The Hemp Farming Act of 2018 (H.R. 5485) was introduced with the intention of removing hemp from Schedule I controlled substances and making it an ordinary agricultural commodity. On December 20, 2018, President Trump signed the Agricultural Improvement Act of 2018 (also known as the Farm Bill), which included the Hemp Farming Act of 2018, into law with several provisions that changed the regulatory framework for the cultivation and production of hemp in the U.S., in addition to the commercialization of hemp-derived ingredients and products. Continued on page 22 â–ś

CAL I FO RNIA GRO CER | 21


◀ Continued from page 21

“The potential benefits of CBD range from relieving pain including from cancer, reducing anxiety, lessening spasms, improving heart health and treating substance abuse.” iStock

What are some of the CBD products in the market?

Who is in the market for CBD products?

CBD products range from beverages and dietary supplements to topical creams and lotions. The potential benefits of CBD range from relieving pain including from cancer, reducing anxiety and depression (in humans and animals), lessening spasms for people with epilepsy and multiple sclerosis, improving heart health and treating substance abuse.

Companies producing CBD products are targeting consumers in ways that range from broad to specific. While Trace Minerals, CV Sciences and Receptra Naturals aim for people, especially women, with a healthy lifestyle who buy natural products, GW Pharmaceuticals has a drug called Epidiolex that is intended for the treatment of seizures in patients age 2 and older (in clinical trials, Epidiolex caused liver damage).

Taylor Leevers, Special Projects Manager at Leevers Supermarkets in Colorado, presented during a National Grocers Association (NGA) webinar on July 10 called, “CBD: The Next Health Food?” During the webinar, Leevers said, “In my opinion, CBD seems to be sort of the snake oil of the 21st century, and while many of the purported uses may be valid, I think just as many probably are not.” Leevers said while his company does not yet carry CBD products, it will in a new Denver store opening soon. He mentioned a handful of products including coffee, Keurig cups, lotions, drinks including those that are similar to “energy shots,” capsules, food, tinctures or liquid extracts, chewing gum, and oils and treats for pets.

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

In preparation for the webinar, Leevers visited multiple stores in Colorado, contacted the stores and manufacturers for pricing details and saw differences in the display, pricing and availability of products. In one store, there was a small display with $800 of product including 10 units of balm near the wellness section. A second store had twice the inventory of the first store. Both stores sold products for about 30 percent of the gross price compared to the 40 percent manufacturer’s suggested gross retail price (MSRP). A third store, had a large supplement section and a locked glass case for CBD products even though they were not more expensive than other offerings in the store. Leevers said those products were priced at 40 percent gross MSRP.

Leevers said he saw a 30-pack of chewing gum for $70 retail, a shot of CBD drink was $8 and pet products were between $75 and $80. He said there is a problem with products having different standards for CBD extraction, which makes for different levels of quality. According to his research, Leevers said tinctures, capsules and sprays are the most popular products and the best value per milligram for consumers and some of the top companies producing CBD products such as Hemp Meds, Charlotte’s Web, CV Sciences and Kannaway are doing more quality control testing.

What have federal and state regulators done? Even with the legalization of growing and producing hemp in the Farm Bill, there is a patchwork approach to CBD products in the states amid the absence of rules from the U.S. Food and Drug Administration (FDA). FDA policy says that under the Federal Food, Drug and Cosmetic Act, CBD cannot be marketed as a food or dietary ingredient. The law also prohibits the marketing of a substance as a dietary supplement or food if the substance is the subject of an investigational new drug application. Continued on page 24 ▶


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◀ Continued from page 22

The FDA has made it clear that it views CBD as a drug, because CBD is the main ingredient in the only approved cannabisbased drug, Epidiolex (made by GW Pharmaceuticals), which is a treatment for severe childhood epilepsy.

and articles on its website and deleted social media content that said its products could treat various medical conditions.

The FDA has told companies that they cannot add CBD to food or beverages, although it appears willing to tolerate it in topical products – as long as companies don’t make serious health claims.

To meet growing consumer demand for CBD products, the NGA urges FDA to take quick and decisive regulatory action to clarify the federal rules surrounding the sale of CBD.

What are industry leaders saying?

“NGA urges FDA to create a legal pathway for retailers to carry CBD products on their store shelves,” said Laura Strange, senior vice president of communications. “We suggest that FDA clearly distinguish CBD as a dietary supplement and food additive rather than a human drug under regulations that require clinical trials before going to market.” Strange said the NGA also urges the FDA to quickly establish a pathway for the marketing and sales of safe CBD products on grocery store shelves. Like the state AGs, the NGA said the FDA should also clarify what, if any, health risks are posed to consumers by the consumption of CBD products.

iStock

“NGA urges FDA to create a legal pathway for retailers to carry CBD products on their store shelves.”

Since 2015, the FDA has issued about 50 warning letters to firms for marketing unapproved drugs that allegedly contain CBD. As part of those actions, the FDA tested the chemical content of cannabinoid compounds in some of the products, and many did not contain the claimed levels of CBD. None of the products were approved by the FDA for the diagnosis, cure, mitigation, treatment or prevention of any disease. The FDA notes that consumers should beware purchasing and using any such products. In the case of Curaleaf, the FDA said the company was “illegally selling unapproved products containing [CBD] online with unsubstantiated claims that the products treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety, among other conditions or diseases.” Following the FDA’s warning, Curaleaf removed its blog

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“We suggest FDA provide guidance to product makers and manufacturers about how to display the health risks of CBD products on its packaging and whether to recommend specific dosing levels for its safe consumption,” said Strange. The NGA would support a regulatory framework for CBD similar to that of folic acid, where lower dosed products may be obtained over the counter, while higher dosage products must be prescribed by medical professionals. Peter Matz, director of food and health policy at the Food Marketing Institute (FMI), testified before the FDA in May 31. Matz said, “I am here to convey the seriousness of the regulatory ambiguity facing our member companies and their customers each day as consumer demand for products containing hemp and hemp-derivatives continues to grow, as does the commercial availability of such products – especially those which count CBD as an ingredient.”


Matz said FMI is fielding more and more questions from companies that are seeking clarity about the current regulatory framework for the sale and labeling of products containing CBD. Noting that FMI and its member companies want to be in full compliance with all FDA requirements, Matz said he also wants to ensure members have appropriate assurances that the products they sell are both safe and appropriately sold. “Given the prevalence of these products in the marketplace, we respectfully urge FDA to move swiftly to provide additional clarity and establish a pathway forward,” said. Matz. “The safety concerns and marketplace confusion surrounding hemp and hemp-derived products will continue until FDA provides guidance governing the production, sale, quality and marketing of these products.”

recreational use. However, the regulation of hemp and CBD products differs in those 11 states. According to the National Organization for the Reform of Marijuana Laws, 14 states legalized CBD for medical use. Those states include Alabama, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, Wisconsin and Wyoming. Many of those states allow for CBD use if a person has epilepsy or other conditions that cause seizures.

Betsy Booren, senior vice president of science and technology at the Grocery Manufacturers Association (GMA), applauded the FDA at the public hearing for taking the first step in stakeholder engagement. “As consumer interest for food, beverage, personal care and household products containing cannabis and cannabis derivatives continues to grow,” said Booren, “The necessity for national uniform regulatory frameworks that protect public health is of critical importance.” Booren and the GMA declined a request for further comments on FDA regulations for CBD products. As the FDA determines standards for CBD and monitors marketing by companies, states can regulate hemp cultivation if there is federally-approved agricultural plan.

Which states are taking action on cannabis and CBD? More than 30 states and the District of Columbia (DC) have legalized cannabis in some form. Eleven states including Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington permit

iStock

In mid-July, attorneys general (AG) from 34 states plus DC, Guam and the Northern Mariana Islands submitted a letter in response to the FDA’s request for comments on the safety, manufacturing and sale of products containing cannabis or cannabisderived compounds. Among other things, the AGs asked the FDA to explore the creation of best practices for manufacturing, testing and marketing products so consumers are not susceptible to confusion based on false advertising claims or harm from dangerous additives or undisclosed risks of use. This includes how products interact with other dietary or pharmaceutical products.

“I think it’s a great opportunity to provide access to a nonintoxicating, alternative product that many people believe helps improve their lives.”

Continued on page 26 ▶ CAL I FO RNIA GRO CER | 25


◀ Continued from page 25

“the hemp industry is booming industry and it will contribute to California’s economy, as a more environmentally-friendly crop, while creating jobs and opportunities for farmers.” iStock

Colorado recently amended food and drug laws to clarify that food containing CBD is not adulterated and permitted for sale.

The alternative is unregulated product from outside the state, or even outside the country.”

What is happening in California?

Aguiar-Curry echoed the state AGs and industry members in saying that it is important to her that consumers are not misled by labels or packaging. She included language in AB 228 that prohibits false health claims or advertising that presents a misleading impression as to the health effects of CBD products.

However, California’s Department of Public Health (CDPH) last summer issued guidance saying that until the FDA changes its position, or the state receives information changing its position, the state does not view CBD as a lawful food or dietary ingredient. California allows the sale of non-food items such as CBD-infused lotions and allows the manufacturing and sale of cannabis products including edibles. State legislation (Assembly Bill 228) that would allow for the retail sale of CBD in food. California Grocer asked California State Assemblymember Cecilia Aguiar-Curry (D-Winters), the author of Assembly Bill 228, why she is excited about the inclusion of hemp and CBD in a variety of products. (At the time of writing this article, AB 228 had passed the State Assembly and multiple State Senate committees.) “I think it’s a great opportunity to provide access to a non-intoxicating, alternative product that many people believe helps improve their lives,” said Aguiar-Curry. “AB 228 is important because not only does it allow hemp-derived CBD to be manufactured and sold, it also puts some parameters around how this can be done safely and with state oversight.

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

The assemblywoman has met with Governor Gavin Newsom’s office multiple times. She plans to continue to work with CDPH and Governor Newsom’s office to make sure that consumers can access CBD in a safe way. “It is critical to me that consumers are protected and informed,” said Aguiar-Curry. “I am hopeful that the administration will recognize that it’s illogical to say, ‘It’s not ok with the federal government’ in a state where cannabis-based products are allowed.”

“There is some research on CBD, but it is not comprehensive, which is why I want our state’s health regulators to be on top of the products being used by Californians,” said Aguiar-Curry. “That’s our job, not creating a situation where the demand is filled by outsiders who don’t care about Californians’ health.”

Aguiar-Curry would like to see California join more than 20 other states that passed legislation to authorize the sale of CBD.

When asked about the marketing and use of products, Aguiar-Curry said regulation is needed because CBD products are already on the market for purchase in stores and online. Without AB 228, she said the CBD marketplace is completely unregulated, and there is no standard for health.

Aguiar-Curry referred to the juxtaposition of reduced federal barriers to using hempderived products and prohibition in California as an “Alice in Wonderland world in which adult consumers can walk into a licensed [cannabis] dispensary and purchase all manner of recreational products, but they cannot legally purchase non-intoxicating hemp products that they believe can bring them calm or ease their pain.”

“Businesses and consumers will suffer if CBD is removed from the retail space,” said Aguiar-Curry. “Ironically, CBD made from cannabis is currently legally available in California inside dispensaries. For those who want CBD that is made without the psychoactive effects that come from THC, the law currently says no.”

She said the hemp industry is booming industry and it will contribute to California’s economy, as a more environmentally-friendly crop, while creating jobs and opportunities for farmers.

Until the FDA issues rules and California legalizes the cultivation, production and sale of CBD products, consumers in the Golden State may have to wait to legally use CBD at their tea parties. ■


CAL I FO RNIA GRO CER | 27


CAPITOL INSIDER

The High Price of Catastrophic Wildfires LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F K AHN, S OAR ES AN D CON WAY, L L P

We already pay the highest energy rates in the nation and it may get worse unless the Legislature addresses issues related to an energy bill. Brown

With the Camp Fire of 2018 still fresh in Californian’s minds and PG&E amid bankruptcy proceedings, Gov. Gavin Newsom last month submitted his plan to address catastrophic wildfires in the form of AB 1054 (D-Holden).

The bill can be broken down into three parts: 1) utility safety and certification; 2) utility liability for wildfires started by utility equipment and repayment of damages to wildfire victims; and 3) the PG&E bankruptcy.

Assembly Bill 1054, almost 100 pages long, was fast-tracked through the State Legislature to meet a July 13 deadline – the date credit ratings decide whether to downgrade the investment grades of California’s two remaining solvent investor-owned utilities (IOU), Southern California Edison and San Diego Gas & Electric.

Utility Safety and Certification The bill establishes the California Wildfire Safety Advisory Board (Board) which is responsible for advising and making recommendations related to wildfire safety to the Wildfire Safety Division at the Public Utilities Commission (PUC). These recommendations include what must be in

the IOUs comprehensive wildfire mitigation plans. The costs of these plans and the mitigation required by them will be paid for by the IOU’s ratepayers. Safety investments, totaling $5 billion, made by the IOUs must be made without a return on equity which is generally borne by ratepayers. Even with this relief, electrical rates are anticipated to rise substantially due to the increased safety and mitigation measures, as well as the rebuilding of electrical systems that burned down in recent fires. The bill also creates a new wildfire certification the PUC may issue a utility if it: 1) has an approved wildfire mitigation plan; 2) is in good standing, which can be satisfied by the electrical corporation having agreed to implement the most recent safety culture assessment; 3) has established a safety committee of its board of directors; and 4) established an executive incentive compensation structure designed to promote safety as a priority. Utility Liability and Repayment

iStock

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

Under current law, the PUC determines if a utility or ratepayers should repay damages to wildfire victims based on a reasonableness standard. Under AB 1054, the utility’s conduct is deemed reasonable if the electrical corporation has a valid wildfire certification. A party would then need to create “a serious doubt” as to the reasonableness of the electrical corporation’s conduct.


CAPITOL INSIDER

If created, the burden shifts back to the utility to prove the conduct was reasonable. If the utility is found to be reasonable, the costs of damages to wildfire victims may be recovered from the utility’s ratepayers. To help with these costs, AB 1054 creates two funding models and allows San Diego Gas and Electric and Edison to choose which model will be utilized. One model is a liquidity fund giving IOUs a $10.5 billion line of credit through a fee on electricity bills, paid by ratepayers. An IOU would be responsible for repaying the loans if it failed to appropriately manage its system to prevent the fire. Otherwise, ratepayers would repay the loans. A second model would act as an insurance policy for utilities. It would be funded by a contribution of $10.5 billion from the IOUs and $10.5 billion from ratepayers through a fee. If a utility has its wildfire certification from the PUC, it may access the fund to repay wildfire victim damages. If the utility

“Under current law, the PUC determines if a utility or ratepayers should repay damages to wildfire victims based on a reasonableness standard.” was not issued a wildfire certification and the PUC finds it did not act reasonably, the utility may access the fund to repay damages, but its shareholders must reimburse the fund for those costs. PG&E Bankruptcy Under AB 1054, PG&E must emerge from bankruptcy by June 30, 2020, with a plan that is ratepayer neutral, provides payment to wildfire victims, and continues meeting the clean energy goals established by the state.

including the rising costs of electricity and de-energization of electrical lines with no time period for re-energization. Californian’s already pay the highest energy rates in the nation. This latest bill may very well take this to another level unless the Legislature addresses a number of issues. Only time will tell if the political will exists to tackle the tough issues that remain. In the meantime, let’s hope AB 1054 keeps the lights on. ■

Next Steps The bill passed both houses of the Legislature with bipartisan support and was signed by the governor. While it is a comprehensive bill, it leaves out key concerns for ratepayers

Congratulations to the 2019 Scholarship Recipients Allison Totzke

Lauren Whightsil

Alvin Yang

Meggane Mata

Brian Harris

Michael Gallegos

Ciara De Alba Garrett Higginbotham

Naga Sai Sagarika Chidella

Jacqueline Upson

Rebecca Wenger

Kylee Sanchez

Theodore De Santos

Proud supporter of the CGA Educational Foundation

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CAL I FO RNIA GRO CER | 29


CGA NEWS

G o l f Tournaments S u ppo r t A s s o c i at i o n Pr o gr a m s Near perfect weather welcomed golfers at the CGA Independent Grocers and CGA Educational Foundation Golf Classics tournaments this summer and provided great networking opportunities while raising funds for a variety of industryrelated activities.

CGAEF Golf Classic – Northern California

This year’s Independent Grocers Golf Tournament moved to the beautiful Foxtail Golf Club in Rohnert Park, Calif. in June and attracted more than 215 independent retailers and their supplier partners. One month later the Foundation hosted its annual golf classics at Blackhawk Country Club in Danville, Calif., and Monarch Beach Golf Links in Dana Point, Calif. Proceeds from the two tournaments help fund the Foundation’s college scholarship and tuition reimbursement programs.

(L to R) Tim Nowell, Procter & Gamble; Jessica Blakely, Raley’s; Hillen Lee, P&G; John Lavine, P&G

(L to R) Tracy Lape, Pete and Gerry’s Organic Eggs; Chris Herpich, Vlassis; Don Esparza, Pacific Insurance Compensation Co.; David Hayes, Hidden Villa Ranch

All three tournaments featured on-course games, food and beverages; new product promotions; raffle prizes and awards. CGA wishes to thank the many sponsoring companies at each of the tournaments and to those vendors providing food and drinks. To learn more about the tournaments, including tournament award winners and sponsoring companies, visit cagrocers.com.

(L to R): Jim Loeffl, Musco Family Olive Co.; Mario Mediate, Clorox Company; Chad Pierotti, Clorox Company; Mark Johnson, UNFI/CGAEF Vice Chair 30 | CAL I FOR N I A G R OC E R

(L to R): Brett Roeber, Brian Hudgins, Fred Thumhart III, Dan Reid, Classic Wines of California

Thank you Illuminators for a fabulous breakfast.

(L to R): Joe Perez; Michael Phillipps, RMC Organic Waste Recycling; Juan Trillas, Bimbo Bakeries USA; Joe Lima, Raley’s

(L to R): Jonathan Mayes, Albertsons Companies; 2nd & 3rd are Brian Sullivan or Steve Kozak, Safeway Nor Cal Division; Brian Dowling


CGA NEWS

CGAEF Golf Classic – Southern California

(L to R) Denny Belcastro, Doug Minor, Dale Stern

Near perfect weather greeted this year’s golfers.

(L to R) Mike Ketcham, retired Albertsons; Donna Tyndall, Gelson’s Markets; George Galanos, Mayhew & Associates; Henry Mayhew, Mayhew & Associates

(L to R) Tony McAndrews, Steve Howard, Pat Posey, Adam Caldecott, Bristol Farms

(L to R) Ken Miller, Dorie Amen, Deedee Lasker, Jim Amen, Super A Foods

(L to R) Chris Wyatt, Flowers Baking; Jerry Whitmore; Kelli Wyatt; Jaime Prager, Albertsons

Continued on page 32 ▶ (L to R) Greg Sheldon, Cody Yorgesen, Jordan Wettstein, John Fehling, Anheuser-Busch

(L to R) Dave Jones, Kellogg; Matt Reeve, Smart & Final; Don Butterfield, Smart & Final; Shane Sgambelluri, Kellogg CAL I FO RNIA GRO CER | 31


CGA NEWS ◀ Continued from page 31

CGAEF Golf Classic – Independent Grocers

(L to R): Matt Bloom, Clover Stornetta; Richard Moresco, Aaron Stone, Mike Stone, Mollie Stone’s Market.

(L to R): Duane Zellers, John Kent, Geno Indorato, Nestle USA; Jeff Laine, Mollie Stone’s Market.

CGA wishes to thank the many sponsors that helped make this year’s tournament a tremendous success.

(L to R): Mike deBouchel, Phil Miller, C&S Wholesale; Dennis Darlin, Foods Etc.

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

(L to R): Rene Flores, Jason Gong, Dick Gong, Mike Peterson, formerly G&G Market.

(L to R): Brennen Cull, Mat Nabity, Jason Holmes, Drew Taylor, Coremark Insurance Services.


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CGA NEWS

SE C M em bers T our Sa fe way In July, the CGA Supplier Executive Council (SEC) received a VIP tour of a Safeway location in Pleasanton, Calif., hosted by Division President Brad Street and Sr. Vice President of Marketing & Merchandising Cliff Rigsbee. The tour was the SEC’s third of four scheduled this year. SEC members toured the store department by department and gained valuable insights into the Safeway brand and its operation. If your company would like to learn more about attending a store tour, contact Sunny Porter, CGA, at (916) 448-3545.

NEW MEMBERS CGA welcomes the following members:

Community Reinvestment Associates, LLC 6101 N Sheridan Rd East #42A Chicago, IL 60660-2870 Contact: Scott Sunagel, Managing Partner E-mail: scott@crassociates-llc.com Phone: (312) 881-0966 Website: www.crassociates-llc.com

Hussmann Corporation 13770 Ramona Ave Chino, CA 91710-5423 Contact: Michael Nobile, Sales Director E-mail: michael.nobile@hussmann.com Phone: (949) 795-6858 Website: www.hussmann.com

Inmar 635 Vine St Winston-Salem, NC 27101-4186 Contact: Craig Rosenblum, Regional Vice President, Enterprise Retail E-mail: craig.rosenblum@inmar.com Phone: (800) 765-1277 Website: www.inmar.com

Instacart 50 Beale St Ste 600 San Francisco, CA 94105-1871 Contact: Matt Kaplan, Public Policy E-mail: matt.kaplan@instacart.com Phone: (888) 246-7822 Website: www.instacart.com

Navigator Sales and Marketing 8502 E Chapman Ave Ste 133 Orange, CA 92869-2461 Contact: Subriana Pierce, Managing Partner E-mail: subriana@navigatorsales.com Phone: (469) 337-9541 Website: www.navigatorsales.com

Novo Dia Group 6300 Bridge Point Pkwy Bldg 1 Ste 150 Austin, TX 78730-5073 Contact Person: Ricky Aviles, Vice President E-mail: ricky@novodiagroup.com Phone: (512) 371-4134 Website: www.novodiagroup.com

Windstream Enterprise (WE) 4001 Rodney Parham Rd Little Rock, AR 72212 Contact: Michael Hurd, Account Dir., Enterprise Sales E-mail: michael.hurd@windstream.com Phone: (916) 997-9756 Website: www.windstreamenterprise.com

Federated Insurance 121 E Park Sq Owatonna, MN 55060-3046 Contact: Jim Brown, Account Executive Email: jcbrown@fedins.com Phone: (509) 539-4167 Website: www.federatedinsurance.com

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!

OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES

BARK to the future

Pets at Home, pet care retailer, has unveiled a new store concept in the United Kingdom that positions it for future growth. The new format offers an immersive experience for pet lovers including a vet practice and grooming rooms, dog washing stations, pet care classes and selfie spots for that portrait of you and your best friend.

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Cannabis Index

A New

If you want to know where to go overseas for legal cannabis and information on new legislation, a report by Euromonitor gives you all the info you need. Canada tops the list with a $166 billion opportunity for legal product, according to Coresight Research, followed by the U.S., Uruguay and Germany.

Wave

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Personalized Apparel

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There’s a new player in the already crowded advertising game – shoppable TV. NBC Universal is trying the concept which allows consumers to instantly buy product shown on their TV screen, according to Ad Age.

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Levi’s is using a self-developed laser technology that enables customers to design their own jean colors and washes. This is the result of a two-year research project to reduce chemicals and water used in manufacturing jeans and denim jackets. It used to take 18 to 20 steps and 12 minutes per pair. Now it’s a three-step method done in 90 seconds.


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Fruitful Endeavor

Silver Dollars

While some are still concerned about seniors leaving the workforce and draining public finances, AARP takes the opposite, more positive view, noting that the over-50 population in the U.S. accounts for nearly $8 trillion in consumer demand, bigger than the combined GDP of France and Germany. This is largely due to higher employment of workers 55 years and older.

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United Kingdom-based Waitrose has found a winner for its produce departments – pineberries. Pineberries started out as a kind of wild strawberry found in South America. However, faced with extinction, the wildly popular fruit, which tastes like pineapple, is now being grown commercially by Dutch farmers.

Hotel Bell

Looking to diversify? Why not try the hotel business? That’s what Taco Bell did with The Bell, a Taco Bell resort in Palm Springs that’s opening for a limited time this summer. The hotel will feature poolside cocktails and Taco Bell themed breakfast choices. Company officials are calling it the latest expression of the “Taco Bell lifestyle.”

Bumping Up

BOPIS

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Politics and Housing

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Nearly half of all online shoppers (46%) have collected online purchases from a physical store location, according to a report by Coresight Research. The buy online, pick up in-store phenomenon is, on average, most popular among younger, more affluent customers. Apparel is the most popular BOPIS category, followed by electronics and grocery.

Marketing and merchandising could be impacted by Senate Bill 50 that could eliminate single-family zoning statewide. The bill, authored by San Francisco Senator Scott Wiener, could enable denser, taller buildings around transit hubs and in job-rich communities. Meanwhile Senate Bill 4 by Mike McGuire (D-Healdsburg) would allow landlords to convert single-family homes into four-apartment buildings. Similar bills are up for review and vote in North Carolina and Portland, Ore.

iStock CAL I FO RNIA GRO CER | 37


MINDING THE

GAPS

BY LEN LEWIS In the hypercompetitive world of grocery retailing, you have to watch your step or risk falling through gaps in technology, consumer demand, corporate and employee culture, and in relationships with key suppliers.

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The industry is facing yet another watershed period in its development, marked by new types of competition eroding sales in traditional channels, changing shopping behaviors, and a digital revolution in which data analysis, artificial intelligence, robotics, machine learning and online buying can widen or narrow the gap between players. The gaps exposed by these and other things are not necessarily bad since filling these gaps where they exist is an opportunity to grow the business and depend against competitive onslaughts.

Embracing the Future Many retailers are progressively embracing the future. Others who choose to rest on their laurels are the ones in danger of losing ground to a new breed of agile competitors.

“Some feel that having weathered category killers and other competitive threats that some technologies and shopping habits will pass,” said Brian Numainville, a principal in The Retail Feedback Group. “But competition today is different, larger and well-resourced. Hoping things will go away won’t work this time around. Better to be part of the future than a victim of it.” The gaps in retailing that must be filled or bridged are becoming broader in scope, and all of them must be addressed. Results are mixed on whether retailers are gaining ground, losing it, or maintaining the status quo. “Our latest studies show that supermarkets continue to lead among shoppers with areas like overall trip satisfaction, quality and freshness top-scoring attributes,” said Numainville. “However, a retailer like Aldi, for example, is more apt to be recommended by consumers than in the past due to

indicators like a higher value for money spent and equivalency with supermarkets on factors like checkout speed, cleanliness, quality and variety.” Despite inroads by online shopping, observers firmly believe that the brick and mortar format is not dead. Retailers still have to make better use of digital capabilities that will enable them to capture and assess more granular consumer data. Omnichannel retailing is simply the cost of entry into the business, Numainville added.

Gaps in Technology “Supermarket retailers have lagged somewhat in adopting technology compared to other sectors. This is due partly to the substantial investment required, the risks involved as well as lower margins,” said John Mercer head of research for Coresight Research, a global advisory firm specializing in the juncture of retailing and technology. “Grocery margins are particularly slim compared with sectors such as apparel, furniture and home improvement. This makes investing in technology a real challenge.” Continued on page 40 ▶

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◀ Continued from page 39

“Retailers will have to adopt technology to better serve customers through faster delivery and seamless instore shopping experiences.” iStock

However, technological advancements have paved the way for more cost-effective innovations in grocery and to meet the rising number and spending power of millennials, said Mercer. “Millennials are digital natives and expect seamless digital experiences,” he said. “As a result, many retailers have improved their digital and omnichannel platforms to speed the supply chain, delivery, traceability and checkout. These innovations have also helped improve employee productivity.” Continual evolution is essential to eliminate any disconnects between retailers, consumers and manufacturers, according to observers. However, the nagging question is what a best-in-class company looks like and where is the industry falling short. Much of the concern these days centers on inroads by Amazon, which has not only widened the gap with traditional retailers but created new ones in logistics and consumerfacing technology. While the chain had a 52.5 percent share of the market in e-commerce last year, according to Euromonitor International, it has yet to gain a meaningful share of the food and grocery market. Amazon’s attempt to crack the grocery market has led to the acquisition of Whole Foods and the development of Amazon Go cashier-less stores.

“But the threat of Amazon has spurred companies like Walmart and Kroger to invest in technology, expand e-commerce and remodel physical stores, said Mercer. The digitalization of grocery retailing is about much more than e-commerce. “In the coming years, we expect the adoption of customer-facing technologies to strip ever-more friction out of the grocery shopping process,” he said. “In the frequently purchased, non-discretionary grocery categories, we expect consumers to increasingly look for tools, services and channels that eliminate pain points from the shopping journey.” Asked to elaborate, Merger added: “Retailers will have to adopt technology to better serve customers through faster delivery and seamless in-store shopping experiences. This will be driven by IoT, AI and machine learning to create a connected store, along with robotics for deliveries, in stores and at distribution centers.” However, some companies trying to play in the digital space, have inadvertently widened the gap by placing too much emphasis on competitors and ignoring consumers. As a report by Deloitte has noted, significant picture issues like big data, beacons and virtual reality have been somewhat of a distraction.

“It is no surprise that many retailers over the last few years have sought to read the future through a telescope – putting an unhealthy focus on competitors at the expense of listening to their customers,” the study reported. “This has only led to the digital divide getting wider.” Approximately 63 percent of shoppers interact digitally with their primary supermarket, mainly by checking a digital circular, building grocery lists and researching special promotions, Numainville said. “Social media is still an area of opportunity for supermarkets since 85 percent of shoppers regularly follow one or more social media sites., he said. “But, just 30 percent of shoppers are connected to or ‘friends’ with their primary grocery store on social media.” However, online grocery shopping may be reaching a peak, according to The Food Marketing Institute’s 2019 Grocery Shopper Trends Report, compiled by The Hartman Group, a leading consumer research and analytics firm. While online shopping has doubled since 2015 and continues to grow, “reach among millennials has not grown in the past two years, suggesting that after Gen X and Gen Z catch up, the online user base may plateau,” the study stated, noting that growth will likely come only from increased frequency by current users. Continued on page 42 ▶

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Looking to a

bright future!

Congratulations to this yearĘźs scholarship winners!


◀ Continued from page 40

Nonetheless, about 21 percent of consumers are regular monthly users of online shopping and 33 percent shop online-only grocery retailers. This level of consumer interest means that retailers will have to develop new “disruptive” ideas for online shopping. It should also be noted that online capabilities are far down the consumer’s wish list for their primary store, with only 12 percent of survey respondents listing online ordering for pick up or delivery as important retail features. This brings up another issue that some retailers are using to get closer to their customers and enhance the omnichannel shopping experience – BOPIS or Buy-onlinepickup-in-store. This has even given rise to a new term – phygital – or the digitization of the in-store experience.

Retailers from Tiffany & Co., to Dollar General, have adopted BOPIS. Walmart has gone a step further by offering discounts for in-store pickups as an incentive to customers, and Sam’s Club has expanded its pickup program nationwide. It may also become a strategy for Amazon and its Whole Foods subsidiary, sources noted. Not everyone is sold on the idea. Some retailers opine that it will cannibalize incremental sales in-store, require additional inventory in limited backroom and in-store space and an increase in labor costs to fulfill orders for pickups. This may be the reason that only about 27.5 percent of U.S. retailers offer BOPIS, compared with 64 percent in the U.K. and 50 percent in France, according to a study by OrderDynamics, a developer of retail order management systems.

As such, BOPIS may be an inevitable middle ground. In fact, the number of U.S. retailers adopting this model increased 5.7 percent last year and, according to a National RetailFederation study, about 64 percent of consumers use this option to avoid escalating shipping fees. By 2021, the buy online/pick up in-store model will be used by an estimated 90 percent of retailers and 75 percent will be able to use “phygital” to identify customers and customize their visits, according to estimates by Retail Touchpoints. Some shoppers see it as their shopping experience and retailers must be prepared. “Our 2018 U.S. Online Grocery Shopping Study found that among different generations millennials were least satisfied with online food shopping. This growing shopper base demands technology-oriented solutions like BOPUS,” Numainville said. The challenges remain significant, according to retail observers, noting that logistics, tracking inventory, and the training and management of employees in the stores to handle it are among the most significant issues. Some retailers are facing these issues headon. Kroger is spending $55 million on an Ocado-powered customer fulfillment center in Forest Park, Ga., the third of about 20 that the chain plans to build. Walmart is also upping its game in the grocery pickup arena with the opening of its largest grocery pickup and delivery center in Lincolnwood, Ill.

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“21 percent of consumers are regular monthly users of online shopping and 33 percent shop online-only grocery retailers. This level of consumer interest means that retailers will have to develop new “disruptive” ideas for online shopping.” 42 | CAL I FOR N I A G R OC E R

Difficulties in inventory management employee training and management have also kept some retailers away from the BOPIS model. However, an increasing number believe that in-store pickups can boost incremental buying. This is underscored by return technology provider Doodle, which found that about 85 percent of BOPIS customers make additional in-store purchases when picking up an online order, Mercer noted.

Customers place orders online or through the chain’s grocery app, choose pickup or delivery and then a time. Shoppers then notify Walmart when they arrive, and personal shoppers are waiting to load their orders. Meanwhile, an age-old technology may be coming to the forefront but differently than in the past. Camera technology pioneered in the Amazon Go stores may be a competitive solution for e-commerce.


Europe is ahead of the game in this area. Tesco is opening its version with a reported 150 ceiling-mounted cameras that offer a three-dimensional picture of products picked from the shelves. This enables the chain to follow customers around the store and may lead to a new loyalty card ID system if it doesn’t anger privacy advocates. These and other technologies are all part of the often, overused phrase – the Internet of Things (IoT) which has received much attention as a way to transform the consumer shopping experience.

He references results showing that overall satisfaction rises when the service components of a shopping visit – friendly staff, checkout speed, helpful/ knowledgeable staff, and available staff – receive high ratings. “So, coupling the use of technology to enhance these elements could yield real and measurable differences,” he said. Conversely, inadequate use of technology could widen the rift between retailers and shoppers.

“When shoppers agree that store employees have the expertise to help them select and prepare food, they are more than twice as likely to recommend that store as a place to shop.”

In fact, IoT, as it pertains to omnichannel strategy, is rapidly becoming table stakes in the retail game. “IoT provides more engaging in-store experiences and more straightforward ways to shop and pay,” a report by Coresight Research noted. “Retail operations benefit from more efficient inventory and supply chain management, customized shopping capabilities, in-store layout optimization and increased automation. We expect it to play a more important role in retail as the technology improves and applications become more efficient.” IoT hardware could grow at an annual compound rate of 16 percent over the next six years thanks to emerging blockchain and 5G technologies designed to improve security, connectivity and scalability issues in retail, it was noted. New technology needs to be explored and adopted at a more rapid pace, noted Numainville. However, it can be overwhelming. As a result, organizations like the Center for Advancing Retail Technology (CART) can help give retailers guidance and direction, he said Asked if there’s a tendency toward overreliance on new technology, Numainville emphasized that some level of reliance is an absolute requirement. “However, it can’t entirely replace interaction and contact with customers,” he said. “Retailers who use technology to enhance and deepen relationships with customers, rather than replace them, will have the greatest success.

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Numainville cited his company’s 2019 U.S. Supermarket Digital & Social Engagement Study that asked shoppers if they had used social media to praise or complain about an experience in a food store or supermarket. Of the 41 percent who said yes, 22 percent had complained about a poor experience. However, 42 percent of these same people did not receive a satisfactory or empathetic response from the company. “Responding to customer concerns and making them right on all channels needs to be a higher priority,” he said. Technology does not negate the need for a differentiated in-store experience that can solidify a store’s core customer base and provide a foundation for other non-traditional approaches to selling food.

Reaching A Retailers True Potential In an industry report card earlier this year, The Retail Feedback Group found four areas where supermarkets are generally falling short of reaching their true potential. The first is demonstrating their food expertise. “While it’s increasingly difficult for traditional supermarkets to position themselves as the lowest priced or even most convenient option, food is an important advantage for brick and mortar retailers,”the report said. Continued on page 44 ▶

CAL I FO RNIA GRO CER | 43


◀ Continued from page 43

“Most industry observers believe that collaborative efforts throughout the supply chain have significantly improved leading to greater trust between supply chain partners and the consumers they serve.” iStock

“It’s one thing to view items neatly organized on a website or app, but it’s a completely different experience to see a beautiful citrus display in a store, with the distinct colors and scents and ideally with opportunities to sample and taste the product,” the report added. However, when it comes to food, some retailers may still be geared up for the wrong time of day, the study said. “From my experience, 11 a.m. is when many supermarkets look their best. The shelves are stocked, prepared foods are being put out, and there’s a full complement of store and department managers to ensure things are running smoothly,” said Doug Madenberg, a principal in The Retail Feedback Group “The problem is that most supermarket business is not done before noon,” he said. “Rather, sales and customer volume are highest during the peak time between 3 p.m. and 7 p.m. And yet shoppers are considerably less satisfied during these hours than in the morning.” Madenberg added that stock dwindles, holes open, and hurried shoppers can make for tense deli associates, and long lines can fluster cashiers,” he said. Supermarkets need to figure out how to be at their best when in‐store traffic is the highest, not the lowest, Madenberg emphasized. “This will require a fresh look at how retailers allocate hours and manage food preparation and presentation throughout the day. The stakes have never been higher.” 44 | CAL I FOR N I A G R OC E R

Engaging Store Associates All this works best with engaged store associates available to offer suggestions for use and preparation. “When shoppers agree that store employees have the expertise to help them select and prepare food, they are more than twice as likely to recommend that store as a place to shop,” Madenberg said. “This alone presents an opportunity for retailers to further train and develop employees around food-related subjects.” It should also be noted that staff availability was the lowest-rated service attribute in the company‘s Supermarket Experience Study. “If I have an ingredient question or need a cooking suggestion, I need to have easy and quick access to a person who can field that request,” he said. Moreover, for physical stores of the future to survive and thrive, greater attention must be paid to interactions between employees and customers. However, the RFG study found that only 71 percent of shoppers had any pleasant human interaction on their visit. This begs the question of whether retailers are positioning themselves to take advantage of new workplace dynamics and balancing the needs of the store with those of employees. One major issue is improving labor scheduling practices, according to industry experts, noting that retailers are adopting more efficient scheduling tools

that enable retailers to contain expenses while making sure people are in the right place at the right time. While money, benefits and other perks remain at the top of employees list, creating a career path is becoming increasingly important. A Forbes article quoted a Gallup poll which found that 87 percent of millennials said career development is an important factor. Moreover, when they have access to more satisfactory career development programs, they are more likely to stay with their employer. “An employee who feels stagnant in their role is more likely to get restless and look elsewhere for opportunities,” it was noted.

Collaboration Gaps With the need for more granular data, most industry observers believe that collaborative efforts throughout the supply chain have significantly improved leading to greater trust between supply chain partners and the consumers they serve. However, it was also agreed that improvement is a never-ending process and collaboration is essential to the success of any company. In fact, in a 2014 study, McKinsey suggests that effective collaborations will result in a cost reduction of 5.4 percent, a 4.4 percent decline in out-of-stocks with products coming to market faster and an average 3.7 percent gain in sales.


An extensive analysis by Supply Chain Quarterly outlined six steps for stronger collaborations and partnerships between retailers and suppliers.

1

Collaborate in areas where you have a solid footing.

Companies are often tempted to use collaboration as a way to fill gaps in their capabilities. In practice, the most successful collaborations build on strengths rather than compensating for weaknesses.

partners based on 3 Select capability, strategic goals,

a robust, joint 5 Establish performance-management

The biggest potential partner might not be the best one. Many companies aim to collaborate with their largest suppliers or customers because they assume that the greatest value is to be found there. In many cases, however, this turns out not to be true. Collaboration may be of more interest to a smaller partner, which might invest more time and effort in the program.

An effective performance-management system helps a company to ensure that any long-term project is on track and delivering the results it should.

and value potential.

win-lose situations into Invest in the right infrastructure 2 Turn win-win opportunities with the 4 and people. right benefit-sharing model. Some collaborations promise equal benefits for both parties. If, for example, a manufacturer and a retailer collaborate to optimize product mix, both could expect to benefit from the resulting increase in sales.

Both manufacturers and retailers that participated in our research cited a lack of dedicated resources as one of the top three reasons for the failure of collaboration efforts. Companies frequently underestimate the resources required to make collaborations work.

system.

6 Collaborate for the long term.

The final vital ingredient is stamina. It may take time and effort to overcome the initial hurdles and make new collaboration work. Both parties need to recognize this and build an appropriately long-term perspective into their goals and expectations for the collaboration. ■

Chad Villanueva on being the 2019 CGAEF Legends in the Industry Scholarship Winner! And to all of this year’s scholarship recipients from The Save Mart Companies: · Bailey Matos · Marissa Robles · Larry Weatherall · Randen Banuelos · Dillon Guillen · Nancy Gutierrez · Kathryn Lucido · Miranda Meyer · Ashley Moylan · Alison Newens · Joanne Newens · Courtney Palmer · Jesus Quiroz

CAL I FO RNIA GRO CER | 45


Supplier members have the opportunity to further participate in the Association by joining CGA’s Supplier leadership committee called the Supplier Executive Council (SEC). This elevated designation of CGA membership provides increased access to California retailers through networking events including CGA’s annual end of the year board meeting, executive led store tours, and other exclusive SEC only events. To learn more about becoming a SEC member, contact Sunny Porter via email sporter@cagrocers.com or call (916) 448-3545.

past store tour hosts: Brad Askeland, VP North Division Gary Reese, VP South Division North State Grocery

Bryan Kaltenbach, Division President, Food 4 Less The Kroger Company

Brad Street, Division President Safeway Northern California

Kevin Konkel, COO Chuck Williamson, District Manager Raley’s

Rick Van Niewburg

Greg Basso

Denny Belcastro

Robert Hilliard

Altria Corp. Services

Cogent Solutions & Supplies

Kimberly-Clark North America

Retail Data Systems

Greg Sheldon

Cherish Changala

Randy Fernandez

Jeff Sigmen

Anheuser-Busch InBev

Command Packaging

Kysor Warren EPTA Refrigeration

Reyes Coca-Cola Bottling

Nick Matteis

Brennen Cull

Cliff Fenter

Renee Wasserman

CA GROWN

CoreMark Insurance Services

Mettler Packaging LLC

Rogers Joseph O’Donnell

Tirso Iglesias

Mark McLean

Jeanne-ette Boshoff

Cory Colwell

Cacique Inc.

CROSSMARK

MillerCoors

Roplast Industries, Inc.

Victoria Horton

Stephenie Shah

Keven Arceneaux

Matt Neible

Calif. Beer & Bev. Distributors

Diageo

Mondelez International, Inc.

Rose Acres Farms

Amy Fuentes

Craig Harlan

Marci Reynolds

John Oakes

California Food Expo

Earth Friendly Products

Moss Adams LLP

SBL Co. Management Consulting

Cindy Plummer

Heather Dougherty

Joe Toscano

Sal Coco

Calif. Table Grape Commission

Emerson Grind2Energy

Nestlé Purina PetCare

SMC ZeroWaste

Joe McDonnell

David Dodge

Jaclyn Rosenberg

Mark Ly

Campbell Soup Company

Flowers Baking of California

Nielsen

Sugar Bowl Bakery

Mark Cassanego

Amy McAnarney

Jim Van Gorkom

Phyllis Adkins

Carr McClellan P.C.

Hallmark Cards

NuCal Foods

TruGrocer Federal Credit Union

Donna Simpson

Brad Caudill

Matt Messens

Pat Huston

Certified Federal Credit Union

Harris Ranch Beef Company

Orchids Paper Products

TRUNO

John Mastropaolo

Brent Cotten

Stephanie Flores

Robert Bukovec

Chobani

The Hershey Company

Pacific Compensation Insurance

Tyson Foods, Inc.

Damon Franzia

Bob Kelly

Jeff Severns

Jeff Schmiege

Classic Wines of California

Hidden Villa Ranch

PepsiCo Inc.

Unilever

Bob Richardson

Tamarie Rayner

Mark Arrington

Jennifer Ward

The Clorox Company

Impact Absorbents, Inc.

Post Consumer Brands

Worldpay US, Inc.

Marcus Benedetti

Matt Kaplan

Hillen Lee

Clover Sonoma

Instacart

Procter & Gamble

Vic Chiono

Dave Jones

Sean Simonian

Coca-Cola - Minute Maid

Kellogg Company

Producers Dairy Foods, Inc.

For more information on CGA SEC membership, visit: www.cagrocers.com/members/supplier-executive-council/ 46 | CAL I FOR N I A G R OC E R


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BY RICHARD VOLPE, Ph.D, California Polytechnic State University, San Luis Obispo

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The gender pay gap, or the average difference in pay between men and women, has been a socio-economic concern in the United States since at least the years immediately following World War II. As of 2019, economists estimate that women earn about $0.79 for every dollar earned by men, or in other words, on average, women earn 79 percent as much as men in the U.S. While this gap has shrunk over time, this persistent difference in earnings has long roots, and its causes are both multiple and complex. In past generations, women were typically less educated and less likely to work full-time or be employed at all. But, these patterns and many others have changed considerably. The California grocery industry has shown real progress in closing the gender pay gap for its employees. Data from the U.S. Census of Business shows that the average monthly earnings gap between men and women in 1991 was $610, with men and women earning $2,042 and $1,432, respectively.

By 2018, that gap had fallen to an average of $514 per month. Adjusting for inflation by measuring the pay gap consistently in 1984 dollars, the progress is much more remarkable. By this measure, the average monthly earnings difference fell by more than half, from $448 in 1991 to $205 in 2018. The narrowing of the pay gap in California’s grocery industry is more impressive when compared to the numbers for California retailing as a whole. Across all California retailing sectors, the monthly gender pay gap increased from $813 to $1,141 from 1991 through 2018. Controlling for inflation, this translates into a modest decrease from $597 to $454. Continued on page 50 ▜

CAL I FO RNIA GRO CER | 49


“While this gap has shrunk over time, this persistent difference in earnings has long roots, and its causes are both multiple and complex.”

iStock ◀ Continued from page 49

Despite the progress made, there remains work to be done. The case remains in California’s grocery industry that on average, men earn more than women. On average, women in the industry earned about 82 percent as much as men as of 2018. This represents a marked improvement over the 70 percent of women earned relative to men in 1991 and is higher than the national average of 79 percent across all employment sectors. It is incumbent upon the industry to understand why this gender pay gap persists and what steps can be taken to close it entirely. There is another statistic calculated by economists today that helps form a blueprint for moving forward and further narrowing the gender pay gap. The controlled gender pay gap measures the difference in pay between men and women, controlling for factors such as education, years of experience, and perhaps most importantly, job titles.

executive positions in the industry. They are mostly men, as is still the case in most industries throughout the economy. But, there can be no question that things are changing and will continue to improve. The National Center for Educational Statistics reports that as of 2016, women are earning the majority of associates and bachelor degrees in the U.S. across all races and ethnicities. In some cases, women are making more than 60 percent of the total degrees conferred. Women are increasingly entering the workforce with qualifications and tools needed to pivot their career trajectories towards executive and managerial positions. The U.S. Census Bureau provides additional statistics on employment by gender that reinforce the notion that the California grocery industry is heading towards gender equity.

In 1992, women accounted for 40.9 percent of the total workforce. As of 2018, this increased to 46.2 percent. In 1992, turnover rates for women in the state’s grocery industry were 5.8 percent higher than those for men. But as of 2018, they are only 2.2 percent higher. As time passes, women are entering the industry in more significant numbers and remaining longer. While males continue to represent a disproportional number of grocery executives, this could significantly change due to the average age of these employees. Baby boomers across industries are beginning to retire in large numbers in a phenomenon that media is describing as the “silver tsunami.” California’s grocery industry is no exception. Continued on page 52 ▶

According to PayScale, the controlled gender pay gap in the U.S. is $0.98 per dollar, or 98 percent. This statistic is not available by industry, so it is not possible to produce a controlled pay gap specific to the California grocery industry. Nevertheless, to reconcile 82 percent with 98 percent (give or take a percentage point), we must take a look at the individuals holding the highest-paying, most influential 2019 CGA Chair Kendra Doyel leading a business meeting with Ron Fong and Phil Miller.

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“Education is the most powerful weapon which you can use to change the world.” – Nelson Mandela

i

Three cheers to El Super’s 2019 scholarship recipients in their pursuit of academic excellence. ¡Aplaudimos y apoyamos sus esfuerzos!

Angel Alcantar

Alexandra Andrade

Michael Arakelien

Florence Bravo Villanueva

Bryce Ellman

Hannah Fernandez

Xitlaly Franquez

Andrea Gonzalez Zuno

Andrew Gutierrez

Brenda Gutierrez

Estefania Hernandez

Jocelyn Hernandez

Angel Jolon Gamboa

Maria Lara

Monica Lopez

Alejandra Lopez

Areelle Navarro

Stephany Penas

Zulema Reyes

Ashley Rivas

Sarahi Stoddard

Angelica Zesatti

CAL I FO RNIA GRO CER | 51


◀ Continued from page 50

The Census Bureau also tracks separations, or job exits, by industry and the numbers for California grocers paint a clear picture. Between 1991 and 2018, separations were down across the board for all workers under age 45. But for workers aged 55-64, separations were up 125 percent over this same time period and for workers over the age of 64, departures were up 152 percent. There can be no question about it: vacancies are coming in large numbers, especially for high-level positions that call for education and experience. Putting this all together, the California grocery industry is in a position to make historical change regarding its workforce and the gender pay gap. The progress that the industry has already made is evident, both via statistics and by the number of women filling organization leadership positions.

At the national level, more women are assuming leadership positions. Leslie Sarasin serves as President and CEO of the Food Marketing Institute, while Cheryl Sommer, Kaune’s Neighborhood Market, Santa Fe, New Mexico, serves as Chair of the Board for the National Grocers Association. The reasons to shatter the glass ceiling once and for all are well documented. Study after study shows that workforce diversity, particularly in leadership roles, translates into increased productivity, efficiency, and profits. As the next generation of leaders assumes the helm at stores and firms across the state, California’s grocery industry is poised to serve as a successful model for other industries to follow. ■

“The California grocery industry is in a position to make historical change regarding its workforce and the gender pay gap.”

iStock

This year’s CGA Board of Directors Chair is Kendra Doyel, Vice President of Merchandising for Ralphs Grocery Co. Jacquie Slobom, Senior Director of Store Operations for Gelson’s Markets, was recently elected Chair of the CGA Educational Foundation Board of Trustees. Also, Tracy Lape, Director, Sales, for Pete and Gerry’s Organics, LLC, is this year’s Illuminator Headlite.

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Editor’s Note: Richard Volpe, is a professor at California Polytechnic State University, San Luis Obispo. He teaches food retail management and, in conjunction with the CGA Educational Foundation, conducts research on the grocery industry and seeks to place graduating seniors in positions with CGA member companies.


We are proud to support the California Grocers Association Educational Foundation.

Congratulations to all of the scholarship recipients!


A

Passion to Serve

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


To say that newly elected CGA Educational Foundation Board of Trustee Chair Jacquie Slobom is passionate about grocery would be an epic understatement. Sitting in a hotel coffee shop listening to Slobom recount her road to where she is today – Senior Director of Store Operations for Gelson’s Markets – it’s obvious why co-workers and industry peers speak so highly of her. Like, for example, CGA Second Vice Chair, Hee-Sook Nelson, a Gelson’s Vice President. “I think what Jacquie does is natural,” Nelson says in her typical matter-of-fact way. “She is a natural born leader and people look up to her. They have high regard for her. She is a very good businessperson and a very good operator. One of the best I’ve seen.” Not bad for a one-time would-be travel agent who dabbled in the industry until a friend suggested she apply for a part-time job at Gelson’s Markets. In some ways, Slobom’s rise to her present position mirrors that of many who have spent the majority of their career in the grocery industry. While the classic rise through the grocery ranks story typically begins with bagging groceries, for Slobom, it was even more basic. It was November 1982 and the local Gelson’s needed someone to field telephone calls from customers placing orders for fresh holiday turkeys. Back then Gelson’s didn’t sell frozen turkeys, and they still don’t. “Gelson’s doesn’t sell frozen turkeys. Everything is fresh,” she says with a somewhat satisfying grin (Obviously something she’s very proud of). While she hadn’t quite “caught the bug,” at that point (a term she uses for those passionate about the grocery industry),

she did look at the industry in a new and different way. Still, she paid her dues like many before her. She worked as a bagger, checker, sales floor clerk, front desk manager and later closing manager. In 1994, when Jacquie was a Front Desk Manager, she had one of those pivotal “ah ha” moments. And it came in the form of the President’s Award, an annual honor bestowed on one Gelson’s company employee nominated by their co-workers. “I think winning that award gave me broader perspective,” Slobom recalls. “I started to look at my job much differently and knew at that moment that this was my career and that I wanted to move forward in it.” In other words, she “caught the bug.” Back then and for many years, Slobom had a boss who was then, and still remains, a legend in the Gelson’s family – Bill Roulette (Remember that name, it pops up several more times). “Bill was a great boss,” she says with a confirming smile. “He never pushed me to advance my career. But the day I told him I was ready, he responded, ‘It’s about time.’” Little did Slobom realize how that decision would change her life. She was promoted to assistant store director – back then they were known as grocery managers – and went from her cozy Newport Beach store to having to drive to Marina del Rey near LAX. But she says, that was okay.

Continued on page 56 ▶

CAL I FO RNIA GRO CER | 55


◀ Continued from page 55

“Jacquie is one of those rare people who does a great job not only for her company, but puts the same kind of passion, energy and effort into her work on the Educational Foundation Board.” – George Frahm “I knew I loved my job,” she recalls. “I loved the customers. I felt I really had a voice. I had a good relationship with my customers and my co-workers. I found my niche.” From there, Slobom continued her upwardly mobile climb, next becoming a store director. Then, after nearly a decade of no growth, Gelson’s opened a store in Irvine and several months later in Dana Point, creating a number of new advancement opportunities. At Roulette’s encouragement, the one-time turkey order taker became an operations supervisor, which eventually led to her present position as Senior Director of Store Operations. “Bill was a mentor to us all,” Slobom says. “He ever pushed you into any job position. That’s what I learned from him. ‘Never push someone into a position they don’t want, just because it seems like the right thing to do.’” When asked about entering an industry historically dominated by men, Slobom admits it was a challenge, “but I took on that challenge,” she says. Slobom believes the industry as a whole is making greater strides towards gender equality. She points to the California Grocers Association as a good example. Along with Jacquie leading the Foundation's Board of Trustees, this year’s CGA Chair is Kendra Doyel, Ralphs Grocery Co., and Kathleen Smith, Albertsons, serves as Chair

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

of CGA's wholly-owned subsidiary, RMS, Inc. In addition, The Illuminators is led by Tracy Lape of Pete and Gerry’s Organic Eggs.

The Gelson’s Family There’s no doubt when talking to both Slobom and Nelson that there is a tremendous love for Gelson’s Markets. To hear either explain it, one word sums it up – family. “It’s customers, it’s co-workers, it’s about respect, and it’s about having fun at work,” Slobom says, adding that Nelson, who is Vice President of Team Development and Public Affairs, is like a sister to her. “We love what we do and it’s that way all the way to our company president,” she says. “It's not a corporate world. It's a family.” In addition to her main responsibilities, Slobom also oversees the company’s charitable giving checkstand campaigns. (Oh, and is in charge of company uniforms, she adds with a laugh). Not surprisingly, Slobom, alongside Nelson, (who is in charge of charitable giving), is a strong believer of giving back. She is proud of starting food donation programs with local food banks. Particularly after the Bill Emerson Good Samaritan Food Donation Act became law which provides liability protection to company’s donating goods to local food banks and other hunger relief organizations.

“Here was an opportunity where, oh my gosh, we are going to be able to give away all this safe and edible food that had previously been thrown out,” she says.

Foundation Chair Turning to her new role as Foundation Chair, Slobom believes the organization’s future rests in the strength of its Board of Trustees. “It’s an incredibly strong group of people,” she says. “I want to be able to utilize everyone’s unique talents to help the Foundation grow.” She cites the Board’s understanding of how charities operate as a real plus in implementing the Foundation’s soon-to-be charitable giving program – Making Change, an opportunity for smaller supermarket chains and independents to create their own charitable-giving programs. If the name Making Change sounds familiar, it’s probably because for many years it served as a 501(c)3 charitable organization that helped food retailers and wholesalers develop and execute point-of-purchase fundraisers. Now defunct, the Foundation recently secured the rights to the name and will soon offer a similar program. “By utilizing Making Change through the Foundation, it will allow many of us to give back to our community,” she says.


Having served on the Board of Trustees for nearly 10 years (at the urging of Roulette), Slobom is aware of the challenges facing the Foundation. She understands the industry’s fatigue towards fundraising, and how mergers and acquisitions have impacted and continue to impact revenue streams.

that the line separating businesses is never crossed. “What I liked about George being on the Board of Trustees was that he always challenged us to be better,” she recalls. “I consider him one of my best friends and mentors in the industry.”

“But we still need to drive fundraising efforts so that we can support our employees,” she says. “It’s our goal to get everyone to understand the Foundation’s importance so they will continue supporting it.”

“She’s an incredible lady,” she reflects, adding that Bob is extremely supportive, calling this “your mom time.”

Final Thoughts As the interview begins to wind down, Slobom offers her insights into some of the biggest challenges facing the industry today.

“Jacquie continues the tradition of extremely passionate Foundation chairs,” says Fong. “The Foundation has been very fortunate in having individuals with strong commitment and desire serve as chair. I’m excited to see where she will lead us.”

“Brad did a great job and I really saw him flourish in this position,” she says. “He really became a leader. I think it helped professionally as well.” She also holds in high regard another former Foundation Trustee, George Frahm, soon-to-be retired President of Stater Bros. Markets, who has nothing but praise for the Foundation’s new chair. “Jacquie is one of those rare people who does a great job not only for her company, but puts the same kind of passion, energy and effort into her work on the Educational Foundation Board,” Frahm says. “I was privileged to serve alongside her as a Trustee for many years and I know she is ready, willing and more than able to serve as the Chairperson. The Board and our industry are fortunate to have her step up into this very important role.” While fierce competitors in the marketplace, the two have carved out a friendship that has allowed for mentoring while ensuring

“Riding a dirt bike mellows me out,” she says. “The dirt is just open road to me. I love to take off by myself. It clears my mind.” These days, after losing her father a year ago, her down time is focused around her 87-year-old mother.

It’s that passion for the industry and commitment to giving that makes Slobom the perfect CGAEF Chair says Foundation President Ron Fong, who also serves as CGA President and CEO.

Slobom follows in the footsteps of her predecessor Brad Askeland, North State Grocery, and greatly appreciates his efforts in leading the organization.

Bob also introduced her to dirt bike riding, a family hobby on his side that started with one bike, then two and then five, but “no street bikes,” she adamantly adds.

“The Foundation has been extremely fortunate in having individuals with strong commitment and desire serve as chair. I’m excited to see where she will lead us.” – Ron Fong Her best friend is her life partner, Bob, now a retired contractor, whom she has been with for 37 years. Slobom recalls how, early in their relationship, she partnered with Bob to help build houses while she worked parttime at Gelson’s. “I nailed 3,000 square feet of sheeting on a roof one time in 100-degree heat,” she proudly boasts. “We would start at 6 a.m. and then I would later go to work that day at Gelson’s from 4 to 10 p.m.”

“Employee retention,” she says. “It used to be that if you were trying to get a job in grocery you had to beat down doors to get someone to talk to you. Now, it is more challenging to get people to come and talk to us. Today’s workers definitely have a different mindset and more choices.” Diversity is another challenge she says, adding that as an industry “we’re getting better.” Both of these concerns are issues the Foundation’s newest chair hopes to address during her tenure. In addition, Slobom hopes to expand the Foundation’s research efforts by utilizing its relationship with Cal Poly San Luis Obispo. “I think engaging in research is very beneficial to the industry,” she said. “When we work with schools like Cal Poly, I think it benefits everyone. Like when we bring college students to our annual Strategic Conference. It’s important for them to be there and for us to engage with them.” And finally, how does Jacquie feel about her new role as Foundation chair? “It’s a little intimidating to take on this role, but I know there will be good things to come down the road,” she confidently shares. “It’s all a part of giving back. I don’t mind giving my time. It’s my second job, but again, it’s a passion of mine.” ■ Continued on page 38 ▶ CAL I FO RNIA GRO CER | 57


Gelson’s

Congratulates Jacquie Slobom for being elected chair of the California Grocers Association Education Foundation Board of Trustees and to these outstanding CGA Scholarship winners for their dedication to achievement.

Jacquie Slobom Gelson’s Senior Director of Store Operations

2019 CGA SCHOLARSHIP WINNERS Brianna Johnson Christian Cavalier Daisy Perez Nichole Gatten Sara Gibson Spencer Hagaman Tran Nhung Victoria Vasquez Kasey Flores Saleena Chapa Cierra Garza Molly Gillmore Hayley Isobe

/ilovegelsons

@gelsonsmarkets

@gelsonsmarkets

/gelsonsmarkets


KNOW THE LAW

Big Changes in California Sexual Harassment Law BY DAV ID M . F OX

Big changes have come to California’s workplace harassment laws in the wake of the #MeToo movement. These new laws apply to employers in every industry in California – including grocers – and have been effect since January 2019. It is essential for grocers to become familiar with them and update their handbooks accordingly. Settlement Agreements Can Not Bar Employees from Disclosing the Facts Concerning Sexual Harassment or Sexual Discrimination Claims Senate Bill 820 goes to the heart of employer settlements of sexual harassment complaints. Under SB 820, employers may not use settlement agreements to prevent employees from disclosing facts concerning claims for sexual assault, sexual harassment, and sex discrimination if the employee has filed a civil lawsuit or administrative action. However, the law allows employees to request that their identity and any facts that may lead one to discover their identity be kept confidential and employers to keep the number of monetary settlements confidential. Senate Bill 820 applies to settlement agreements entered into on or after Jan. 1, 2019. Thus, pre-2019 agreements with non-disclosure provisions are not affected by the new law.

Employers Cannot Require Employees to Sign a Release of Harassment Claims Senate Bill 1300 prohibits employers from requiring employees to sign a release of harassment claims or requiring employees to refrain from discussing harassment as a condition of employment or in exchange for a raise or bonus. However, consistent with SB 820, this provision does not prevent employers from requiring employees to keep any amount of a settlement confidential. The Definition of “Harassment” and Employers’ Obligation to Prevent It Have Broadened Senate Bill 1300 also expanded the definition of “harassment” and employers’ obligations to prevent it. As of Jan. 1, 2019, a “single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered” with the employee’s work performance or “created an intimidating, hostile, or offensive working environment.” This language makes it harder for employers to avoid a trial by pointing to a low number of harassing incidents.

Senate Bill 1300 also expands employers’ liability for a non-employee’s harassment of an employee. Before the new law, employers were liable only for a non-employee’s sexual harassment of an employee. As of Jan. 1, 2019, the scope of liability expanded to include harassment based upon all characteristics protected by the Fair Employment and Housing Act: “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.” This new law will require grocers to be more vigilant and proactive regarding the actions of non-employees. Employers with More Than Five Employees Must Train All Employees in Sexual Harassment Prevention Senate Bill 1343 dramatically expands the scope of employers’ requirement to train their employees on sexual harassment prevention. Now, all California employers – including grocers – with at least five employees must provide sexual harassment prevention to all of their employees by Jan. 1, 2020. Before SB 1343, only employers with at least 50 employees were required to provide the training, and even then, only to personnel in supervisory positions.

Continued on page 60 ▶ CAL I FO RNIA GRO CER | 59


KNOW THE LAW ◀ Continued from page 59

complainants and witnesses without such communications forming the basis of a defamation lawsuit. Finally, AB 2770 protects employers from defamation suits arising out of communications to an alleged harasser’s prospective employer relating to alleged harassment. This allows employers to be truthful with prospective employers without fear that such honesty will leave them exposed to defamation claims also helps prevent prospective employers from unknowingly hiring alleged harassers. Tip for Grocers: Time to Update the Employee Handbook and Settlement Agreements iStock

“This new law will require grocers to be more vigilant and proactive regarding the actions of non-employees.” Now, employers with at least five employees must provide two hours of training to all employees – including temporary or seasonal employees. This training must be completed by Jan. 1, 2020. From that point, training must be provided once every two years. Law firms such Downey Brand LLP partner with employers to assist them in delivering trainings. Assembly Bill 2770 Protects Employees and Employers from Defamation Suits Arising Out of a Sexual Harassment Complaint Assembly Bill 2770 protects employees who complain of sexual harassment and their employers from being sued for defamation by alleged harassers. The State Legislature unanimously passed AB 2770 because alleged harassers were suing victims and their employers for defamation. These lawsuits put employers in a difficult situation due to employers’ affirmative obligation to prevent harassment. 60 | CAL I FOR N I A G R OC E R

The bill protects employees and employers from being sued for defamation by establishing that certain communications relating to harassment complaints are “privileged” – meaning they cannot form the basis of a cause of action for defamation. First, the law shields “[c]omplaints of sexual harassment made by an employee, without malice, to an employer based on credible evidence.” This strikes a balance between protecting employee complaints filed in good faith while leaving a safeguard to alleged harassers where a plaintiff makes a malicious complaint – i.e., a clearly baseless or frivolous complaint filed to injure the reputation of the accused. Second, the law protects “[c]ommunications between the employer and interested persons, without malice, regarding a complaint of sexual harassment,” allowing employers to share information regarding a harassment investigation with

Grocers should take this as an opportunity to update their employee handbooks to reflect the new state of law. Specifically, the expanded definition of “harassment,” the new protections surrounding information sharing, and notice of the new training requirements should be included. Additionally, in the unfortunate event that a grocer finds itself as a defendant in a civil or administrative action for sexual harassment or discrimination, grocers should be cognizant that any settlement agreement cannot be used to bar an employee from disclosing facts concerning the employee’s claims, though the agreement may still require that payment amounts be kept confidential. ■ David Fox is an attorney at Downey Brand LLP practicing in the areas of employment litigation, complex business litigation, and appellate litigation.


Congratulates

its 2019 scholarship recipients!

Dalia Canedo Felix

Monique Chavez

Magaly Gonzalez

Lorena Hernandez

Jane Juarez

Melissa Lopez Gonzalez

Camilo Mesa Amariles

Isamar Perez

Emilie Serna

Michelle Sosa

Yvonne Vasquez

Melissa Velasco

Stephanie Velasco

M Hilda Viernes

Andrea Zaragoza

Erik Mercado

Building a Better Future Together CAL I FO RNIA GRO CER | 61


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1 5 MINUTES WITH…

Scott Riefler C H I EF T EC H N O LOGY OFFICER, Sō RS E TECHN OLOGY

Hemp and cannabidiol (CBD) could revolutionize the food and over-the-counter markets, and the business might reach an estimated $22 billion over the next couple of years, according to some estimates. But even as new products containing these ingredients hit the market, they are still misunderstood, with one faction claiming it to be a miracle cure for a laundry list of ailments and others believing it’s an overhyped fad. Scott Riefler, chief technology officer for SōRSE Technology, and a member of both the Institute of Food Technologists and the National Association of Flavor and Food Ingredients, recently discussed the facts and how to approach the business as it evolves

Is this steadily increasing? “I see it as a general trend. People aren’t skipping getting educated, but once they get something in their heads, they seem to rush towards it. That’s what’s happening in the CBD world as more health benefits – especially as an anti-inflammatory – are reported. The anecdotal evidence coming out on CBD from athletes, celebrities and others, can’t be ignored. We see an extremely high-efficacy rate, and when people get all the information they are becoming more interested than ever.”

California Grocer: As popular as CBD is becoming, there seems to be a lot of issues surrounding it – good and bad? Riefler: “Yes, it is a whole new frontier. Many people are experiencing positive results. At the same time, traditional information channels such as research and supporting clinical data are hampered due to hemp and CBD being held hostage as a Schedule 1 material. Large amounts of positive anecdotal evidence coupled with social shifts have created mushrooming consumer demand, and frankly, the science and research is playing catch up. Consumers are undeterred, and in many cases, have already made their buying decision.”

Scott Riefler will moderate a Whiteboard Session on understanding the benefits, opportunities and mechanics of Hemp extracts and CBD at the 2019 CGA Strategic Conference in Palm Springs.

A lot of people are hyping it as a “silver bullet” for all ailments. “That’s not the way it is. They used to say the same thing about penicillin, but we’ve since found that different antibiotics work differently. Some people are exuberant about CBD being a miracle cure for everything. That’s probably not the case. But, it does

have a high number of pharma-active materials, and we’re just at the beginning of understanding it.” But there’s been a lot off false and misleading information. “Yes. Most of it is residual propaganda on hemp and cannabis stemming from the war on drugs and more recently overhyped claims. Through all of it, one of the real victims was the truth, yet the descheduling of hemp removed the legal barriers, and people are curious. They want to try it.” Yet claims are still regulated. “In the food space, there’s a term called structure-function claims that FDA regulates as part of consumer protection and safety. That’s the quandary the CBD industry is in right now. Theoretically, no one is allowed to put a functional claim on a package that says, for instance, this product will reduce swelling,” unless you have supporting clinical data. Otherwise, it’s seen as an unsubstantiated claim.” With the category growing, you have to deal with the mass market. What do you hear from retailers? “I’ve spoken with a number of retailers that seem comfortable operating in the CBD space – and the number is growing. Most are seeking knowledge so they can operate responsibly. Some remain hesitant. I never try to talk anyone into changing their mind. We want to help people make informed decisions. Continued on page 64 ▶ CAL I FO RNIA GRO CER | 63


15 MINUTES WITH… ◀ Continued from page 63

“We see an extremely high-efficacy rate, and when people get all the information they are becoming more interested than ever.” We don’t sell directly to retail. We sell to others that are building retail products. I don’t see many retailers drawing in customers with marketing…other than perhaps signage indicating CBD is sold here. There is no real need to do that. Instead, word travels very quickly about availability in various stores. Consumers are actively looking for access.” Will that be enough? “Consumers are educated to the point that they want to try it. It’s a direct outgrowth of the legalization of marijuana and cannabis for medical and recreational use.” What message do you want to get across to retailers at CGA? “Education is the goal. Knowledge is like peeling an onion. There’s always another layer of understanding.” How might that translate into marketing and merchandising to consumers? “It’s all knowledge-based. We all want to stay on the right side of the FDA and follow its guidance. One way is not to make function claims. Another is to label products as hemp extract and not CBD. Also, avoid interstate commerce.” But some retailers have stores in multiple states. “Everyone has to judge for themselves. There are plenty of people doing e-commerce now with hemp extracts and CBD, but retailers 64 | CAL I FOR N I A G R OC E R

iStock

want to be positioned to answer questions directly from consumers. I was in a store recently and noticed an endcap of CBD/ hemp products near the pharmacy. You need someone to answer questions for curious customers who want to try it responsibly.” But keep in mind, retailers also have to know their exposure and what’s legal for mainstream consumer products. FDA has yet to provide guidance and CBD has yet to gain GRAS (generally recognized as safe) status in the U.S. Along those lines, should retailers look at these products on a state-bystate, or county-by-county basis? “It all depends where you are. Every place can have its own rules and regulations. California is very progressive in the CBD arena and, considering the bills being drafted, the Legislature wants consumers to have access.” Should that access be near pharmacies? “It would help. It’s where people go to ask questions. Pharmacists should be well-versed in the products.” Should sales be limited to pharmacies initially? “Everyone has a different view. In many states you can buy it at gas station checkout counters. Another question is restricting access by children.

Given the regulatory landscape, there is iStock an argument for putting these products in the nutraceutical section which is often contained within the pharmacy. These questions will be answered as owners and marketers become more educated on what CBD is, its potential, and how it should be safely consumed.” Will merchandising depend on the type of product? “Correct. Many products are sold as hemp extract or hemp oil which may or may not have CBD in it or high or low doses. So, there is an efficacy question that borders on ethics. You might be selling hemp extract in a bottle, but it doesn’t necessarily contain CBD.” How can retailers effectively market products to consumers? “Right now, it’s primarily through word of mouth and relying on consumers to educate themselves on the internet. No one should just search Wikipedia. This creates an excellent marketing tool. Consider promoting knowledge in pamphlets or even through web-based videos and discussion forums. I’ve seen little booklets at retail that introduce customers to the benefits and effects of CBD. That may be beneficial, but most people showing up already know what they want. They’re just looking for the right channel to buy it in.”


There seems to be a quality issue with CBD. How can retailers know who to deal with for quality and consistency? “You have to do the due diligence, so you’re not culpable. If you allow a product in your store, you have to understand its pedigree. This means buying on something other than price, or whether someone will supply endcaps and advertising. It’s another reason to get the pharmacy group to participate. You’ve got scientists working in the pharmacy, and they know what questions to ask and the kind of documentation needed – including HACCP protocols and whether the product is food grade. It’s one of the ways to know what you’re selling.”

Will things change as the industry moves into edibles?

Does that mean more over-thecounter products?

“It will. To put something in the food supply one has to first verify its safety within the food supply. Food additives or ingredients are regulated by the FDA and require GRAS status. This is a critical step to ensure consumer safety. This process ensures that any new food additives or ingredients have been evaluated and vetted at the intended levels in various food forms.

“FDA has to draw a line in the sand with additional guidance. For example, it has already approved a pharma-based CBD treatment. It would not be surprising to see guidance which establishes therapeutic and non-therapeutic doses. It’s like Ibuprofen, where there are prescription doses and much lower ones for over-the-counter.”

The good news is that people have been consuming hemp for thousands of years. We’d already know it if were overtly toxic and there’s a large body of empirical evidence that cannabis and hemp are pretty benign in terms of potential hazards.”

Pricing is still a major issue. Will prices get down to massmarket levels? “I believe so. A lot of people are producing hemp, and at some point, supply will saturate demand. Extraction and refinement systems are still evolving as well as scaling. Remember, this is a very nascent industry supply, and demand is still balancing.” ■

A DVERTISER IND EX PAGE

COMPANY

PHONE

EMAIL

WEBSITE

5, 53

Albertsons

(925) 467-3000

albertsons.com

61

Cardenas Markets LLC

(909) 923-7426

cardenasmarkets.com

BC

Certified Federal Credit Union

(909) 261-4065

dsimpson@certifiedfed.com

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CMB Design Partners

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cmbdesign.com

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Draeger’s Supermarkets

(650) 244-6500

13

ECOS by Earth Friendly Products

(800) 335-3267

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Bodega Latina Corporation dba El Super & Fiesta Mart

(562) 616-8800

elsupermarkets.com

58

Gelson’s Market

(818) 906-5709

gelsons.com

23

Kushco Holdings

(949) 244-5921

ryan.savage@kushco.com

kushco.com

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NuCal Foods

(209) 254-2206

custsvc@nucalfoods.com

nucalfoods.com

35

PepsiCo

(949) 330-5804

IBC

Nestle Purina PetCare

(314) 982-1000

41

Raley’s

(916) 373-3333

raleys.com

7

Ralphs Grocery Company

(310) 884-9000

ralphs.com

33

RMS, Inc.

(818) 817-6712

45

Save Mart Companies, The

(209) 577-1600

27

SMC ZeroWaste

(951) 788-6042

29

Stater Brother’s Markets

(909) 973-3500

10

TRUGrocer Federal Credit Union

(208) 385-5273

draegers.com craig@ecos.com

ecos.com

pepsico.com joe.toscano@nestle.purina.com

mdodson@retailms.net

purina.com

retailms.net savemart.com

terry@smczerowaste.com

smczerowaste.com staterbros.com

cdemaray@trugrocer.com

trugrocer.com CAL I FO RNIA GRO CER | 65


BY GRACE BECKER

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

From enduring homelessness to graduating Summa Cum Laude with a degree in Business Administration from Fresno Pacific University, Chad Villanueva is no stranger to adversity.


decision I make, they’re affected by. The effects of this are amazing, I’m still blown away by it.”

As a Save Mart Supermarkets store manager who’s also working towards obtaining his master’s degree, Chad Villanueva never could have imagined he would graduate from college with the highest honors possible. Though he dreamed of attending college, as a youth it didn’t seem in his cards. Growing up with an absent father, he relied on his mom and grandmother throughout childhood. Tragedy struck when his grandmother was murdered, leaving him and his mom in an unstable situation. “We ended up being homeless,” Villanueva recalls. “You never know what hungry really is until you’re putting together 50 cents to eat a can of green beans for dinner.” Though he worked whatever jobs he could as a teenager, it wasn’t until Villanueva was hired by Save Mart in 2008 at age 21 that things turned around. “The stability the job gave me as far as the medical insurance, the pay structure, everything…that’s when my life really started to change,” he says. While Villanueva began as a courtesy clerk bagging groceries, he eventually transferred to the meat department and began working his way up the company. His mentor in the meat department, who himself had a degree, ultimately inspired Villanueva to pursue a higher education, reviving his childhood dreams. “It was just one of the things I never thought would happen,” he shares. Villanueva is this year’s CGA Educational Foundation “Legends of the Industry Scholarship” recipient. This $10,000 scholarship was created last year in honor of past and future CGAEF Hall of Achievement inductees. “[Receiving] this scholarship means that I can pursue my dream of higher education with less of the burden of tuition,” he says. “I have four kids and ultimately every

Save Mart was supportive of his educational pursuits and allowed him flexibility within his work schedule. During his undergrad, Villanueva strove for the same excellence in school that he did in the workplace. Coupled with his natural drive, Villanueva’s kids fueled him to excel in his education, “I want to set the bar high for them,” he adds. “What impresses me the most about Chad is his ability to balance his role as a husband and father, stay on task with his educational goals, and still perform at high

and help teach, train, and develop other individuals such as myself that really want it.” Gestures of human kindness have inspired Villanueva throughout his journey, like when the store manager from another Save Mart in town routinely offered him rides, relieving Villanueva of his hour-long walk to work.

(L to R) CGAEF Chair Jacquie Slobom with 2019 Legends of the Industry Scholarship Recipient Chad and Zandra Villanueva.

“Receiving this scholarship means that I can pursue my dream of higher education with less of the burden of tuition.” level as a Store Manager,” says Lloyd Scott, Director of Store Operations for Save Mart. “He’s an inspiration to our team, and a true asset for our company.” Villanueva’s deep passion for the industry is undeniable. “It’s my home. I’m not going anywhere,” he says, calling the grocery industry unique because, in his words, it gives anyone a chance. “This industry is one of empowerment. It really taught me to take ownership in everything I do and that rolled over into my schooling.” Once he completes his master’s degree in Organizational and Leadership Studies he hopes to secure a senior management position within the industry where he can help keep it thriving. He wants to “give back

Simple acts of kindness like these have made Villanueva adamant about giving back. “I’ve seen what they’ve done for me [acts of kindness],” he says. “I mean, I never thought I’d go back to school. I never thought I’d be a store manager, a great father, or husband. I’d like to take other people who have gone through things in their life – good or bad – and try to give back to them and show what they can be with their potential.” Between work and school Villanueva is a busy man, but in his free time he is an avid sports fan and enjoys taking trips with his family. To anyone starting out in the grocery industry Villanueva advises, “Ask questions, work hard, and keep a can-do attitude. If you do those three things the sky is the limit.” ■

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MOMMY BLOGGER

Cart Confessional K I M B ER LY M I L L ER WR ITER , ACTR ES S

My children consistently test my rules of customer etiquette. When I was in high school, I worked at a restaurant that had the rules of customer etiquette engraved into a plaque next to the front door. Most rules seemed like common sense, basic manners, but that never seemed to stop a few of our more boisterous patrons from testing just how serious management was about them. Etiquette is, in many cases, a matter of perspective. What may seem reasonable to one person is uncouth to another. I, for one, am a rule follower. I like order, and I hate conflict. I tend to err toward more staid behavior in general, but since having children, I’ve had to reexamine my own

standards of public etiquette. If kids do one thing consistently, it’s forcing you to live outside your comfort zone. Especially while shopping. I always believed that opening and eating food before paying for it was akin to shoplifting. But long gone are the days when I could righteously throw shade at people munching on unpaid-for cookies while they shop. My toddler sees his time in the shopping cart as a mobile all-you-can-eat buffet. Good news for you: I buy everything we open. Bad news for me: I buy everything we open.

Don’t even get me started on the Catch-22 that is the parking lot. It used to be that I’d silently curse the existence of those who wantonly left their cart behind in the prime spot I was about to park in. These days I’m regularly faced with the moral dilemma of leaving my children unattended in a hot car or being a conscientious shopper. I at least try to put my cart somewhere out of the way, which then, of course, makes it harder for the person who collects them but makes parking easier for patrons. There really is no winning when it comes to cart return. I used to be a stickler for 15 items or less express checkouts, but now I just eyeball my cart to see if it’s in the ballpark. Sometimes it’s just better for everyone if I can take the express route to the parking lot before the candy display tantrum has time to reach its crescendo. It always seemed rude to me to open a sealed bag of bananas, take out three, and then put the scavenged bag back in your cart. Nowadays…actually, I still think that’s rude. I just buy the whole darn bag of bananas. ■

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