California
Stargazing Around Grocery PAGE 36
The Struggle of Courageous Leadership 2019, ISSUE 1
CALIFORNIA GROCERS ASSOCIATION
WIP How IndependEnt Grocers Can
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CONTENTS | ISSUE 1
FEATURES
28 How Independent Grocers Can Win in 2019 This February, independent grocers nationwide will be in San Diego for the National Grocers Association Convention. As competition grows, so do opportunities. Those that can quickly adapt, will thrive.
COLUMNS President’s Message Your Day. Your Story. . . . . . . . . . . . . . . . . . . 4 Chair’s Message Navigating Today’s Incredible Pace of Change. . . . . . . . . . . . . . . 6 Viewpoint Bread & Metaphors’. . . . . . . . . . . . . . . . . . . . . . 8
36 Stargazing Around Grocery: Inmar Insights into 2019 From increased automation to greater shopper autonomy, 2019 will see accelerating change across virtually every facet of the grocery industry.
Guest Column Supporting Our Veterans’. . . . . . . . . . . . . . . . 10 Government Relations Thoughts on the Governor’s Proposed Budget . . . . . . . . . . . . . . . . . . . . . 18 Capitol Insider And We’re Off!.. . . . . . . . . . . . . . . . . . . . . . 20 Inside the Beltway Now Is the Time to Become a Grocery Industry Advocate. . . . . . . . . . . 23 Washington Report Five Trends to Watch in 2019 .. . . . . . . . . . 24
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Mommy Blogger The Hard-Learned Lessons of Feeding Small Humans. . . . . . . . . . . . . . 56
Little Things Make the Biggest Difference in Customer Experience In a world where 60-80 percent of customers describe themselves as satisfied or very satisfied…right before going on to defect to the competition, “meeting expectations” is no longer an option. In business you either fall below expectations or you exceed them.
DEPARTMENTS CGA News. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Outside the Box New Retail Perspectives.. . . . . . . . . . . . . . . 26
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Know the Law ADA Update: Can That Animal Come In Here?.. . . . . . . 54 Index to Advertisers. . . . . . . . . . . . . . . . . . 55
The Struggle of Courageous Leadership As a leader, an essential (and often unspoken) part of your job is continuing to “hold space” for the positive opportunities ahead, even when the circumstances are frightening. 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 Super A Foods
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
Saj Khan Nugget Markets
Bob Richardson The Clorox Company
Scott Silverman KeHE Distributors
Denny Belcastro Kimberly-Clark Corporation
Greg King California Fresh Market
Doug Minor Numero Uno Market
Lee Smith Smart & Final Stores
Jeanne-ette Boshoff MillerCoors
Nancy Krystal Jelly Belly Candy Co.
Tim Murphy Costco Wholesale
Rick Stewart Susanville Supermarket IGA
Bob Bukovec Tyson Foods, Inc.
Michel LeClerc North State Grocery Inc.
Nicole Pesco The Save Mart Companies
Jaclyn Rosenberg Nielsen
Pamela Burke Grocery Outlet, Inc.
Hillen Lee Procter & Gamble
Bob Richardson The Clorox Company
Joe Toscano Nestlé Purina PetCare
Brent Cotten The Hershey Company
John Mastropaolo Chobani, Inc.
Mike Ridenour The Kraft Heinz Company
Rob Twyman Whole Foods Market
Willie Crocker Bimbo Bakeries USA
Jonathan Mayes Albertsons Companies, Inc.
Casey Rodacker Mar-Val Food Stores
Jim Van Gorkom NuCal Foods
Steve Dietz United Natural Foods, Inc.
Joe McDonnell Campbell Soup Company
Jeff Severns PepsiCo Inc.
Michael Walton Unilever
Jake Fermanian Super King Markets
Mark McLean CROSSMARK
Greg Sheldon Anheuser-Busch InBev
Richard Wardwell Superior Grocers
Damon Franzia Classic Wines Of California
Casey McQuaid E & J Gallo Winery
Karl Wissmann C & K Market, Inc.
David Higginbotham Stater Bros. Markets
Skip Nugent Best Buy Markets IGA
Jeff Sigmen Reyes Coca-Cola Bottling LLC
President/CEO Ronald Fong
Senior Director Events & Sponsorship Beth Wright
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 Executive Director CGA Educational Foundation Shiloh London Costello, CFRE
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Senior Director Government Relations Aaron Moreno Director CGA Educational Foundation Brianne Page Director Digital Communications Nate Rose Controller Gary Brewer
California Grocer is the official publication of the California Grocers Association. 1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448–3545 (916) 448–2793 Fax www.cagrocers.com For association members, subscription is included in membership dues. Subscription rate for non-members is $100.
Kevin Young Young’s Payless Market IGA © 2019 California Grocers Association Publisher Ronald Fong rfong@cagrocers.com Editor Dave Heylen dheylen@cagrocers.com For advertising information contact: Maria Tillman mtillman@cagrocers.com
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grocers day AT THE
CAPITOL
YOUR DAY. YOUR STORY.
For additional information, contact Aaron Moreno, CGA, at amoreno@cagrocers.com or (916) 448-3545. Sponsorship opportunities available. Please contact Beth Wright, CGA, bwright@cagrocers.com or (916) 448-3545. For more information, please visit our website at www.cagrocers.com.
CAL I FO RNIA GRO CER | 3
PRESIDENT’S MESSAGE
Your Day. Your Story.
RO N F O N G PR ES IDEN T AN D CEO CALIFOR N IA GR OCER S AS SO CIATIO N
The recent election altered the political landscape here in California. Your voice in Sacramento is needed now more than ever. The vaunted Blue Wave predicted to sweep the nation lived up to its hype with Democrats sweeping every statewide office and gaining historic numbers in both houses of the State Legislature.
Even more ominous is the threat of legislation that could add more regulatory burdens to the industry. With supersupermajorities, there are ample votes to pass such measures, even if all Republicans and business-friendly Democrats voted against a measure. With all of this looming, we must take it upon ourselves to be proactive with the Legislature and let them know that the last thing we need are laws that hamper our ability to provide jobs and deliver goods and services to our customers at competitive prices.
What were once two-thirds legislative supermajorities are now three-fourths super-supermajorities. These margins have the potential to negatively affect the grocery and greater business community as there are more than enough votes to spare to pass tax increases that need only a two-thirds majority. 4 | CAL I FOR N I A G R OC E R
Now more than ever, it is so important for CA-member representatives to participate in our annual Grocers Day at the Capitol. This annual lobby day is a valuable opportunity for grocers to come to Sacramento in order to tell the stories of our industry to lawmakers and their staffs. It allows grocers
to remind them of the important service we provide to the communities we all serve – legislators and grocers alike. It’s also an opportunity for CGA members to establish (or reestablish) personal relationships with legislators and remind them that they are a resource to reach out to when making policy decisions that may have an impact on their operations. These personal relationships provide the foundation for our government relations program and allow the team to be even more effective as they represent the interests of the grocery industry in the state capitol. This year’s Grocers Day will be on Tuesday, April 9. I can’t emphasize enough how important it is for CGA members to attend and show legislators our unity and resolve, especially with the current political landscape. Please join us for this important undertaking this year. ■
To us, local means
California
We’re proud to offer more of what Californians are looking for – from locally grown produce to California-raised USDA choice meat. Long before local was cool, our family of stores made it a priority to buy direct from local growers. In fact, some of our current relationships with farmers started over 60 years ago. We’re working hard to be California’s favorite grocer. In our neighborhoods, we are focused on developing offerings unique to the California lifestyle, we’re dedicated to contributing to the community, and we’re honored to call nearly 70,000 Californians our employees. To us… Local means fresher
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Local means better |
Local means California
CAL I FO RNIA GRO CER | 5
CHAIR’S MESSAGE
Navigating Today’s Incredible Pace of Change K EN DR A DOY EL R ALPHS GR OCERY COMPAN Y / FOO D 4 L ESS
It has been said that days go slow, and years go fast…and it certainly seems 2019 will be no exception. I always love the way a new year brings renewed hope and promise for what will come and what is possible. As I embark on my year as Chair of the California Grocers Association Board of Directors, I am humbled for the opportunity to support an industry that I am grateful found me. Like many in our industry, I don’t recall as a young woman setting out on a path in grocery, but I am thankful I landed here. As each of us begin our next adventure, I am hopeful it is a healthy and prosperous chapter in the journey. Our industry has never seen a time of greater change, and yet so many of today’s greatest minds remind us that change will only continue to accelerate in the years to come. As we all navigate that pace of change, we are fortunate to have an association that is strong and well respected in a state with many blessings and many challenges. The leadership and staff at CGA is second to none and recognized across the nation as some of the most impactful. The other important area of strength for our association, as in any other group, is our members. Your commitment and support of the work done by CGA is critical and it is one of the best ways we can continue to be a 6 | CAL I FOR N I A G R OC E R
voice for our companies, our associates and our customers. Thank you for all you have done, and all you will continue to do, as we move through a very important year. The impact our industry makes on our communities is powerful. We are rooted in deep and meaningful values that are expressed in big and small ways every single day. There are countless stories of our influence in everything from rescuing and supporting communities in a natural disaster, to how a simple hello at the checkstand made someone’s day. A difference that can often be transformative. As we navigate change, it is those values that must anchor us, as we honor the past, and create the future. ■
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
Bread & Metaphors
K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M
At this year’s Consumer Electronics Show, I found the best innovations are the ones that marry technology to basic human needs and reflect the retailer’s ability to walk in the shopper’s shoes. In the end, despite all the focus on high tech, the most talked-about piece of technology at the recent Consumer Electronics Show (CES) in Las Vegas was a bread maker. And one of the core retailing lessons for me came in the form of a metaphor. Sure, there was plenty of VR. And AI. And 5G. And self-care-oriented products, including one massager, the Osé, that used microrobotics so impressively that it got an innovation award from CES. It then was stripped of its award when it was determined that the item was less about selfcare and more about being an instrument of self-pleasure, though that strikes me as a distinction without a difference, or maybe a difference without a distinction. There also was a considerable number of voice-activated gizmos. And even a 96-inch 8K television that was amazing…though in addition to being wildly expensive, one has to remember that it is likely to be years before 8K content is available, so owning one would be like having an Aston Martin DB5 sitting in your driveway and absolutely no access to fuel.
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In wandering CES – this was the first time I’ve been to the show, and I found it to be every bit as overwhelming as I expected it to be – and talking to event veterans, it seemed clear to me that this was a transitional year for CES. There wasn’t a blockbuster announcement of some new technology or killer app that looks destined to change all of our lives. In fact, this seems to be a transitional time for technology in general, with even Apple struggling a bit to find its footing in the marketplace at a time when there appears to be no next big thing to unveil. (One caveat. There always is a next big thing, and it often comes along and smacks us upside the head when we least expect it, from a source that we didn’t see coming. It just didn’t happen at CES.) To me, a central lesson of CES for retailers came in the form of what ends up being a metaphor – the technology decisions being made by car companies. Walk around CES (and I suppose any car show) and one of the things you see is companies choosing technology lanes. This automobile company decides
to work with Apple in terms of installing communications and media technology, while another one might work with Google, and another with Amazon. I understand why these alliances are created – it’s all about the money. I’m sure car companies get a nice check from technology companies to have their systems installed because that then brings the driver into that company’s ecosystem. I’m not sure this is a very consumer-centric way for car companies to think about these things, though. If I’m in the Amazon ecosystem, and I want to buy a Ford, which seems to be firmly implanted in the Apple ecosystem, I may decide to look for another car brand so I don’t have to change technology ecosystems. I might not, if the importance of the car brand outweighs the brand of the technology. But I might. My point here is this: Wouldn’t these automobile companies be more driverfriendly if they actually took an à la carte approach to this kind of technology, allowing me as the customer to choose what I want? Or, to put it another way, wouldn’t they be better off if they put themselves in the shoes of the customer? To me, those are the shoes in which retailers have to walk these days if they are going to be successful. Continued on page 11 ▶
GUEST COLUMN
Supporti ng Our Veterans
C H R I S T Y DUN C A N-A N D ERS O N E XECUTIV E DIR ECTOR , ALBER T S ON S COMPAN IE S FOUNDATIO N
The grocery industry gives millions of dollars annually to veterans of the armed services.
support and life-saving, in-kind donations is critical to addressing hunger among homeless veterans with disabilities.”
According to The California Department of Veterans Affairs, California is home to 1.8 million veterans, and it anticipate receiving an additional 30,000 discharged members of the armed services each year for the next several years – more than any other state.
Another impactful program the grocery industry is proud to support with financial donations as well as in-kind food and basic household supplies is Veterans Healing Retreat & Family Camp, a project of Easterseals of Central California. The camp is a week-long outreach not only for veterans, but their families, as well.
Historically, the largest demand for benefits and services for veterans occurs immediately after discharge and again as the veteran population ages and requires greater access to medical facilities and long-term care services. As an industry, we make a significant impact in the lives of veterans in our communities. Our industry provides millions of dollars annually to organizations that provide support services to these men and women who have served our country. There are many stories of veteran’s lives improved with the grocery industry’s help. Here are some of my favorites: The Farmer Veteran Coalition in Davis is a nonprofit organization working through a collaboration of the farming and military communities to provide viable and meaningful careers in agriculture to veterans. 10 | CAL I FOR N I A G R OC E R
Matt Smiley was a veteran intern sponsored by the grocery industry to learn organic farming. On the farm, Matt noticed the positive effect that working the land had on his war experiences as a Medic. He also felt like he was serving his country again. Matt is now Assistant Farm Manager at Jacob’s Farm, a leading supplier of organic produce for O Organics and other brands. In Matt’s own words, “I believe sustainable agriculture is a practical solution to healing and employing veterans, strengthening communities, and combating climate change.” Swords to Plowshares, which receives thousands of dollars each year for their mission to end and prevent homelessness among veterans, is a big fan of our industry. “The grocery industry does so much to mitigate food insecurity and give back to communities most in need,” said Colleen Corliss, Development and Communications Director. “The homeless and severely low-income veterans we serve have a number of risk factors for food insecurity. Having generous financial
The 2017 camps, free for veterans, provided services, counseling, mentoring, job training and other outreach for a total of 138 veterans and their families. The program also provided follow-up services and counseling to ensure that the benefits achieved during camp are sustained. For camp participants, the outcome was nothing short of amazing. The program reported that 19 of the 138 veterans were deemed “actively suicidal” (had attempted or were on-watch) at the beginning of their camp experience. After camp and six months of consistent, regular follow-up, each of the 19 reported that they were no longer suicidal.
GUEST COLUMN
In addition, four sets of parents attending the camp were reunified with their children who had been removed and placed into temporary foster care. Five couples restored their marriages. Operation Dignity assists homeless veterans and their families by providing housing and support services, like nutritious meals to help veterans rediscover hope. Marguerite Bachand, Executive Director says, “In Operation Dignity’s housing programs serving homeless veterans, food isn’t just subsistence – it’s a key part
of building a community. Offering hot, nutritious meals or a full pantry shows veterans that we care for their health, their well-being, and their future. Donations from the grocery industry help us provide high-quality food and enrich our services on a daily basis.” Once again, I am so proud to work in an industry that recognizes the enormous sacrifice made by our veterans, especially those who were injured while defending the freedoms we all enjoy. ■ iStock
◀ “Bread & Metaphors”, Viewpoint column, continued from page 8
Let’s take a more supermarket-centric example – click-and-collect systems, also known as BOPIS (buy online, pickup in-store). Research from WD Partners shows that among customers who want to do e-commerce, BOPIS is the number one requested item, far beyond delivery; BOPIS actually tends to create larger basket sizes for the retailer; and, BOPIS tends to get profitable faster than delivery. And yet, many retailers don’t offer it, many of those that do don’t do it well, and many retailers are building stores without creating the basic infrastructure for providing click-and-collect in the future (much less delivery). In essence, they are opening new stores that in some ways already are obsolete. Why? I believe there is a certain amount of denial of future inevitabilities here, plus an unwillingness or inability to think like the customer. This even extends to the pickup bays created by companies that are doing BOPIS – most retailers may have two, three or four slots. But what happens if you’re the fourth customer to pull up, and the three slots are filled? The entire premise behind a clickand-collect offering falls apart, and you’ve alienated the shopper.
“That’s what the best technology innovations do – address essential human needs and desires, sometimes even before we know we have them, and offer solutions that improve our lives.” The technology exists to turn an entire parking lot into a pickup bay, not to mention track customers’ movements so that you know exactly when their car enters your property. But at this point, there aren’t a lot of retailers making these kinds of investments, even though I think that any reasonable reading of the retail tea leaves suggests this is where the world is going and what customers will demand. Alienate or disenfranchise these customers, and they may go elsewhere…like to Amazon, which will be happy to deliver stuff right to their houses or offices. Finally, about the bread maker…I wasn’t being hyperbolic when I referred to it being perhaps the most talked-about technology at CES. The BreadBot, as it has been dubbed by its creator, the Wilkinson Baking Company, is a fresh bread vending machine.
Hunger is a powerful tool if you are in the food business. So how come many supermarkets have all the aroma appeal of a CVS? The BreadBot, by tapping into something visceral, represents the marriage of technology to the satisfaction of a basic human desire. That’s what the best technology innovations do – address essential human needs and desires, sometimes even before we know we have them, and offer solutions that improve our lives. Sure, tech for tech’s sake can be cool, fun and even, given a little time, critical to how we live. But tech that touches the heart, soul and stomach, in addition to the mind, is the real secret sauce for a retailer’s success. ■
Half of it bakes fresh bread, and the other half sells it by the loaf…and the whole thing creates not just theater, but also some powerful aromas that, when you smell them, can’t help but make you hungry. CAL I FO RNIA GRO CER | 11
CGA NEWS
INDEPENDENTS GATHER FOR
ANNUAL SYMPOSIUM THE WESTERN SHORE OF OAHU WAS THE GATHERING PLACE FOR THE 2019 CGA INDEPENDENT OPERATORS SYMPOSIUM IN JANUARY.
Independent grocers from around California joined their supplier and wholesale partners for a week of education, networking and relaxation, all in an atmosphere “conducive to stepping away from your day-to-day operation.” Attendees heard from inspiring thought leaders who shared valuable insights on differentiating customer service, understanding social media marketing and developing “superhero” leadership. In addition to its educational program, the symposium also provided excellent networking opportunities and plenty of time to relax, recharge and renew. “Our symposium continues to blend inspirational speakers with entertaining social events designed to help our members conceptualize the bigger goal of building their business,” said CGA President and CEO Ron Fong. 12 | CAL I FOR N I A G R OC E R
CGA NEWS
This year’s speaker lineup kicked off with Stan Phelps, founder of PurpleGoldfish. com, whose message focused on the little things that make the biggest difference in customer service and explained how the customer experience will determine whether you thrive and profit, or struggle and fail. The following day, Brian Carter, CEO of the Brian Carter Group, provided a high-energy and entertaining program focused on the secrets of social marketing success. Considered one of the top social media experts, Carter blended his background in stand-up comedy with his vast hands-on social media experiences. The Symposium’s final speaker was Brett Culp, co-founder of The Rising Heroes Project. Culp shared powerful stories from his filmmaking adventures that focused on what he called “superhero” leadership and how everyday people can have an extraordinary impact. “Our presenters were fantastic and shared thought-provoking messages that were timely and inspiring,” Fong said.
The CGA Independent Operators Committee wishes to thank this year’s symposium sponsors: CGA Educational Foundation, Bimbo Bakeries, USA, Post Consumer Brands, C&S Wholesale, UNFI/SUPERVALU and Kimberly-Clark.
CAL I FO RNIA GRO CER | 13
CGA NEWS
CGA ELECTS 2019 BOARD OF DIRECTORS
Kendra Doyel
Last November 30, Kendra Doyel, Senior Director of Human Resources and Labor Relations for Ralphs Grocery Company, a subsidiary of Kroger, was elected the 20182019 California Grocers Association Chair of the Board of Directors at the Association’s Annual Meeting. As Chair, Doyel will lead the Board’s strategy regarding CGA’s numerous legislative, educational, communications and industryrelated programs. The Association is comprised of more than 300 retail companies operating more than 6,000 stores in California and Nevada. The chair serves for one year. She succeeds Immediate Past Chair Bob Parriott, Twain Harte Markets. “We are very excited to have Kendra serve as our chair for the coming year,” says CGA President Ron Fong. “Her expertise in government relations, along with her extensive knowledge of the grocery industry will be a tremendous benefit to our association.” In accepting the Board reigns, Doyel said her focus during her time as chair will be to “elevate CGA in any possible way.” Her goal is to make CGA the “go-to” source for California grocery information. The Ralphs executive is the fourth woman to serve as CGA Chair. Two women now serving on the Board’s Executive Committee are slated to become CGA chair in the next three years.
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In addition to Doyel, the following individuals were elected to the 20182019 CGA Board of Directors Executive Committee: First Vice Chair, Phil Miller, C&S Wholesale; Second Vice Chair, HeeSook Nelson, Gelson’s Markets; Treasurer, Renee Amen, Super A Foods; Secretary, Dennis Darling, Foods Etc.; and Immediate Past Chair, Bob Parriott, Twain Harte Markets Chair appointments to the Executive Committee include: Dave Jones, Kellogg Company; Kevin Arceneaux, Mondelez International Inc.; and Lynn Melillo, Bristol Farms. Independent Operator Committee Chair Elliott Stone, Mollie Stone’s Market, was elected as an Executive Committee member. Stone replaces Dennis Darling who was elected Secretary. Directors elected to their first full threeyear term include: Jeanne-ette Boshoff, MillerCoors; Pamela Burke, Grocery Outlet, Inc.; Saj Khan, Nugget Markets; Greg King, California Fresh Market; Nancy Krystal, Jelly Belly Candy Co.; Hillen Lee, Procter & Gamble; Skip Nugent, Best Buy Markets IGA; Bob Richardson, The Clorox Company; Jeff Severns, PepsiCo Inc.; Scott Silverman, KeHE Distributors. Directors elected to their second three-year term include: Denny Belcastro, KimberlyClark Corporation; Bob Bukovec, Tyson Foods, Inc.; Steve Dietz, United Natural Foods, Inc. (UNFI); Michel LeClerc, North State Grocery; Mark McLean, CROSSMARK. Former CGA Chair Jim Wallace, Sprouts Farmers Market, was elected an honorary board member.
MEET YOUR NEW BOARD MEMBERS Jeanne-ette Boshoff MillerCoors Jeanne-ette Boshoff is Pacific Region Chain Sales Director for Miller/Coors. Pamela Burke Grocery Outlet Pam Burke is Chief Administrative Officer for Grocery Outlet. Prior to joining Grocery Outlet in June of 2015, Pam served as Senior Vice President – Legal, HR, Risk and General Counsel of CRC Health Group.
Saj Khan Nugget Markets Saj Khan is Vice President, Grocery Operations & Purchasing for Nugget Markets, headquartered in Woodland, Calif. Greg King California Fresh Market/ El Rancho Marketplace Greg King is President of California Fresh Market/El Rancho Marketplace. Nancy K. Krystal Jelly Belly Candy Company Nancy Krystal is Associate General Counsel at Jelly Belly Candy Company, and is responsible for handling and advising on a wide range of legal issues. Hillen Lee Procter & Gamble Hillen Lee is Associate Director of West Region Food at Procter & Gamble and leads a multifunctional team of 50-plus covering approximately $700 million of business. Skip Nugent Best Buy Markets IGA Skip Nugent is owner of Best Buy Markets IGA in Hanford, Calif. Bob Richardson The Clorox Company Bob Richardson was named Director of Sales, Industry and Customer Development in November 2008 and is responsible for the overall business results with assigned customers. Jeff Severns PepsiCo, Inc. Jeff Severns is Sr. Director, Retail Sales, California Region for PepsiCo, Inc. Scott Silverman KeHE Distributors Scott Silverman is Vice President, Business Development for KeHE Distributors and serves as the Vice President of Business Development and is responsible for the Western United States.
CGA NEWS
NEW YEAR, NEW LOOK WHAT’S NEW FOR THE CALIFORNIA GROCERS ASSOCIATION IN 2019? A LOT. CGA has updated its brand, redesigned its website and e-newsletter and in the Spring will move to its new headquarters. “With the purchase of our new headquarters in downtown Sacramento, we thought it was time to update the Association brand and several of its communication tools,” said Ron Fong, CGA President and CEO. CGA’s logo has been simplified to highlight its three key missions – government advocacy, communications and industry relations, and its familiar acronym – CGA, with the letter G (Grocers) rising slightly above the other letters. “We wanted the logo to remain true to representing the Association’s mission to serve, represent and educate its members and to advocate on their behalf,” said Fong. “We also believed it was time to simplify our look to better emphasize our strengths.”
The new logo, with its updated color palette, will be splashed across the Association’s entire suite of print, digital and marketing programs. Under the direction of Nate Rose, Digital Communications Director, the Association’s redesigned website and newsletter will focus on a streamlined, easy-to-navigate look. The Association’s weekly e-newsletter, Checkout, also reflects this same focus on simplicity and ease-of-use, along with content customization. The Association will occupy its new office at 1005 12th Street, Suite 200, in early March and officially open by May. CGA purchased the 20,544 square foot three-level historic building in 2015. “Purchasing our own building was a sound investment for the Association,” Fong said. “We wanted to celebrate this important milestone with branding that was equally bold.”
CGA HIRES NEW SALES MANAGER The California Grocers Association is pleased to announce the hiring of Maria Tillman as Manager, Advertising & Sponsorships, effective immediately.
LOSS PREVENTION, SAFETY, RISK MANAGEMENT COMMITTEE MEETS The CGA Loss Prevention, Safety, Risk Management Committee met in early December for a full day of educational programming that featured presentations on facial recognition, confrontational management, OSHA and microlearning to engage and empower your associates. More than 35 LPSRM professionals attended the event, hosted by Axonify. The committee’s next meeting is April 8 in Sacramento, Calif.
In this newly-created position, Tillman will oversee CGA’s print and digital advertising strategy along with managing the Association’s sponsorship programs. She will report to Beth Wright, Senior Director, Events & Sponsorship . “Having Maria oversee both advertising and sponsorship sales makes perfect sense,” said Dave Heylen, Vice President, Communications, noting the crossover sales opportunities will allow companies greater avenues to participate in CGA programs. Prior to joining CGA, Tillman worked for the Sacramento Metro Chamber as an Account Executive for Member Services. Prior to that she was employed by the Sacramento Business Journal, Harrison, Temblador, Hungerford & Johnson and TPF Hardwood.
Sponsored by
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CGA NEWS
CALIFORNIA RETAILERS: Tobacco Stings are Happening Now, Remember to Check Every ID! This year in California, undercover stings to check for underage tobacco sales will double, and there are tough penalties for violators. And in California, the age of tobacco sale is 21, not 18. Stings are already happening. Three clerks in the Central Valley were cited in January for selling to minors. Officers working with police cadets conducted a minor decoy operation across the city of Lodi, attempting to buy tobacco at 24 shops. All three clerks received citations, and one was arrested on an unrelated felony warrant. In 2016, California raised the tobacco age of sale to 21, which includes e-cigarettes and e-juices. Called Tobacco 21, the law aims to help keep tobacco products away from youth, who are more susceptible to becoming addicted.
However, the responsibility for the law lies with store owners and clerks, not customers. Undercover stings can happen anywhere in the state at any time – stores are selected randomly. Fines for a first violation start at $400 to $600, and can go up to $6,000. It is not just fines either. Store owners caught selling tobacco products to anyone under 21 also risk losing their tobacco license. The best thing store owners can do is to train employees to ask for identification for every tobacco sale. Store owners can get free training materials at www.cdph.ca.gov/tobacco21, and order free STAKE Act age-of-sale warning signs by calling 1-800-258-9090 and using code CA21.
KELLY ASH NAMED VICE PRESIDENT, GOVERNMENT RELATIONS The California Grocers Association is pleased to announce the hiring of Kelly Ash as Vice President, Government Relations, effective Jan. 3, 2019. In this position, Ash will serve as the Association’s chief lobbyist and be responsible for managing all aspects of CGA’s advocacy efforts. She will represent CGA member companies on strategic advocacy efforts before the State Legislature, regulatory agencies and local municipalities, as well as manage CGA’s government relations staff and contract lobbyists. Ash will also participate on CGA’s Senior Management Team. “Kelly will be a tremendous addition to our government relations team,” said Ron Fong, CGA President and CEO. “She is no stranger to the California Legislature, having served in numerous positions in the State Assembly. Her experience will 16 | CAL I FOR N I A G R OC E R
prove extremely valuable as the Association continues to strengthen and expand its legislative program.” Prior to joining CGA, Ash served three years as Capitol Director in the California State Assembly and two years as Deputy Political Director for the Personal Insurance Federation of California. She also has served as a Consultant, Capitol Director/ Legislative Director and Legislative Aide in the California State Assembly. Ash holds a master’s degree in Criminal Justice from Boston University and a bachelor of arts degree in Political Science from Seattle Pacific University. “Kelly stood out from a field of excellent candidates,” said Michel LeClerc, Chief Financial Officer, North State Grocery, Inc., and chair of the CGA Government Relations Committee. “She brings to CGA a great blend of expertise and passion that will serve us well as we navigate the legislative and regulatory challenges facing our industry.”
NEW MEMBERS CGA welcomes the following members:
FaceFirst, Inc. 15821 Ventura Blvd Ste 425 Encino, CA 91436-4776 Contact: Michelle Tutino, Office Manager E-mail: finance@facefirst.com Phone: (818) 540-9743 Website: www.facefirst.com
New Seasons Market 1300 SE Stark St Ste 401 Portland, OR 97214-2473 Contact: Mathias Whisler, Sr., Competitive Pricing Manager E-mail: mathias.whisler@newseasonsmarket.com Phone: (503) 292-1987 Website: www.newleaf.com
Novamont 1000 Bridgeport Ave Ste 404 Shelton, CT 06484-4676 Contact: Paul Darby, Vice President, Marketing E-mail: paul.darby@novamont.com Phone: (203) 744-8801 Website: www.novamont.com/eng
Qualifying America’s Workers 1200 Quail St Ste 205 Newport Beach, CA 92660-2707 Contact: Gary Jarvis, Rick Ergonomic Management E-mail: gjarvis@safsol.com Phone: (714) 329-4877 Website: www.safsol.com
Sprouts Farmers Market 5455 E High St Ste 111 Phoenix, AZ 85054-5464 Contact: Jim Wallace, Sr. VP, Operations – West Phone: (480) 814-8016 Website: www.sprouts.com
CA LAW The sale of tobacco products including e-cigs is prohibited to persons under 21.
PREVENT A LIFETIME OF ADDICTION ©2019 CALIFORNIA DEPARTMENT OF PUBLIC HEALTH
GOVERNMENT RELATIONS
Thoughts on the Governor’s Proposed Budget A A RO N M O R EN O S EN IOR DIR ECTOR CGA GOV ER N MEN T R ELATION S
There was much anticipation in the lead up to newly elected Governor Gavin Newsom’s first budget unveiling. There was much anticipation in the lead up to newly elected Governor Gavin Newsom’s first budget unveiling.
governing experience, having served in various offices at both the state and local level.
Being sworn in on January 7 and then pivoting to the constitutionally mandated presentation of the state budget by Jan. 10, the new administration did the equivalent of going 0-60 mph in 3.4 seconds (incidentally, this is the 0-60 time of the 717 horsepower Dodge Challenger Hellcat, the last great American muscle car).
His second gubernatorial stint was about making the state run better based on the flaws he’d seen in government over the years. This wisdom gleaned from a lifetime of public service allowed him to take a state that was fiscally broken, plagued by budget deficits and their consequences, and put it on firm financial footing.
Political observers of all stripes eagerly anticipated what sort of budget Newsom would propose. Would he fully embrace and fully fund many of the social programs he talked about on the campaign trail? Or would he continue the relative fiscal prudence of his predecessor, Jerry Brown?
Newsom campaigned, and will likely govern (based on his first budget), as a visionary. His budget reads like a blueprint for investment in human infrastructure, with record spending for K-12 education along with more money for free community college, expansion of preschool education and all-day kindergarten.
The answer to these questions is neither yes, nor no. Instead, the answer to the questions is yes and no. If, as it is often said, budgets reflect the values of those who produce them, then this is a truly Gavin Newsom budget, albeit with traces of Jerry Brown mixed in for good measure. Jerry Brown campaigned and governed as a fixer and caretaker. He came to the office his second time around with unparalleled
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His eye for the future also is seen with his emphasis on making housing more affordable, as groups from all political sides note that having a well-educated workforce and companies growing in our state will mean nothing if there is nowhere for workers to live in proximity to their jobs.
There is some temperance to go with Newsom’s forward thinking. In a nod to his predecessor, Jerry Brown, who often warned of coming fiscal calamity, Newsom targeted over a billion dollars to go to the state’s rainyday fund. He also proposed more than $8 billion to go towards paying off state debt and some of the state’s unfunded retirement liabilities. The lessons of Brown did not go completely unnoticed by Newsom the visionary. What remains to be seen is what the Legislature will do. Remember, the Governor’s budget is merely a proposal – a starting point from which to begin negotiations. They may want more money for education and social services. They may not want to put in as much money into the rainy-day fund. The first real test of Gavin Newsom the Governor will be how he deals with these inevitable conflicts that come from the budget process. From a business perspective, this budget doesn’t mean much on its face. But it’s worth noting (and perhaps hoping) that this budget will focus the legislative energy of governing Democrats on education and housing, leaving less time to pass legislation that may negatively affect the fortunes of the state’s economic drivers. ■
CGA gives me a voice in Sacramento that I otherwise wouldn’t have. Through CGA I’ve been able to lobby directly with elected officials and their staff on issues that effect my business. RICK STEWART, PRESIDENT SUSANVILLE SUPERMARKET ONE STORE – SUSANVILLE, CA
Want to learn more about the benefits to CGA membership? 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 CAL I FO RNIA GRO CER | 19
CAPITOL INSIDER
And We’re Off! LO UI E B ROW N IN T HE S ACR AME N TO OFFICE O F K HAN, S OAR ES AN D CON WAY, L L P
In case you haven’t been paying attention, 2019 is here, and it came in with a bang! Brown
There has been no shortage of happenings taking place in your State Capitol. Here are some of the items that have made news in just the first couple weeks of this extraordinary year: • Gavin Newsom was sworn in as California’s 40th Governor; the first Democrat to democrat transition in power in more than 100 years. In his inaugural address, the governor spoke to all Californians, those who voted for him and those who didn’t, and identified homelessness, housing, and economic equality as top priorities for his Administration. The address will be remembered for quite some time, if not for the substance, for the moment when the governor was joined on stage by his two-year-old son. • The governor issued an Executive Order creating the largest single purchaser for prescription drugs in the nation and allowing private employers to join the state in negotiating drug prices. The Executive Order also included a letter requesting President Trump and the federal government allow California to move forward on a plan for universal healthcare.
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• The governor, in one of the longest presentations to date, clocking in at more than 90 minutes, presented a $209 billion budget, with an estimated $20 billion in additional revenues. The budget includes one-time funding for universal preschool and community colleges, and expanded Medi-Cal services, in addition to a number of other policy priorities of the new Administration. • The governor is quickly filling positions in his Administration, including policy advisor positions that have never before existed. • The governor ordered a comprehensive modernization and reorganization of California’s troubled Department of Motor Vehicles after numerous media reports regarding long wait lines, potentially adding non-residents to voter rolls, and failure to meet the requirements of the new Real ID. • PG&E, California’s largest utility, declared its intention to file bankruptcy as a result of the liability facing the company from the 2017 and 2018 wildfires.
• Los Angeles Unified School District teachers strike, impacting more than 500,000 students. • The governor issued an Executive Order to inventory all state-owned parcels and identify property being underutilized for the purposes of building affordable housing. Local zoning ordinances do not govern the use of state property allowing the State to enter into long-term lease arrangements with developers and expedite projects. Take notice, the list above does not include any news from the Legislature, which is also starting the year in extraordinary fashion. Eight new members were sworn into the Assembly, and nine new members were sworn into the Senate. Democrats now hold the largest majority since the 1880s with 60 Democrats in the Assembly and 29 in the Senate. This mega-majority control by the democratic party gives them the ability to pass any policy, including taxes and constitutional amendments, without support from the Republican party. On the policy front, more than 2,500 bills are expected to be introduced by the deadline in late February, but to date, the introductions have been slow and steady. However, even with this slow and steady pace, legislation already introduced calls for more than $40 billion in new spending from the State’s General Fund.
CAPITOL INSIDER
“On the policy front, more than 2,500 bills are expected to be introduced by the deadline in late February.” iStock
Special elections have been called for early March and June if necessary, to fill the seats vacated seats by Senators Ricardo Lara and Ted Gaines, each elected to another office in November. Both elections are expected to draw a large number of candidates, but will not change the Senate’s make up.
continues to operate in 2019 just as it did when initially passed in 1978 by penalizing grocers and forcing them to be the recycler of last resort. Last year, we were close to moving a bill through the Legislature with no opposition and no “no” votes, only to have it vetoed by then-Governor Jerry Brown.
Even though considerable change has occurred, much will remain the same. We will continue our quest for reforms to the California bottle bill program which
We will also continue to work on cleaning up last year’s privacy legislation that unintentionally impacted club cards used throughout the industry. These cards have
been subject to California law and privacy protections for nearly 20 years. Last year’s legislation duplicates many of the existing laws while confusing some other areas and is simply unnecessary. As you can see, 2019 is bound to be a wild, and quite possible exciting, ride. So, buckle your seat and hold on because here we go! ■
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Advertising in the CGA Annual Buyers’ Guide is your key to reaching thousands of grocery executives and buyers in the largest market in the nation – California. Reserve your advertisement today Advertisers receive a free listing in Buyers’ Guide.
Reservation Date: May 15, 2019 Ad Material Date: June 1, 2019 Publication Date: July 1, 2019 For more information, contact Maria Tillman, CGA, at (916) 448-3545, or mtillman@cagrocers.com.
CAL I FO RNIA GRO CER | 21
Customized Grocery Workplace Harassment Prevention Training Mandatory training for supervisors and managers specific to the grocery workplace The California Grocers Association Educational Foundation proudly launches the first-of-its-kind, on-line supervisor training for workplace harassment prevention. This new, easy-to-use two-hour training module is customized for the grocery industry and fully compliant with California law. CUSTOMIZED TR AINING FOR GROCERY SUPERVISORS
• Tailored for the grocery industry • Real life in-store, office and warehouse scenarios A F F O R DA B L E
• Quantity discounts • CGA-member savings • Save up to 75% off your current solution E ASY TO IMPLEMENT
• Completely tablet/desktop ready • On-demand training for your employees • Customized reporting for compliance tracking & verification
Purchase Today! To learn more about this effective, affordable and easy-to-use training, including special pricing, visit cagrocers.com/workplace-harassment.
CGA Educational Foundation | www.cagrocers.com/workplace-harassment | (916) 448-3545
INSIDE THE BELTWAY
Now Is the Time to Become a G r o c e ry I n d u s t ry A d v o c at e 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
With the Democrats in control of the House of Representatives, your involvement is needed more than ever. They’re off! The 116th Congress has officially started, although not exactly on a high note given the tremendous impasse bringing the longest government shutdown in history.
committee chairs and determining ratios of Democrats and Republicans on committees that will determine committee assignments for the newly elected Members as well as some of the returning members.
Republicans now control the U.S. Senate by a 53-47 margin (two Independents caucus with the Democrats). Republican-led committees, Republican leadership, and Republican Committee Chairman remain committed in 2019 to continue reshaping the judiciary by confirming new judges in vacancies across the country.
In at least one case the new agenda resulted in a new name to the committee – Education and Labor instead of Education and the Workforce. With 59 new Democrat members and 29 new Republican members – many holding elective office for the first time, our most important job is to educate them on our industry and the essential daily interactions your businesses have with the federal government in order to protect your customers and associates and preserve your business as a critical contributor to the tax base of your local communities.
Additionally, the Senate will consider nominees for a number of vacant positions at the Cabinet and Subcabinet levels at agencies throughout the Trump Administration. There are nine new U.S. Senators, busy learning the ropes and getting their committee assignments, and already three veteran Senators – Senators Grassley (R-IA), Alexander (R-TN) and Roberts (R-KS) who have announced their retirements in 2020. The new U.S. House of Representatives led by California’s own – Speaker Nancy Pelosi has an entirely different focus. The new Democrat majority is busy appointing new
We expect oversight of the Trump Administration, labor issues, the “green agenda,” repeal of the tax cut, infrastructure, and health care to be high on the priority list of the new Democrat leadership. FMI has been on Capitol Hill meeting with each of the newly-elected Members’ offices – with the goal of explaining more about our industry, how we interact with government agencies, and how we and
you would like to be a resource to them as they consider some of the complex issues presented to Congress. Our first request of you is to ask you to commit to being a grocery industry advocate. For now, you can sign up on our new advocacy platform located at fmi.org. Once we have your contact information, we will then send you a message any time there are critical issues before Congress where we would like you to consider weighing in. It is easy, completely customizable if you like, and can be accomplished from your phone in less than one minute. You can send an email, tweet or make a phone call to your congressional office. Once you sign up to be a grocery advocate, keep your eyes peeled for our first message, which will be for you to invite your Member of Congress to your store or business to see what your team does every day to serve customers. As you know, governing is by no way limited to Washington, D.C. and federal issues; and nowhere is that truer than in California, with state and local issues constantly on the front page. FMI has just completed our 2019 State Legislative Outlook with an overview of issues that are likely to be considered in state legislatures and local municipalities across the country. ■
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WASHINGTON REPORT
F i v e T r e n d s t o Wat c h i n 2 0 1 9
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
Some key industry and consumer trends from 2018 will take on even greater importance in 2019. As 2019 begins to unfold, independent retailers are in a good position to get ahead of the key industry and consumers trends that will impact the entire grocery industry. They need to be aware of these developments and the high stakes involved. Here are five trends that should be on the radar of independent grocers this year: Gen Z Comes of Age This generation, often defined as consumers born between the mid-1990s and 2012, is still up for grabs. While they mirror millennial behaviors in some ways, this group also has its own unique identity. Independents will need to understand what it takes to connect with these younger consumers, including with enhanced variety and digital experiences. For example, Gen Zers are more comfortable receiving advertisements through social media based on their activity and interests. This provides retailers with an opportunity to expand digital advertising that can be specially targeted to increase sales. Retailers that gain the trust and loyalty of these shoppers will be in a stronger position for many years to come.
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Transparency Progresses The need for transparency is not a temporary development. It’s a long-term trend. Consumers are demanding more information. Embracing transparency will be essential for retailers to maintain and grow trust. Shoppers are interested not only in learning more about product ingredients but also in attributes such as sourcing. Independents are already among the most trusted retailers, so transparency is a good way to further grow that bond with shoppers. E-Commerce Evolves E-commerce is often viewed as a threat to traditional retailers, but it’s also an opportunity. Independents are beginning to make progress with a range of e-commerce models, and they need to understand that success with customers lies in employing a balanced approach to in-store and online strategies. Independents don’t need to make the largest e-commerce investments in the industry. However, they do need to determine which strategies will be most important for customer convenience. For example, fresh is where independents can differentiate themselves in a crowded e-commerce field by excelling in the category.
Wellness Soars Health is a more significant topic with consumers. Everyone is becoming more aware as health costs soar. Retailers need to have the right products for customers, but just as important is the ability to provide guidance. This is needed in areas of the store that include packaged foods, the perimeter, and the pharmacy. Independents, known for their differentiated service, have what it takes to offer products and guidance that differentiate from competitors. Consolidation Advances As mergers continue, the consolidation of large retailers can lead to dilution of the unique aspects that defined their successes in the first place. That underscores the importance of independents as the retailers that maintain high standards and unique local approaches. Customers seeking local offerings are likely to look to independents more. The five trends outlined here should be on the radar of independents. They will need to determine the best investments to make in the coming years, which isn't easy in an industry heading in so many new directions. These are difficult decisions, but independents are up to the task. They can position themselves as the retail segment that understands shopper needs and is willing to prove it. ■
CELEBRATING YEAR S
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!
OUTSIDE THE BOX N EW RETAIL PERS PECTIV ES
Man Up Euromonitor reports that global sales of men’s grooming products reached $50 billion in 2017 and is on track to grow 16 percent by 2020. American men already use four grooming products per day and spend 48 minutes daily on grooming including washing, conditioning and styling their hair. iStock
FUTURE of FOOD
iStock
If you haven’t heard of Wageningen University in The Netherlands you might want to look up the institution at the center of an agri-revolution. In a corner of Northern Europe nicknamed “Food Valley” the university is focusing on food technology including altering the color of lights at indoor grow rooms to increase yield, vitamin content, smell and taste. Turn on the red light and you get more efficient growth. The blue light gets you shorter plants with higher levels of antioxidants.
SHOCKING RESULTS The popularity of electric vehicles is up so much that Tesco and Volkswagen are teaming up to build the largest charging network in the U.S. The firms are planning to launch 2,400 additional charging stations at 600 Tesco stores over the next three years. And the service will be free to consumers using a regular charger. iStock 26 | CAL I FOR N I A G R OC E R
Dollars in Singles
Chinese data services firm Synfun reports that the annual Singles Day sales generated about $45 billion, twothirds of which was accounted for by Alibaba, China’s leading e-commerce company.
Kid S tuff Kudo s
RISE of the
MACHINES? Business conversations seem to be centered around artificial intelligence. But it’s not about putting robots in stores. Non-tech companies are starting to see AI opportunities for achieving business goals and improving P&Ls by using it to redesign their organizations, cut costs, analyze geographic expansion and becoming part of the business strategy.
iStock
iStock
Professional Ethics
iStock
In a 2018 survey of ethical and honesty standards, the Gallup Organization found that the top three slots belonged to those in the medical profession. Nurses took the number one slot, followed by doctors. But only one percentage point behind doctors were pharmacists.
Ultimate Experience
If you want to appeal to parents, take care of the kids. This was the thinking behind a line of clothing for children with disabilities introduced by Marks & Spencer. The “Adapted for Easy Dressing” line is available for kids up to age 16 and features innovations such as easy-dressing products with as few seams as possible, snaps instead of buttons and zippers, and Velcro fasteners which makes it easier for kids in wheelchairs. The entire line is modeled after the company’s regular clothing line so disabilities aren’t defined by the clothing.
North of the Border iStock
Everyone talks about customer experience. But John Lewis & Partners department stores in the United Kingdom want to provide the ultimate in personalization. Private shopping will enable customers to book an entire department for after-hours shopping with access to expert advisors. Customers can also book the store for an evening’s shopping party if you can get your friends and family to spend a minimum of $12,800.
Not that there aren’t challenges, but the place to be in the retail world is Toronto. Hirise, multi-family building construction is at an all-time high and there are reportedly 91 cranes on this Canadian skyline. Toronto has become the fastest growing city in the U.S. and Canada, according to Cushman & Wakefield. Taxes and wages are a bit higher than the U.S. which hasn’t seemed to stop Nordstrom’s, a recent entry from making a killing.
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How Independent
Grocers can finish first
in 2019 by jessica dumont
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If there is one thing that Kevin Davis has learned in his more than 20 years leading Bristol Farms, it’s that finding a niche has helped the independent grocery company out-execute major chains. Davis, formerly President & CEO of Bristol Farms and now special advisor to the board, takes pride in carrying thousands of distinctive food and beverage items that big-name grocers can’t get their hands on. “If you succeed in differentiating your store to your customers so that they understand why they’re shopping there, and they get a different quality or service – something that’s unique and different, you will be a survivor,” Davis says. “If you’re trying to beat the big guys at their game, you have a hard road. The more unique, different and special you are, the longer you can survive and the more you can do.” With a product assortment that is local, fresh and specially curated, Bristol Farms stands out as one of the most popular stores in Southern California and one of the most successful independent grocers in the state. But even as it thrives, there are still a number of challenges in operating an independent grocery store in today’s evolving industry. As most independent operators are all too aware, business has changed dramatically in recent years, especially with the rise of e-commerce and the continued growth of giants like Amazon and Walmart and newcomers like Aldi. This has, without question, caused new challenges and created more competition for independent grocers. But it has also created an opportunity for them to stand out and offer something that shoppers cannot get from retail behemoths or international grocery chains. “This industry has always experienced a lot of change,” says retail food industry consultant Michael Sansolo. “The competitive landscape keeps changing, and the consumers’ needs and wants keep changing. The difference today is the enormity of the change and the speed of the change.” Fortunately, independent grocers have the flexibility to adapt well and respond quickly to change, according to Peter Larkin, president of the National Grocers Association (NGA), which represents more than 1,400 retail members and about 8,000 storefronts across the country. “One word I would use to describe their advantage is speed. I like to say that the independent operators that I know and have worked with over the years can make decisions quickly and turn on a dime,” Larkin says. Continued on page 30 ▶
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◀ Continued from page 29
iStock
Regardless of the change, independent grocery stores can make adjustments or sweeping overhauls without going through a bureaucracy, Larkin says, and this will help them get ahead of their competitors much faster. Kevin Coupe, the “Content Guy” for MorningNewsBeat.com, agrees. He says there are some great independent retailers who are independent precisely because they know they need to be competitive, and yet they’ve decided they’re going to play their own game. “The worst thing you can do is play somebody else’s game and play by their rules,” Coupe says. There are independent grocers that stand out to Coupe because they have a specific value proposition, such as Bristol Farms and Gelson’s Markets in Southern California, Mollie Stone’s Markets in the San Francisco Bay Area and New Seasons Market in the Pacific Northwest. But these retailers also understand that they may need to make changes from time to time to create something completely different.
Making E-Commerce Work Perhaps the most triggering buzzword today when it comes to grocery is e-commerce. According to research from Nielsen and
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the Food Marketing Institute, 70 percent of consumers will be grocery shopping online within the next five to seven years.
needs and customers. Harmons just marked one year of e-commerce offerings for several of its 19 stores.
“Our industry has always relied on technology to help us be more efficient and more cost-effective,” Larkin says. “Now we have technology that is also consumer-facing. Our members are looking at what direction they should take regarding e-commerce, as well as other technology that will help them be more efficient and effective in driving costs down.”
“That was an interesting challenge for us because we grew up as a brick-and-mortar business,” says Lindee Nance, vice president of marketing for Harmons. “Because we’re family-owned and not as large as these other chains, it took us a while (to launch e-commerce).”
Larkin says a big part of the e-commerce challenge is the competing technologies that exist, which make it difficult for independent retailers to figure out which one they need and how much they should invest. Coupe says independent grocers have to figure e-commerce out, but they also have to resist simply turning to a company like Instacart to fulfill their e-commerce needs. “They get all your shopper data and they’ll compete with you,” Coupe says. Instead, he encourages companies to be diligent in finding a way to do e-commerce that works for them. Harmons, a fourth-generation family-owned grocery business based in Salt Lake City, Utah, is one company that has figured out an e-commerce format that is tailored to its
Harmons’ e-commerce service is called eShop, and it features about 33,000 items that customers can purchase online. Once a customer places an order, a personal shopper, employed by Harmons, will fulfill the order in store and communicate with customers by text as needed. Personal shoppers will use text and picture messages to ask the customer about replacements or substitutions for out-of-stock items as well as preferences – such as how ripe their bananas should be. eShop orders can be picked up in store, and Nance says Harmons recently partnered with Shipt to begin offering last-mile delivery. Harmons has chosen not to hire Shipt for personal shopping and instead plans to keep that feature in-house. Continued on page 32 ▶
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◀ Continued from page 30
“What makes our online service unique is the customer service aspect, and we want to maintain that, so we didn’t want to outsource personal shopping to Shipt,” Nance says. Customers have responded very well to Harmons’ e-commerce offerings, and last year Harmons was able to achieve its goal of ending the year with 3 percent of eShop stores’ total sales coming from online orders. Customers who use the service still do about 60 percent of their shopping instore, Nance says, but they use the online service for repeat purchases and “stock-up” shopping trips. With the rise of e-commerce, the traditional strengths of retail are becoming less important, Sansolo says. “Things like location, which used to be so important, don’t matter as much. We can order anything from where we are. These traditional strengths of retail are challenging the industry to find new ways of appealing to especially younger consumers who can have things done for them.”
Standing Out from Competition Another significant challenge for independent operators today is increased competition, which changes daily. Larkin says that is not just the number of
competitors that independent grocers face, but the nature of the competition and how it has changed over the years.
company to move from price competition to fresher food offerings, which were not widely available at other grocery chains.
“It used to be that supermarket operators would name another supermarket as their competition. Now, you have so many different places that are selling food and grocery items that it’s more difficult to pinpoint who your competitors are,” Larkin says. For example, big-box discounters like Walmart and Target are now in the grocery business, as well as dollar stores and convenience stores.
“We started out as a price operator in Utah, but in order to stay in business we’ve had to shift our focus,” Nance says. “You have to decide who you’re going to be and stay true to it, and that’s really been an effective approach for us. It can be risky to move away from the price message, but if we’d tried to compete on that we’d have raced to the bottom.”
“The competitive landscape keeps changing, and the consumers’ needs and wants keep changing. The difference today is the enormity of the change and the speed of the change.” “There are more competitors, and independents have a hard time determining who their fiercest competitors are and how they need to change to keep their customers,” Larkin says. For Harmons, which was founded as a fruit stand in 1932, competition drove the company to reinvent itself several years ago when Walmart came to Utah for the first time. In the early 2000s, this led the
Since then, Harmons has stood out largely for its fresh food and local offerings – including artisan bread baked in stores and fresh meal solutions, as well as a lineup of products shoppers won’t find in other supermarkets nearby, such as Kroger or Whole Foods, which Nance says are Harmons’ closest competitors. Today, Harmons carries more than 2,300 local-toUtah products.
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Based in Los Angeles County, Bristol Farms has also pursued fresh foods and unique product offerings to stand out from larger grocery chains. Bristol Farms was founded by two partners in 1982 as a specialty butcher shop and grocery store. Today the company operates 26 stores under three banners including Bristol Farms, Lazy Acres Natural Food stores and the recently acquired Metropolitan Markets, which operates in Seattle, Washington. Until recently, the company was owned by a private equity firm, but due to an unsolicited offer from Korean retail conglomerate Shinsegae – which owns retail giant E-mart in South Korea – the company has changed hands and will now operate as a wholly owned subsidiary of E-mart. Notwithstanding its success that attracted a massive international buyer, Bristol Farms is among the most popular and highperforming independent grocers in California. The average Bristol Farms store is about 29,000 square feet, and while it offers mainstream brands and goods that shoppers recognize – such as French’s mustard and Bush’s baked beans – Davis says the stores’ unique specialty items are its focus. The banner also has a central kitchen where it makes more than 600 fresh items and ships them to stores. “We’re not commodity-driven,” Davis says. “We’re specialty, unique, fresh, organic and natural-foods driven. Our foodservice department is bigger than our grocery department.” Bristol Farms and Harmons both exemplify how independent operators can take advantage of their opportunities to stand out from larger grocery chains by offering something that others cannot do as easily, or as well. “A lot of independents’ ability to focus on customer service, to know their customers, to curate local products in their store better than Amazon and Walmart can do, or even Kroger or Safeway or Albertsons – that’s where they have the advantage,” says Larkin.
“It’s not keeping up with those companies. It’s understanding and responding to the needs of their own consumers.”
The Resource Challenge For most independent grocery businesses, resources – both human and financial – are ever-present challenges, and making money and resources work takes constant inventive thinking. “It’s really hard to compete today in this environment when Amazon has neverending supply of money,” Coupe says. “Margins are tight, and people are getting squeezed from the bottom and the top. It’s very difficult to find the resources to compete.” He suggests that independent
grocers keep their prices sharp and do what they have to make their stores compelling, relevant and resonant to their shoppers. Nance with Harmons says the bottom line is always a challenge, especially as the cost of goods continues to go up. At Harmons, that means the team has to be creative to make sure the margins are right and to keep business running smoothly – but also to stay true to the company’s core values. “As costs increase, we want to be competitive in the market with our prices – but we also want to offer competitive compensation and care for our associates. It’s one of our main values,” Nance says. Continued on page 34 ▶
A Voice for Independents: CGA’s Independent Operators Committee To ensure that all of its members are represented, the California Grocers Association created the Independent Operators Committee to be the voice of independent grocery companies in California. Chaired by Elliott Stone, vice president and general manager of Mollie Stone’s Markets, the IOC works on issues specific to independent operators – issues that Stone is well-versed in as a second-generation leader for his family’s company. Mollie Stone’s operates nine grocery stores in the San Francisco Bay Area, and as an independent operator, Stone believes that the company plays a significant role in each of the communities it serves. “In order for independent operators to continue to succeed, we have to adapt to change and stay innovative,” Stone says. It also helps to network with and learn from other independent operators, which is a major benefit of participating in the IOC. Each year, the committee holds several special events and educational opportunities, including a yearly golf tournament, the annual Independent Operators Symposium in Hawaii and several educational events. As part of the IOC, independent operators will also help inform CGA’s government relations and advocacy efforts. This year’s Independent Operators Symposium took place in January, and Stone says the event rejuvenated and motivated CGA’s independent membership base, helping many operators to look at their businesses in a new way. “We encourage all independents that are members of CGA to get involved with the independent operators committee because it adds great value to their membership,” Stone says. To get involved in the IOC, contact Sunny Porter, Senior Manager, Marketing & Membership at (916) 448-3545.
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Davis notes that Bristol Farms’ major challenge is finding and retaining employees. California’s minimum wage laws have created a labor market where employees have a shorter term view of their employment, rather than entering the grocery business with a career orientation. “You have to look long term at who you’re hiring and you have to train and develop them so that they can see their path to success, so that they can see their growth beyond their starting job,” Davis says. To help with this, Bristol Farms will pay half of an employee’s tuition at a community college
How to Win as an Independent Grocer Despite the ups and downs that many independent grocery companies face, there is plenty of room for independents to operate alongside major supermarket chains. But independents may have to work a little harder and invest a little smarter to stand out. There is a fear in the industry that the traditional grocer is becoming irrelevant to the shopper and the future, Sansolo says. To remain relevant today, retailers can
“These are fully-loaded culinary programs that we have staffed with full-time chefs and sous chefs, and our customers love it,” Nance says. “They love to come in and learn how to cook something they wouldn’t normally try.” Larkin says he is “bullish” on the future of independents, especially companies in California like Cardiff Seaside Market, Mollie Stone’s, Bristol Farms and Draeger’s Market who really understand what their customers want. That doesn’t diminish the fact that there is tough competition, and some will go out of business, but Larkin says many independents have invested and are very successful. And the demise of some small grocery stores may benefit stronger competitors. “There are many independents buying other independents. They are growing because some of their colleagues are getting out,” Larkin says.
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for any employee who wants to complete the Western Association of Food Chains’ retail management certificate program, an accredited eight-course program available at many California community colleges. As for e-commerce, Davis doesn’t view it as much of an issue. “We offer home delivery and we always have,” Davis says. “It is growing and the competition, like anything else, is growing with Amazon and Whole Foods and everyone focusing more on it. But it’s a subset of our business. It’s not the majority of our business, and it never will be.”
no longer rest on their old strengths. Rather, they need to focus on delivering an experience for shoppers, being resourceful and activating allies. “How do you build a shopping experience that convinces people to get up, stop using Alexa or Siri, and come to the store? Independent operators are going to need to become much more creative, more flexible,” Sansolo says. That includes having a good supply chain, good products and well-trained people, but more than that, retailers need to create excitement and they need to create an experience, he says. One way Harmons draws people into stores is through its cooking schools, where customers can sign up for a cooking class focused on a special cuisine.
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Another winning strategy, according to Coupe, is for grocers to offer clickand-collect as part of their e-commerce capabilities. “I would always encourage small retailers to do click-and-collect before they do delivery – customers want it more,” Coupe says. This may be a daunting era to operate a grocery business, no matter what size or ownership structure a company has, but the future is bright for independent operators. Harmons, for example, is planning to open its 20th location in 2020, and is always scouting for more locations due to customer demand. “With every store we build, we try to get just a little bit better. Our team is constantly look at processes – we always say we’re the best at getting better. We don’t want to say we’re the best and rest on our laurels,” Nance says. For those who are committed to their success and their customers, there are plenty of ways to stand out and to attract shoppers who want something different, memorable and local. It will take hard work and innovation, but as most independent operators know, that’s just par for the course. ■
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Contact us today to learn how we can help make this your best year ever! Eric Pearlman, Sr. Director Independent Sales, West Coast 916.823.4586 | www.cswg.com
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GAZING
AROUND GROCERY: INMAR INSIGHTS INTO 2019
By Craig Rosenblum, Regional Vice President Enterprise Retail, Inmar
With the holidays in the rear-view, it’s time to pause and take a quick look ahead at what promises to be a very “interesting” 2019 for trading partners in the grocery space. And, from my perspective, much of what will make this year interesting will be the increased deployment of automation. As grocery retail continues to operate on razor-thin margins (while the cost of servicing shoppers grows) it is imperative that retailers maximize efficiency all along the value chain from inventory optimization through closing the last mile and automation looks to be the answer. But, for all the promise of efficiency and the potential to drive shopper satisfaction and loyalty, the use of automation poses some daunting questions.
Only time will provide the answers but 2019 will see a growing number of retailers using automation to try to improve operations and more quickly activate shoppers. There will be more cashless and/or selfcheckouts, more geofencing, more delivery drones and autonomous vehicles, more virtual reality and even more robots. But will all this automation automate success? We’ll have to see.
Will today’s consumers greet this technology with delight and what aspects of this “new retail” will require a longer period of adjustment for shoppers? How far will customers and shoppers be willing to go in providing personal information so automated technology can work its magic toward delivering the ultimate shopping experience?
In the meantime, to get a broader sense of how the industry will engage, activate and retain shoppers this year, I asked several of my colleagues at Inmar for their insights into what will be influencing and shaping the grocery marketplace. Here’s what they had to say… Continued on page 38 ▶
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But even before shoppers reach the store they’re going to be reaching out to retailers online for help with personalized meal planning and food product options that not only support their wellness goals but also are tied to their individual health states.
“Personalized, experiential retail will proliferate -- from web pages to food prep to pricing.” Jon Hauptman, Sr. Director, Analytics Solutions; Diana Medina, Director, e-Commerce Solutions; and Tom Martin, Associate Director, Digital Solutions
Retailers and brands have already demonstrated a willingness to participate in personalized communication with shoppers but this form of engagement is going to move from occasional to obligatory in 2019. We’ll see marketers, especially those on the retailer side, commit to establishing one-to-one communication with shoppers and they’ll do it through personalized web pages and personalized mobile app screens that employ individualized screen layout and content, curated assortment bundles, etc.
To meet this need, retailers will lead with curated content (recipes, storytelling, promoted products, etc.) intended to inspire and activate shoppers at every meal occasion with the information tailored to the specific needs of the shopper including budget, number of guests, health considerations, etc. Creating that kind of uber-specific, loyalty-building connection is going to require that retailers accelerate investment in the tools and technologies already available for better engaging shoppers while, at the same time, pursuing cross-industry collaboration with healthcare systems and insurers to better enable shoppers in their quest for better health. Smart retailers will use more real-time communication with shoppers around their online orders – and focus their efforts on optimizing the online shopping experience and delivering superior quality of service as key differentiators in an already crowded space. However, the most striking, and potentially most impactful employment, of personalization may well be personalized pricing. With the technology now available and the concept proven, expect to see retailers more actively engage in store-level personalized pricing and promotion – maintaining their strongest long-term base prices while providing shorter-term promotional pricing to select households on those items most important to them regardless of department, category or brand.
“Supply chain will go ‘super strategic’ as efforts around e-commerce focus on functionality and profitability.” iStock
And these personalized “conversations” will, more and more, take place around meals and food preparation as the goal for retailers will shift from growing share of wallet to growing share of stomach. They’ll pursue this goal in-store by dedicating more space to grocerants, breweries, wine bars, food stations, coffee bars, etc. Retailers will also take additional steps to make it easier and more attractive for shoppers to pre-order prepared foods for same-trip pickup. With shoppers’ heightened focus on healthier eating, additional “better for you” center store options will not suffice; retailers won’t be able to rely on new product lines from manufacturers to attract and retain these increasingly discriminating shoppers. Expanded, and more nutritious, deli, prepared, pre-packaged and locally sourced perimeter options will be retailer “must haves” in 2019, with prominent labeling and signage that leave no doubt among shoppers as to the quality – and origin – of what’s being offered. 38 | CAL I FOR N I A G R OC E R
Paul Weitzel, Vice President, Analytics Solutions
E-commerce will continue to be the leading growth channel for food and beverage sales in 2019 and this growth will be fueled, in large part, by the increasing number of brick & click locations that will come into operation during the year. As this expansion accelerates, trading partners and service providers will be increasingly focused around delivering the best total landed cost to customers and consumers and begin to seriously tackle operational requirements for making e-commerce sustainable and profitable over the long term. Therefore, expect to see more unique arrangements between trading partners with independent fulfillment platforms fulfilling online orders directly inside the manufacturer’s mixing centers – lessening distribution and handling and keeping costs down for online shoppers. Concurrently, there will be greater use of smaller depots closer to delivery points to make home deliveries less costly, more operators leveraging automation to make the pick-and-pack
process more efficient, and center store shrinking as brick and mortar locations make room for high-volume backroom picking and packing. Blockchain automation will make its way into integrated supply chains so that food transparency and traceability will be seamless and readily available to trading partners and, ultimately, consumers. This push will continue to come from leading U.S. retailers and their global trading partners who are increasingly requiring upgraded sourcing information and better food safety solutions. Applied correctly, blockchain should also reduce redundancies inherent across trading partner systems and operations. This year’s omnichannel expansion will also include more and more CPG manufacturers testing their own direct-to-consumer programs. There will be widespread interest and no shortage of experiments, but it will be those CPGs that produce small cube, high-value products that will be better positioned to effectively leverage the opportunity and make it pay off.
“Private label will pivot toward innovation while analysts will drive a superior customer experience.”
The bottom line will be that retailers, working to build long-term shopper loyalty, will take on greater (if not full) responsibility for store brands. This new “ownership” means that new skills, such as consumer and shopper research, must be acquired. At the same time, leveraging the opportunity presented by innovative private label offerings will require that retailers and store brand suppliers collaborate around product conceptualization and development, not just create and respond to bid specs. As online offerings will come to include more produce, additional innovative private label products and broader CPG assortment, those retailer locations still standing after further consolidation will serve as hyper-marts crossed with mini distribution centers. Predictive analytics will guide the supply chain logistics necessary to make this increased personalized assortment, speed and convenience economically viable. Larger retailers that have stuck to analytics hiring initiatives since the early 2000s and converted lower foottraffic volume establishments into pseudo-DCs will fair best. Traditional grocers will likely expand same-day delivery efforts– paralleling the rise in consumer comfort with online grocery shopping. And it will be predictive analytics that will inform spend and make this new level of CX achievable and profitable.
Jim Hertel, Sr. VP of Retail Promotion Network and Irv Turner, Vice President, Analytics Operations
Analytics is transforming grocery the way it has transformed several industries – from finance to pharmaceuticals. That transformation is not going to slow in 2019 as the key grocery retail players will continue growing their analytics stables to drive a new level of Customer Experience (CX). They will be investing heavily in hiring analysts and data scientists to increase customer convenience while using predictive analytics to grow razor-thin margins. Even now, predictive analytics is at the core of hyper-localized shelf assortment, shopper segmentation aligned with product affinity, personalized discounts by CPG-brand price-sensitivity and forecasted out-of-stocks by hour of day. Going forward, predictive analytics – in combination with highly customized data storage vectors populated from retailer data lakes – will significantly increase personalization and CX to the point where out-of-stock forecasting will focus on the household refrigerator rather than the supermarket shelf. Highlighting this enhanced assortment will be the addition of new private label offerings that do more than simply mimic national brands. This break with retailers’ long-standing practice of growing new sales by relying on replicating new products from national brand manufacturers is showing stress as cost and margin pressures increase for CPGs. Therefore, retailers are going to have to step up. And they will as the promised benefits are significant. Store brands that deliver on quality, in addition to value, have high appeal among younger shoppers and represent a unique opportunity to attract cost-conscious Millennials who want an “experience” even as they seek to save. Besides adding margin, private label can drive store choice and shopper loyalty based on exclusive availability.
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A year of accelerating change… From increased automation to greater shopper autonomy, 2019 will see accelerating change across virtually every facet of the grocery industry. Continuously shifting shopper behaviors – further impacted by looming economic uncertainty – will drive retailers and brands to work harder than ever to innovate their operations in order to anticipate and effectively address diverse marketplace demands. And while there is no single strategy that will guarantee successful, if not superior, shopper activation, those trading partners that make full use of available data and conscientiously apply advanced analytics to inform their shopper engagement will be those that retain their competitiveness and protect their profitability in the (very interesting) year ahead. ■
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Education & Events March 5–9, 2019 Trade Show March 6–8, 2019 Anaheim Convention Center North Halls, Anaheim Hilton March 7–9, 2019 Anaheim Convention Center Main Halls Anaheim, CA USA
Keeley Tillotson & Erika Welsh Wild Friends Foods
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By Stan Phelps, JD/MBA PurpleGoldfish.com
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The Biggest Myth in Business It was a summer evening back in 2009. I was in New York City with a work colleague. Brad and I were at a trendy rooftop bar. One of those places where a bottle of beer is $15. We were waiting to meet a few people before heading over to a networking event. I noticed an older gentleman sitting on his own for over 30 minutes. It was obvious that he was waiting for someone. I decided to strike up a conversation about waiting by offering my standard line: “Do you know that we spend 10% of our life waiting?” I told him I knew it was true because I once read it on the internet…so it must be true. We laughed and started talking about the etiquette of waiting. I stressed the importance of being on time. Right then this guy shook his head and said something I’ll never forget:
This was a complete paradigm shift for me. I immediately started thinking about how this applies to the customers we serve and the idea of meeting customer expectations. I’ve always thought that the idea of meeting expectations was a surefire recipe for losing business. It almost guarantees you will fall short. It’s similar to playing prevent defense in football. Prevent defense only prevents you from doing one thing…winning. In business you either fall below expectations or you exceed them. There is no middle ground. It bears repeating: “There is no such thing as meeting expectations.” In a world where 60-80 percent of customers describe themselves as satisfied or very satisfied…right before going on to defect to the competition, “meeting expectations” is no longer an option.
“There is no such thing as being on time. Being on time is a fallacy.” I told him that I’m usually on time, but then he shook his finger in my face and uttered, “You either are early…or you are late. No one is ever on time. On time is a myth.”
Continued on page 44 ▶
Stan Phelps was a presenter at the 2019 Independent Operators Symposium.
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I went home that summer night and started thinking about companies that purposely set out to exceed the expectations of their customers. I began looking for companies that purposely did a little something extra for their customers. A concept called a Purple Goldfish.
A Purple Goldfish? A Purple Goldfish is any time a business purposely goes above and beyond to provide a little something extra. It’s a marketing investment back into your customer base. It’s that unexpected surprise that’s thrown in for good measure to achieve product differentiation, drive retention and promote word of mouth.
Why a Goldfish? The average goldfish is three inches, yet the largest in the world is nearly 20 inches in size! That’s six times larger!!! Imagine walking down the street and bumping into someone 30 feet tall. How can there be such a disparity between a garden variety goldfish and their monster cousins? It turns out that the growth of the goldfish is determined by five factors. It is my belief that the growth of your business is exactly like a goldfish. Let’s look at each of the factors:
1 SIZE OF THE ENVIRONMENT = THE MARKET Growth Factor: The size of the bowl or pond.
Rule of Thumb: Direct correlation. The larger the bowl or pond, the larger the goldfish can grow. The smaller the market, the lesser the growth.
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2 NUMBER OF OTHER GOLDFISH = COMPETITION
Growth Factor: The number of goldfish in the same bowl or pond.
Rule of Thumb: Inverse correlation. The more goldfish, the less growth. The less competition, the more growth opportunity. Those other goldfish are your competition.
3 THE QUALITY OF THE WATER = THE ECONOMY
Growth Factor: The clarity and amount of nutrients in the water.
Rule of Thumb: Direct correlation. The better the quality of the water, the larger the growth. Similarly in business, the weaker the economy or less consumer confidence, the more difficult it is too grow.
THEY’RE TREATED IN THE FIRST 120 DAYS 4 HOW OF LIFE = START-UP PHASE / LAUNCH Growth Factor The nourishment and treatment they receive as a fry (baby goldfish). Rule of Thumb: Direct correlation. The lower the quality of the food, water and treatment, the more the goldfish will be stunted for future growth. The stronger the leadership and capital as a start-up, the better the growth.
5 GENETIC MAKE-UP = DIFFERENTIATION
Growth Factor: The genetic make-up of the goldfish.
Rule of Thumb: Direct correlation. The poorer the genes or the less differentiated, the less the goldfish can grow. The more differentiated the business is from the competition, the better the chance for growth.
High Value
Which of the five factors can you control? Let’s assume you have been in business for more than four months. Do you have any control over the market, your competition or the economy? NO, NO and NO. The only thing you have control over is your business’ genetic make-up or how you differentiate the customer experience. In goldfish terms, how do you stand out in a sea of sameness.
Why Purple? Purple is an ode to New Orleans and its most famous event – Mardi Gras. It is a homage because there is one word that comes from New Orleans that epitomizes the concept of exceeding expectations. A word that Mark Twain once said, “was worth traveling to New Orleans to get.” The word is Lagniappe. It is a Creole word meaning “the gift” or “to give more.” Pronounced lan-yap, the practice originated in Louisiana in the 1840s. Back then it was commonplace for a merchant to give a customer a little something extra at the time of purchase. It is a signature personal touch by the business that creates goodwill and promotes word of mouth.
Enter Samuel Langhorne Clemens Mark Twain was so smitten by the word that he wrote about it in his autobiography, “Life on the Mississippi”: “We picked up one excellent word – a word worth traveling to New Orleans to get; a nice limber, expressive, handy word – ‘lagniappe.’ They pronounce it lanny-yap. It is Spanish – so they said. We discovered it at the head of a column of odds and ends in the Picayune (newspaper) the first day; heard twenty people use it the second; inquired what it meant the third; adopted it and got facility in swinging it the fourth. It has a restricted meaning, but I think the people spread it out a little when they choose. It is the equivalent of the thirteenth roll in a baker’s dozen. It is something thrown in, gratis, for good measure. The custom originated in the Spanish quarter of the city. When a child or a servant buys something in a shop – or even the mayor or the governor, for aught I know – he finishes the operation by saying – ‘Give me something for lagniappe.’ The shopman always responds; gives the child a bit of licorice-root, gives the servant a cheap cigar or a spool of thread, gives the governor – I don’t know what he gives the governor; support, likely.”
12 Types of Purple Goldfish Over the course of 27 months, the Purple Goldfish Project crowd sourced over 1,001 examples. It turns out there are a dozen different types of Purple Goldfish. Half are based on “value” and half are based on “maintenance” according to the value / maintenance matrix:
Quadrant I
Quadrant II
Premium Zone High Maintenence
Danger Zone
Target Zone Low Maintenence
Commodity Zone
Quadrant IV
Quadrant III
Low Value Here are the main elements of both: Value (the what and when of customer experience) • What are the tangible and intangible benefits that your business provides? • Does your business go above and beyond to exceed customer expectations? • Are you giving that little unexpected extra to surprise and delight your customer? Maintenance (the who and how of customer experience) • What is the buying experience like for your customer? • Do you make things turnkey or simple for your customer? • Are you responsive to problems / issues for your customer?
HERE ARE THE 12 CATEGORIES
1 THROW-INS (VALUE)
Little extras that are included with your product or service. They help you stand out in a sea of sameness: Example: Southwest Airlines – “Bags Fly Free” and no change fees.
2 IN THE BAG / OUT OF THE BOX (VALUE)
Little unexpected things that are added as a surprise. Example: Maggiano’s – order a signature pasta dish and Maggiano’s will pack an additional one up for you to take home on the house.
3 SAMPLING (VALUE)
Give your customer an additional taste by offering a free something extra on the house. Example: Bigelow Tea – order a box of tea from Bigelow and you’ll be treated to a sample of another flavor on the house. Continued on page 46 ▶ CAL I FO RNIA GRO CER | 45
◀ Continued from page 45
8 ADDED SERVICE (MAINTENANCE)
The little extra that’s an added unexpected service. Example: Safelite repairs or replaces your glass, but they also vacuum your car and clean your windows.
9 CONVENIENCE (MAINTENANCE)
The little extras you add to make things easier for your customers. Example: TD Bank is open 7 days a week and some nights until 8 p.m.
10
WAITING (MAINTENANCE) All customers hate to wait. If it’s inevitable, how can you do a little extra to make it more bearable. Example: Pacific Cafe – while you wait for your table, enjoy a glass of wine on the house.
11 You have two chances to make an impression. When your customer comes through the door and right before they walk out, hang up or log off. These little extras make you memorable and more importantly talk-able. Example: When you check in the Hard Rock Hotel, they’ll let you sample a Gibson guitar. Check in, plug-in and rock out.
5
GUARANTEES (VALUE) Giving your customers that little extra pledge that you’ll stand behind your product or service. Example: Jansport guarantees their bags for life.
6 PAY IT FORWARD (VALUE)
Give a little extra back to the community. Example: Plaza Cleaners – if you are out of work and need a suit cleaned for an interview, Plaza will clean it for free.
7 FOLLOW-UP CALL (MAINTENANCE)
Make the little extra follow up with your customer. Example: Rite Aid follows up with a call to check on a patient.
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Acknowledging that some customers have needs that require special attention. Example: Rainforest Cafe – the restaurant caters to the needs of customer by doing a little extra for those with food allergies.
iStock
4 FIRST & LAST IMPRESSIONS (VALUE)
SPECIAL NEEDS (MAINTENANCE)
12
HANDLING MISTAKES (MAINTENANCE) Admitting that you’re wrong and doing the little extra above and beyond to make it more than right. Example: Nurse Next Door – this nursing agency in Canada takes the idea of “humble pie” to heart, literally delivering a pie when they make a mistake.
Are you ready to stand out in a sea of sameness. How are you doing the little things to add value or make it easier for your customers? What’s your Purple Goldfish? ■ About the Author: Stan Phelps is a TEDx Speaker, Forbes Contributor and IBM Futurist. He believes that today’s organizations must focus on meaningful differentiation to win the hearts of both employees and customers. He is an author of 10 books and has spoken for Fortune 100 brands such as IBM, Citi, ESPN and Target. Stan has delivered keynotes and workshops at over 300 events in the US, Canada, UK, France, Japan, Sweden, Spain, The Netherlands, Russia, Peru, Israel, Singapore, Bahrain, Malaysia and Australia. Stan received a BS in Marketing and Human Resources from Marist College, a JD/MBA from Villanova University and a certificate for Achieving Breakthrough Service from Harvard Business School. Interested in having Stan speaking at your event, email him at: stan@purplegoldfish.com.
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THE STRUGGLE OF
COURAGEO LEA
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Brett Culp spoke at the 2019 Independent Operators Symposium on the topic: “SUPERHERO LEADERSHIP: How Everyday People Can have an Extraordinary Impact.”
OUS ADERSHIP BY BRETT CULP
Emery Benson was 11-years old when his family joined several others for a hiking trip in the Smoky Mountains. Ever the adventurer, Emery wandered downstream from the main group to explore. The rains had been heavy that summer and the river was deep and fast.
Continued on page 50 ▶
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B
◀ Continued from page 49
ack at the top, sevenyear-old Devin Leslie was standing on a boulder, moving too close to the edge of the river. Without warning, Devin’s mom heard a splash. Her son had fallen into the raging current. He was struggling to keep his head above the water, and he was moving so fast she knew she would never reach him.
It was a desperate moment. Devin was in serious danger, and his mom was powerless to do anything about it. All she could do was scream, “HELP!” A few hundred feet below, Emery was startled by her cry. He looked at the river and spotted Devin rushing toward him. In seconds, Devin would move past him and out of reach, and there was no one to assist in the river below. Emery had a split-second decision to make. Would he jump into the river in an attempt to save his friend? It was very dangerous. It would be tough swimming for anyone, but it would be perilous for 11-year-old Emery, especially in a rescue attempt for Devin. If he hesitated, Devin would be left alone in a life-threatening situation, completely out of control in the water. But if he jumped in, he was risking his own life and there would be no one to help. Emery’s mother was upstream, too far away to advise him. He was on his own, and he only had moments to decide. What would you do? Standing at the side of a violent river, hearing the cry for help, seeing your friend in peril, knowing you were the final lifeline, understanding the risk for yourself, and having no time to think. If you were Emery’s mother, and you were close enough for him to hear your voice, what would you shout to him? These are exhilarating and rather terrifying questions, aren’t they? A split-second decision to take a risk – or to play it safe – could have cost either of the boys their lives.
Emery decided to take a leap. Without a moment of hesitation, he jumped into the water, swimming hard to reach the spot where he could intercept his friend. When Devin came toward him, Emery held him with one arm and used his other arm to paddle to the closest boulder. He pushed Devon up onto it and then held on for several minutes until the adults could reach them. Emery made a daring move, certainly worthy of superhero status. And I decided to include his story in my newest documentary film, “Look to the Sky.” You can see the full story by watching the film right now on Hulu, Amazon, or iTunes. During my interview with Emery, I asked him why he decided to jump into the river. He told me that he had just earned his swimming badge in Cub Scouts so he felt he could do it. I have no idea if having such a badge qualifies an 11-year-old to jump into a raging river. I doubt it. But I’m touched by his belief that he could. He believed that he was powerful enough to do the extraordinary. This was a scary, dark situation. Yet, Emery’s instinctive reaction was: “I am ready, willing, and able to accomplish something heroic. Let’s go.” I love that. When we truly believe that our actions can make an impact, we are empowered to do bold, courageous things. That sense of possibility makes us brave. It inspires us to dive into new relationships, explore different opportunities, launch creative projects, and build innovative ventures. When you open yourself to the impossible, have faith in positive change, and see the light in yourself, you start to gain confidence that you can jump into the unknown and make an impact in your own life and in the community around you. When the time comes to take a risk in your life or career, will you be ready to jump? Here’s my hunch: I think Emery’s decision to take a leap was made long before that dire moment of decision. That choice was the result of years of encouragement and positive
affirmation from parents and mentors. It was the build-up of a lifetime of experiences and perceptions. It was an expression of his identity that had been growing for 11 years. It demonstrated his view of the world and his place in it. Maybe you are waiting for your big moment to shine and do something significant. Perhaps you are waiting for life to bring you an extraordinary chance to take an extraordinary risk. The reality is that this moment, even if it feels small and insignificant, is preparing you for the big moment. The choices you make when the spotlight is on you will be the result of the little choices you made when no one was looking. What you are investing in yourself and in other people right now is building your character and identity. Nothing is insignificant. I spent two days filming with Emery and his family near Knoxville, Tenn., where Emery enjoys hiking and camping and doing anything outdoors. I live in Florida. I grew up on comic books and video games, so for me, wading into a cold river in the Smoky Mountains with my camera was pushing the limits of my comfort zone. On the first day, Emery led me an hour uphill to Mouse Creek Falls where the event had taken place. When we arrived at the spot Emery had jumped in, I set my backpack down on the rock to scout out the location. The rocks were more slippery than I’d expected, and after a misstep, I fell in the water myself! I still had my shoes on and my phone and wallet in my pocket. The current pushed me hard into a rock, leaving a huge purple bruise on my side. I alternated between grabbing and slipping at the wet rocks for at least 20 seconds before making my way out. I pulled my phone from my wet pocket. It was dead. My entire life is on my phone. It tells me where to go, how to get there, and who to meet. As I stared at the dark, lifeless screen, my heart sank. I felt stupid for making such an amateur mistake. I tried to stay focused on the shoot, but every five minutes I realized another consequence of my phone
dying. I didn’t remember my hotel name or how to get there. I didn’t have my ticket info for my flight back. Maybe I could call my wife – oh wait…how was I going to survive? Then, when I finally returned to my hotel that night and opened my laptop, I read multiple messages from friends about the passing of Lenny Robinson. Known as the Rt. 29 Batman, Lenny was the Good Samaritan I had featured in my previous film, “Legends of the Knight.” He drove his custom Batmobile to children’s hospitals dressed as the Dark Knight himself to lift the spirits of those suffering. More than that, though, he was my friend.
“When we truly believe that our actions can make an impact, we are empowered to do bold, courageous things.” Emery Benson in the Smokey Mountains.
Alone in my hotel room, there was no one to talk to. I couldn’t send text messages or call anyone. The day had been overwhelming, and I still had to shoot the interviews the next morning. I questioned why I was even shooting this film. I felt weak and out of control. It’s fun when you are on the stage of a soldout theater experiencing a standing ovation for a new film. It’s nice when your movie debuts on Netflix and social media lights up with affirming posts about your work. But those beautiful moments happen because of the choices you make in lonely hotel rooms when your heart is broken and your phone is dead. Continued on page 52 ▶ CAL I FO RNIA GRO CER | 51
◀ Continued from page 51
Filmmaker Brett Culp with Emery Benson
“As a leader, an essential (and often unspoken) part of your job is continuing to ‘hold space’ for the positive opportunities ahead, even when the circumstances are frightening.”
The next morning, I woke up and jumped into cold water again. I was anxious, sad, and frustrated. But, deep in my heart, I knew I was still surrounded by opportunity. I saw my identity within that sense of possibility. I believed I could find my power within the darkness. And I knew that I had the ability to make a positive impact. I didn’t know if my new film would ever literally save a life, but I was confident that I could make a difference, even if it didn’t feel that way on that particular day. At the deepest level, I think that’s how authentic leadership works. It creates a foundation that allows you to keep moving on your noble mission even when things feel dangerous, out-ofcontrol, lonely, and painful.
As a leader, an essential (and often unspoken) part of your job is continuing to “hold space” for the positive opportunities ahead, even when the circumstances are frightening. This hopeful perspective gives you the courage to jump in and stay with the struggle. It motivates you to take action when the safer path is to stand on the riverbank and do nothing. This kind of leadership is what we need every day to keep fighting and to believe our work in the world matters. It’s the courage we need to grow our teams, our communities, and ourselves. ■
Brett Culp is an acclaimed filmmaker whose work has inspired audiences around the world. He is the personal cinematographer for Hollywood stars, music icons, beloved authors, hall of fame athletes, and royal families. Brett uncovers and captures powerful human experiences through his heartwarming movies. He has been featured in USA Today, Entertainment Tonight, WIRED, The Hollywood Reporter, Netflix, and many more. Brett is the co-founder of The Rising Heroes Project, a not-for-profit that supports charitable organizations and empowers community leaders.
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KNOW THE LAW
ADA Update: Can That Animal Come In Here? BY E L IZ ABE TH STA L L A R D
At its most basic, your obligations with respect to any animal (and necessarily, its human companion) depend upon what kind of animal it is. An area that often leads to questions, especially given recent efforts by airlines and others to limit animals in their places of business, is what kinds of animals are entitled to legal protection. A “Service Animal” is a dog that is individually trained to do work or perform tasks for a person with a disability. Examples of the kinds of work and tasks that a service animal may perform include: guiding people who are blind; alerting people who are deaf; pulling a wheelchair; alerting and protecting a person who is having a seizure; reminding a person with mental illness to take prescribed medications; calming a person with Post Traumatic Stress Disorder (PTSD) during an anxiety attack; or performing other duties. The work or task the dog has been trained to perform must be directly related to the person’s disability. Under the Americans with Disabilities Act (ADA), Service Animals may go all places where the public may go or is invited. An “Emotional Support Animal,” or ESA, is a companion animal that provides some therapeutic benefit to an individual with a mental or psychiatric disability, but that is not trained to provide any particular tasks
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for the disabled person. An ESA can assist with severe depression, generalized anxiety disorder, post-traumatic stress disorder, and many other emotional and psychiatric disabilities. An ESA can also be any kind of animal, but dogs are common. ESAs have no protection under the ADA. However, they do have certain protections, such as in the areas of employment, housing and air travel, as defined by other laws. A “Pet” is a domestic or tamed animal kept for companionship or pleasure, and not for utility. Pets have no protections under the ADA. With this background, let’s answer a few common questions about Service Animals. What kinds of animals can be service animals? The ADA confirms that only dogs can be true service animals. However, 2010 ADA amendments provide miniature ponies with essentially the same protections and rights as service animals when they meet certain requirements. The separate category is intended to provide flexibility in situations where admitting a miniature horse might not be appropriate for a public accommodation.
Can a grocery store employee require proof of a customer’s disability before allowing the service animal in the store? No, you cannot ask for information about the nature of the person’s disability. The only two questions you are allowed to ask are: • Is the dog a service animal required because of a disability? • What work or task has the dog been trained to perform? Can a grocery store employeerequire proof of a service animal’s training before allowing the service animal in the store? No, you cannot ask for documentation proving the service animal’s training or a demonstration of the tasks for which it has been trained. It is also important to remember that service animals are not required to wear any specific clothing or identification, although individuals with service animals frequently have their dogs wear vests and other identifying apparel.
KNOW THE LAW
“Under the Americans with Disabilities Act (ADA), Service Animals may go all places where the public may go or is invited.” Should grocery stores post their policies regarding service animals and ESAs? Yes. Posting a notice explaining the store’s policy at the entrance is a useful and appropriate way to notify potential patrons. It is also important to make sure that your store policies comply with not just federal and state requirements, but also any applicable local requirements.
Editor’s Note: Elizabeth Stallard is a partner in the Employment Practice at Downey Brand LLP. She assists retail grocery employers with both employment counseling and litigation.
Do I have to treat a service animal in training the same way that I would treat a service animal? Yes. Under California law, service animals in training are entitled to the same protections as service animals. ■
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CAL I FO RNIA GRO CER | 55
MOMMY BLOGGER
The Hard-Learned Lessons of Feeding Small Humans K I M B ER LY M I L L ER WR IT E R , ACT R E S S
The arrival of a second child creates a whole new look at grocery shopping. Before my son was born, I was petrified of everything. How our life would change, how I would change, and that this whole making a new human thing was a terrible, terrible mistake.
He’s scared of re-entering the realm of the utterly exhausted, while I know it will be chaos but for me, chaos has become a comfortable status quo that is worth its weight in hugs and giggles.
dozen, and some well-established favorites are about all the organic items I will fit into my $500 a month grocery budget. Almost everything else will end up in my (ever expanding) dog or my vacuum anyway. And of course, I know that chicken nuggets shaped like dinosaurs are a food group in and of themselves. I once heard the CEO of a children’s store chain talk about how the vast majority of their revenue comes from first-time parents. When subsequent kids come along parents spend far, far less, either because they already have what they need or because they know that kids don’t need much at all. I’m no expert, but I’d say when it comes to feeding small children the opposite is true. As pro parents this go around we are no longer under the misconception that toddlers will happily gobble up tofu stir-fries or shakshuka for dinner.
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My husband, on the other hand, was cool as a cucumber. He knew that our kid was going to be amazing, and we would be amazing parents, and all was right with the world. And of course, he knew that our kid would eat what we eat; we wouldn’t raise one of those brats that demand a special meal every night. We’re a couple of weeks away from baby No. 2 making her appearance, and this go-around our roles are reversed. 56 | CAL I FOR N I A G R OC E R
To be honest, part of my newly-found sense of chill is that my standards are now much, much lower. The likelihood that I’ll stay up late to clean, dice, steam and puree all of her baby food from scratch as I did for her brother is pretty slim. I’ve learned that applesauce from a pouch is infinitely more coveted than apples picked at a local orchard that have been stewed and mashed at home, and that organic food is to be purchased strategically. Dairy, the dirty
Most of our grocery budget is spent with the nourishment and cooperation of tiny humans in mind. The rest of us…well, we’re just learning to appreciate a good dinosaurshaped nugget. ■
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