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January 2019 Vol 73, Number 1

Also Inside  Apply Now for Scholarships, page 8  Lame Duck Bills Impact Food Industry, page 10  Big Changes Coming to Michigan Food News, page 11

Paid Medical Leave, Minimum Wage Laws Take Effect March 29

Here’s What You Need to Know

On December 13, 2018, two bills affecting employers in Michigan became law, and both take effect March 29, 2019. Public Act 368 of 2018 amends the Improved Workforce Opportunity Act to increase Michigan’s minimum wage to $12.05 by 2030. Here’s what you need to know:  The minimum wage will rise through a series of annual increases over the next 11 years. The first increase, to $9.45 an hour, takes effect March 29.  $12.05 was calculated to coincide with the estimated wage Michigan would have reached under the current law that adjusted the wage each year based on inflation.  If Michigan’s unemployment rate is 8.5% or higher for the immediately preceding calendar year, the scheduled wage increases will be delayed.  No changes were made to the $4.25 an hour training wage that employees aged 16-19 receive during the first 90 days of employment.  The youth wage (85% of the state’s minimum wage) for employees 10 ages 16-17 is still in effect.

Michigan Retailers Association 603 S. Washington Avenue, Lansing, MI 48933

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president ’s message

Winter Musings James P. Hallan Publisher Lisa J. Reibsome Editor

Advertising Index Michigan Lottery ............................................. 2 SpartanNash ................................................... 12 Star Truck Rentals ............................................ 8 Williams Cheese .............................................. 4

Michigan Grocers Association is a division of the Michigan Retailers Association

Michigan Grocers Division Board of Directors James P. Hallan, President Michigan Retailers Association Rich Beishuizen, Country Fresh Craig Diepenhorst, H.T. Hackney Dave Duthler, AMRA Energy Jim Forsberg, Arctic Glacier Premium Ice Jim Gohsman, SpartanNash John Leppink, Leppink’s Food Centers Ken McClure, Kroger Company of Michigan Bryan Neiman, Neiman’s Family Market DJ Oleson, Oleson’s Food Stores Don Symonds, Lipari Foods Thom Welch, Hollywood Markets Jim Zyrowski, Ben’s Supercenters Michigan Food News is completely recyclable. Printed on recycled paper with soyoil-based ink. Publisher does not assume responsibility for statements made by advertisers in business competition. MICHIGAN FOOD NEWS © 2019 Michigan Retailers Services, Inc. All rights reserved.

Contact Information Lisa J. Reibsome, communications director 517.449.2256 MGAReibsome@comcast.net  Michigan Food News advertising  Michigan Food News all content, layout, and printing  Michigan Retailer advertising Grocers Division Michigan Retailers Association 603 South Washington Avenue, Lansing MI 48933 517.372.5656 or 800.366.3699 www.Retailers.com

Gridlock As I pen this version of Musings, it has just been announced that President Trump and Congressional leaders have reached a deal to reopen the government for three weeks while negotiations over border security continue. This is a complicated game of chess, and like most people, I hope that a meeting of minds soon brings a permanent solution to this standoff. It’s unfortunate that workers got caught in the middle, and that some customers who rely on government programs serviced by the grocery industry experienced uncertainty. Michigan Retailers Foundation The Michigan Retailers Foundation scholarship competition kicked off January 1. You should have received a poster, brochure, and letter about the program, which awards 21 scholarships to students who plan to attend or are already in college. Seventeen of the scholarships are what we call “legacy scholarships,” in which MRA members have established a permanent scholarship in their name or in honor of a designee. And, of course, when Michigan Grocers became part of MRA a year ago, we added four Paul M. Felice scholarships to the legacy group to continue to honor the former MGA chairman and director. See the article on page 8 for details about applying for the scholarships. New Faces With Michigan’s term limits law forcing state legislators out of office, the 2019 legislative session has a lot of new faces. In January we welcomed to Lansing 53 new senators and representatives. Our goal is to meet with every new legislator individually to introduce them to Michigan Retailers and explain our legislative priorities and positions. Under the leadership of MRA Vice President of Government Affairs Amy Drumm, we have already met with 37 legislators, and our retail message has been well received by all. Last year, we actively tracked 308 bills on your behalf. Page 10 provides a brief look at some of the lame duck issues that impact food retailers. For a more complete report, you will soon receive our year-end legislative outlook that recaps all the bills that gained traction in 2018 and forecasts our legislative priorities for 2019. Thank You! To end month’s column, I am offering my sincere thanks to everyone who has sent in their membership dues. We look forward to a busy and prosperous 2019!

. MRA President and Chief Executive Officer

it ’s the law

Reminder: Post OSHA Form 300A Starting Feb. 1

Employers subject to OSHA’s recordkeeping requirements are reminded to post their 2018 OSHA Form 300A, Summary of Work-Related Injuries and Illnesses, from February 1April 30, 2019. This form, which must be posted even if no work-related injuries or illnesses occurred during 2018, should be displayed in a common area where notices to employees are usually posted. In addition, a company executive must certify that he or she has examined OSHA Form 300, Log of Work-Related Injuries and Illnesses, and that he or she reasonably believes that the OSHA Form 300A is correct and complete.

OSHA Form 300A Electronic Submission Deadline is March 2

March 2, 2019, is the deadline for electronically reporting OSHA Form 300A data for calendar year 2018. Grocery stores, wholesalers, and other employers in certain industries (see the list at www.osha.gov/injuryreporting) whose peak employment was between 20 and 249 employees during the previous calendar year and establishments with 250 or more employees that are currently required to keep OSHA injury and illness records must file OSHA Form 300A electronically. To file, see www.osha.gov/injuryreporting. January 2019  Michigan Food News 3


Gleaners and Kroger-Michigan Team Up to Fight Hunger

MRA Member the Kroger Co. of Michigan and Gleaners Community Food Bank are conducting special food drives in the greater Detroit area throughout January. At 83 Kroger stores in Wayne, Macomb, Monroe, Oakland, and Livingston counties, Gleaners volunteers are greeting shoppers inside Kroger store vestibules to distribute lists of needed nutritious foods and personal items and collect customer donations at scheduled times and locations on Saturdays and Sundays all month long. “The food and personal items Gleaners collect will make a difference to people in need right here in southeast Michigan,” says Kroger-Michigan Corporate Affairs Manager Rachel Hurst. “Our Kroger customers so willingly give year after year, and we feel sure they will enthusiastically support this collection effort to help end hunger in local neighborhoods.” Kroger customers also have the option to make a donation at any register or select a pre-filled “From Hearts to Homes” $5 or $10 bag of groceries to add to their total at checkout for donation. Each item, monetary donation, and “From Hearts to Homes” grocery bag donated brings hope and food to tables in the community. The food collection events are part of Kroger’s Zero Hunger, Zero Waste plan to end hunger in local communities and eliminate waste across the company by 2025.

Aunt Millie’s Closes Coldwater Bakery

MRA Member Aunt Millie’s Bakeries permanently closed its bakery on Garfield Road in Coldwater on January 11. The company plans to maintain its Bakehouse frozen division in Coldwater and its five other bakeries in Jackson, Kalamazoo, and Plymouth, Michigan, as well as in Lowell, Indiana, and Sydney, Ohio.

Plan Now for Pure Michigan Agriculture Summit

For the sixth consecutive year, Pure Michigan Business Connect and the Michigan Department of Agriculture and Rural Development are hosting the 2019 Pure Michigan Agriculture Summit. Taking place on March 19 at the Radisson Hotel in Kalamazoo from 8:30 a.m. to 3:30 p.m., the summit brings together buyers and suppliers from across the state in a oneday matchmaking event. Whether you’re looking to increase your store’s Michigan-made product lineup or looking to get your product onto shelves, the summit will give you the opportunity to do so. With almost 160 one-on-one meetings scheduled last year, grocers were able to make numerous connections in a few short hours to create new business opportunities. The 2018 Summit had over 360 attendees, 34 buying companies, and over 300 suppliers. Suppliers interested in setting up one-on-one matchmaking meetings must submit an application. Please contact Katy Till at tillk1@michigan. org or Bobby Chasnis at chasnisr@michigan.org.

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Michigan Food News  January 2019


Oleson’s Food Stores’ Owners Hailed as ‘Conservation Angels’

Don Oleson and Jerry Oleson, whose father founded MRA Member Oleson’s Food Stores, recently provided a loan to the Grand Traverse Regional Land Conservancy (GTRLC) to acquire approximately 400 acres of land for public use. The conservancy needed to move quickly to secure the land — previously a northern Michigan summer camp that closed in 2011 after 56 years and was now for sale — before it was snapped up for commercial development. Don and Jerry loaned the conservancy $2.8 million to buy the land and protect it for public use. The land — formerly camp Maplehurst and now the Maplehurst Natural Area — has 150 acres of steep hardwood forested bluffs that drain into Torch Lake and open meadows that surround Lake Maplehurst, a 60-acre spring-fed gem. Its position on high ground means visitors have excellent views of Torch Lake, Elk Lake, and Grand Traverse Bay. The area presents an opportunity to create trails for hiking, cross-country skiing, and snow shoeing. Additionally, there is an extensive waterfront area conducive to beach activities, non-motorized boating, and fishing. According to GTRLC, this is not the first time that Don and Jerry made it possible for the conservancy to meet a seller’s deadline. They were instrumental in helping to protect other northern Michigan parcels of land. “We would not be the success we are today without the support of Don, Jerry, and the rest of the Oleson family,” says GTRLC Executive Director Glen Chown. On their website, GTRLC calls them “conservation angels.” “We can’t thank them enough for making so many conservation dreams come true,” Chown adds. Don’s son, DJ Oleson, serves on Michigan Retailers Association’s Grocers Division Advisory Board.

SpartanNash Names New CIO

MRA Member SpartanNash hired Arif Dar as the new Chief Information Officer, effective January 2, 2019. Since 2015, Dar had served as the CIO for Wisconsin-based SC Johnson and Sons. As SpartnanNash CIO and Senior Vice President, Dar is responsible for the development and execution of the enterprise-wide IT strategy. Dar reports to SpartanNash President and CEO David M. Staples.

Williams Cheese Wins Two Awards

MRA Member Williams Cheese won two awards in the cold pack category at the World Dairy Expo. The company’s Pineapple Habanero gourmet cheese spread took first place and the Raspberry Pineapple flavor took third. The spreads are two of the newest varieties from Williams Cheese. The expo received a near-record number 1,402 entries for cheese, butter, fluid milk, yogurt, cottage cheese, ice cream, sour cream, sherbet, cultured milk, sour cream dips, whipping cream, whey, and creative/innovative products from dairy processors throughout North America. “We’re exceptionally proud of our products,” says Williams Cheese Sales Manager Pat Meehleder. “We expect our new gourmet cheese spreads to sell well for retailers. The sweeter flavors that feature pineapple pair really well with celery, carrot sticks, apples, and other produce.”

AWG Realigns, Makes Key Leadership Changes

MRA Member Associated Wholesale Grocers, Inc. made key leadership and alignment changes for 2019 allowing them to better seize opportunities; provide the best supply performance; and enhance retail-level service, support, and solutions for members. The changes clarify roles and responsibilities throughout the organization, improve internal collaboration, and position the company’s retail-facing teammates “as a united force for positive change,” AWG reports. The most substantive change is that the cooperative will create a more cohesive supply chain alignment by bringing together division operations, merchandising, and distribution/logistics functions.  Dan Funk is the new Chief Supply Chain & Merchandising Officer. He will be accountable for all merchandising and operations, bringing the entire supply chain under one leader. Dan joined AWG in 2012 to lead its Valu Merchandisers subsidiary as President. He later was promoted to Senior Vice President of Grocery for AWG; and in 2015, he assumed the role of EVP, Merchandising and Marketing.  Jeff Pedersen will lead sales, services, support, and solutions for AWG as Executive Vice President and Chief Sales & Support Dan Funk Officer. A 21 year veteran of AWG, Jeff has worked in a variety of increasingly impactful roles from specialist all the way to EVP of Division Operations. Under Jeff’s leadership, this new retailerfacing organization will be segregated into the primary disciplines of Sales, Services, Support, and Solutions. The Sales team will be the primary point of contact for AWG members. The Services team will be responsible for the combined functions of store engineering, store design, store décor, and more. The Support team will be a centrally Jeff Pedersen managed group of functional areas and departments focused on delivering sales support to division teams and its members. These support functions encompass advertising and marketing, creative services, digital and in-store marketing, social media services, and more. The Solutions team is a new addition for AWG. It encompasses retail technology, business solutions, and retail pricing and will expand to be the go-to for various member needs fulfilled by AWG or third-party providers, especially in the area of technology.

H.I.G. Purchases Sterling Investment Partners’ Interest in Lipari Foods Lipari Aims to Continue Steady Expansion

Florida-based private equity firm H.I.G. Capital purchased Connecticut-based Sterling Investment Partners’ interests in MRA Member Lipari Foods on January 8. H.I.G. says it is partnering with the Lipari family and the current management team to grow the company’s distribution and manufacturing platform. H.I.G. currently has about $30 billion of equity capital under management across buyouts, debt, and real estate strategies. “We are very excited about partnering with H.I.G. to support Lipari’s strategic growth plan,” says Lipari President and CEO Thom Lipari. “The company continues to have numerous opportunities to expand, and H.I.G.’s experience and resources, particularly around [mergers and acquisitions], will help us continue our successful growth trajectory. We remain committed to providing outstanding service to our longstanding, blue-chip customers.” Since 2011, Lipari has partnered with financial companies like H.I.G. to facilitate the company’s continued growth and help execute the strategy of becoming a multi-regional distribution and manufacturing company. In 2018, Lipari acquired specialty deli wholesaler Heagy Foods, Mediterranean food business Jerusalem Foods, and the cheese cutting and packaging business of distributor Jim’s Cheese. The Lipari family remains committed to leading the company. January 2019  Michigan Food News 5


Industry Experts Agree on Several 2019 Predictions Albert Einstein said, “I never think of the future, it comes soon enough.” He was definitely in the minority at this time of year when industry experts and publications are all sharing predictions for the new year. In sifting through the lists of grocery-related predictions, several common themes emerged. According to forecasters, grocers should plan to stock more of the following items in 2019. Consumers will continue to be all about eating for health, a trend that now has become a major movement. While many food retailers have taken steps to help shoppers in this quest — hiring dieticians, offering cooking classes, providing healthy recipes, and more — taking a more active role in promoting better health presents a growth opportunity for retailers. (See “Spotlight on Independents,” page 7.)

Healthy Products A challenge in building health-based partnerships is that consumers have different definitions of healthy. Fueling the diversity are today’s popular eating plans — Keto, Paleo, Grain-free, Vegan, Raw, Mediterranean, Carnivore, and many more — and their varying takes on what people should eat. That leads to multiple interpretations of eating healthy.  For instance, Whole Foods says fats are making a comeback, with the trendiest diets on board. The retailer predicts the rise of these “Phat Fats” (fats made popular in the Keto, Paleo, Dukan, and other diets). Increased fats along with higher protein and lower-carb combos will continue to trend across snacking categories. In particular, the retailer says to expect popcorn made with grass-fed ghee, multiple flavors of ghee ranging from sweet to savory, plus new variations on traditional meaty snacks such as chicken chips and thin, crisped beef jerky.  Research company Innova Market Insight’s take on the healthy-eating trend predicts that alternative proteins will be in demand. According to the market researcher, one in two U.S. consumers report that health is the top reason for buying alternatives to bread, meat, or dairy. The search for alternative proteins has resulted in using more black beans, lentils, peas, rice, nuts and seeds, chickpeas, and even insects as protein ingredients in foods.  MRA Member Kroger is on board with this trend. Two of its top predictions for 2019 are health-related. The first focuses on eating styles. According to Kroger, “More consumers are purchasing better-for-you products and subscribing to different eating styles from Vegetarian to Flexitarian to Keto and Paleo. A recent study reports 15% of the U.S. population identify as Vegetarian or Vegan.” The retailer says it’s responding by offering and developing new products that make it easy for customers practicing any lifestyle to find foods to support their health and wellness journey.  Kroger’s other health-related trend notes that many consumers are motivated to reduce or eliminate sugar and/or consume alternate natural sweeteners such as honey and agave. Kroger reports that 47% of consumers are working to minimize their sugar intake. The retailer predicts that new solutions and foods will continue to be added to grocery shelves to help consumers find products rich in nutrition and flavor but lean on sugar.

Bold Flavors Several forecasters predict that in 2019 consumers will explore bolder flavors. Catering to “The Adventurous Consumer” will be important, says 6

Michigan Food News  January 2019

Innova Market Insights. Today’s connected world encourages consumers to discover new flavors. Innova research found that 17% of new food and beverages highlighted ethnic flavors.  Whole Foods agrees, predicting that shoppers will seek flavor inspiration from the Pacific Rim; ingredients such as longganisa (a Filipino pork sausage), dried shrimp, cuttlefish, and shrimp paste as well as vibrant tropical fruits such as guava, dragon fruit, and passion fruit will be in demand.  The Specialty Food Association predicts that the regional cuisines of Africa, South Asia, and Latin America will be in demand particularly by Millennials and Gen Z.  Kroger’s take on the flavor trend is that regional flavors will be big: “From tried-and-true barbecue sauces and flavorful potato chips with a twist, inspiration is coming from Nashville hot chicken, Southern Appalachian pimento cheese, and other geographies,” Kroger says. “America’s culinary heritage is as varied as it is delicious. Consumers will see a growing number of products influenced by local, regional, and global tastes.”

Plant-based Foods  Kroger also reports that consumers are finding it is easier to incorporate more plant-based fare into their daily diets. By electing to go meatless or dairy free, whether for a meal, a Meatless Monday, Flexitarian Friday, or every day, the retailer predicts that shoppers will want more plant-based options. According to Kroger, 31% of consumers participated in meat-free days once a week in 2018.  The Specialty Food Association says plant-based foods now hold broad appeal for consumers who are intrigued by health benefits and have concerns about how their food is sourced. It predicts, in addition to continuing product rollouts in snacks and dairy, plant-based foods will pop up in several new categories.  Innova says the plant-based market shows no signs of slowing down. For the mainstream consumer, going plant-based is about achieving a healthy and sustainable balance between meat and vegetables, rather than adopting an all-or-nothing way of eating.

Snacks Over the past several years, it’s becoming more common for consumers to snack at all times of the day, sitting down for fewer regular meals.  Innova Market Insights says snacking is a central focus of innovation across all food and beverage categories. Approximately 10% of food and beverages launched with a snacking claim over the past five years. “What is changing now is ... snacking is no longer the optional extra, but the definitive occasion,” the market researcher says.  Whole Foods predicts that snacking will take a turn toward the fancy — “Think charcuterie or cheese boards for one, one-ounce portions of Cypress Grove cheeses paired with demi-baguettes as desk snacks, and more mini meals,” the retailer says. Whole Foods also predicts that upgraded retro treats will star on 2019’s shelves.  Another Whole Foods snack-related prediction: Ice cream and other frozen treats will be more in demand in 2019. “The new pints on the block are adding a fresh take on a timeless treat with innovative bases like avocado, hummus, tahini, and coconut water,” the company says. Whole Foods predicts globally-inspired frozen desserts will take the stage — possibly sparked by 2018’s mochi ice cream obsession (shown here)


and the Thai rolled ice cream craze. “Popsicles and gelatos won’t be left out of the fun,” Whole Foods says. “They’ll get some buzz with boozier infusions coming to market.”  The Specialty Food Association agrees saying ice cream is being rethought in function and flavor. Its reinvention started with dairy-free varieties made with coconut, almond, or soy milks. Then Halo Top entered the scene with its high-protein, low-calorie product that others are emulating. Now makers are blurring the lines between treat and healthy snack even further by blending vegetables like cauliflower and carrots into ice creams. But it’s not only about health, the association adds. Boutique creameries known for local, handcrafted, and indulgent ices creams are expanding nationally and could be big in 2019. On the flavor front, global and floral notes like black sesame and jasmine are adding new touches to the market. The association says to look for innovations to continue to drive the category, including further advances in the non-dairy segments.

Sustainability

Many industry experts predict that a lot of these new products, as well as a large number of tried and true items, will come in new packaging this year. There’s a consensus that packing will take center stage in 2019.  According to the Specialty Food Association, soliciting consumer trust through values conveyed on product packaging and the material of which it’s made will be more visible in the coming year.  Innova agrees, noting that the industry is increasingly committed to meeting customer expectations about sustainability. This is driving corporate goals, as retailers and manufacturers commit to sustainable products and packaging.  Kroger says stakeholders are increasingly deciding which businesses to support based on shared values and clarity of purpose. Because of Kroger’s Zero Hunger, Zero Waste commitments by 2025, the company decided to phase out singleuse plastic bags and transition to reusable bags on the same timeline.  Mintel calls this movement Evergreen Consumption. “From farm to retailer to fork to bin and, ideally, to rebirth as a new plant, ingredient, product, or package, a 360-degree approach will ensure resources are kept in use for as long as possible,” the research company says. “The movement towards circularity as the new sustainability will require collaboration between retailers, suppliers, manufacturers, governments, nonprofits, and consumers.” —By Lisa J Reibsome, editor

Spotlight on Independents: Concerns & Opportunities

For 68 years, FMI has been conducting “The Food Retail Industry Speaks” annual survey of U.S. food retailers and wholesalers. Speaks provides the food retail industry with operational and financial benchmarks as well as insights into strategic and tactical decisions. Like in previous years, the report starts with a review of what’s on the minds of food retail executives. That section, previously known as the “Worry Index,” was renamed the “Food Retail Pulse” this year to reflect the many positive responses and general optimism expressed by food retailers. Topping the list of concerns this year is the cost of health care benefits, with 69% of survey respondents saying they expect those costs to increase in the near term. That’s no surprise said FMI President and CEO Leslie Sarasin in a webinar about the Speaks survey. Health care costs rose to 2.1% of sales, up from an already significant 1.7% the year before. As they face higher health insurance costs, food retailers continue to pursue workplace wellness programs, with 59% of responding companies having wellness programs that average 43% participation rates among employees. (For more on this, see “Health Care Costs Continue to Present Challenges for Food Retailers,” page 8.) On the positive side, grocers report that there are growth opportunities under the health and wellness banner and in how consumers use food as medicine. The study found that consumer wellness programs are offered by 51% of grocers and some 46% are looking to do more in this area. FMI’s “2019 Power of Health and Well-being in Food Retail” takes a closer look at this trend, finding that retailers have a big role to play in advancing total-store wellness strategies, both in bricks and mortar and online. The study suggests that fresh produce provides a good place to start. Most consumers believe that fresh fruits and vegetables have positive health benefits:  Many consumers identify produce as a category that supports health. About two-thirds of Americans believe fresh produce is a crucial part of a balanced diet.  More than half closely link fresh produce to heart health, healthy weight, and essential nutrients in diet.  Consumers say that they hope to benefit by increasing fresh produce consumption throughout the day, from dinner to snacks. It’s worth noting that consumers aren’t necessarily measuring up to their goals of eating more produce or following nutrition guidelines. For example, about 30% of consumers say they are very familiar with MyPlate, the dietary guidelines from USDA. Nevertheless, consumers report they eat fewer fruits and vegetables and more protein than MyPlate recommends, according to the International Food Information Council Foundation’s “2018 Food and Health Survey.” Needs From Retailers How can grocers best help consumers shop and eat well? Consumers say the top ways are to provide recipes and recommendations on nutrition and healthy eating and to offer a good selection of grab-and-go healthy prepared foods such as the salad bar items seen here. How Does Your Store Compare? Not surprisingly, fresh foods segments are being tapped for bigger space allocations in the next two years, given that shoppers continue to gravitate towards these categories, the Speaks study says. Some 89% of responding companies expect to increase space for grab-and-go selections, 68% will increase space for fresh produce, and 67% will allot more space for self-serve bars/buffets. Retailers also are benefitting from their investments in product differentiation strategies that include local and organic: 84% said they expect to increase SKU allocation for local products, and 83% said they plan to increase SKU allocation for organic products. January 2019  Michigan Food News 7


Apply Now for Scholarships The Michigan Retailers Association Foundation scholarship competition kicked off January 1. As an official division of the Michigan Retailers Association, Michigan Grocer members are eligible to apply for the MRA scholarships as well as the long-standing Paul M. Felice scholarship. MRA will award four $1,500 Paul M. Felice scholarships. Applications are accepted through April 1 for 21 one-year scholarships for the 2019-20 academic year. Those eligible to apply are high school seniors and college freshmen, sophomores, and juniors who are dependent children of owners or full-time employees of MRA member businesses, which includes Michigan Grocers members. Part-time employees who are full-time students are also eligible.

An independent selection committee made up of educators will select the winners in April. Financial need is not a consideration. In selecting the winners, the committee evaluates the applicants’ academic records, test scores, and extracurricular activities including, but not limited to, retail employment. The committee will not discriminate on the basis of sex, race, religion, or national origin. Applicants will be notified of the results in June. Students may apply online: bit.ly/mrascholarships or www.retailers.com under the Member Benefits tab at the top of the homepage. Students may also contact MRA’s Rachel Schrauben at (800) 366-3699 or rschrauben@ retailers.com to check eligibility or request an application.

Michigan’s Food Safety Efforts Continue During Federal Shutdown

The Michigan Department of Agriculture and Rural Development wants retailers to know that, during the partial federal government shutdown, food inspectors from the department as well as food sanitarians from Michigan’s local health departments continue to conduct food safety inspections to protect public health and the safety of the state’s food supply. MDARD will continue to inspect grocery stores and other food establishments, processing facilities, and wholesale food operations and respond to all complaints to help ensure Michigan’s food supply is safe. Contact MDARD’s Jennifer Holton at (517) 284-5724 with any questions. Ag Exporter Award: The department is now accepting applications for the 2019 Ag Exporter of the Year award, recognizing outstanding companies for their efforts to increase exports of Michigan food and agriculture products. Eligibility is limited to Michigan food and agriculture producers, manufacturers, or shippers who are pursuing international markets and increasing export sales. Products must be more than 50% grown, processed, or manufactured in Michigan. Companies of all sizes are encouraged to apply. Applications are due by 5 p.m. on March 15, 2019. For more information or an application, visit www. michigan.gov/agexport or contact Jamie ZmitkoSomers at (517) 284-5738. 8

Michigan Food News  January 2019


Health Care Costs Continue to Present Challenges for Food Retailers MRA’s Insurance Options Can Help Health care costs are the top concern among food retailers, according to this year’s FMI study, “The Food Retailing Industry Speaks.” Ninety-two percent of survey respondents said they consider the major costs of providing health care benefits to have a negative impact on their business. The study reports that, in 2017, health care costs as a percent of sales rose to 2.1%, up from an already significant 1.7% the previous year. Likewise, eligibility among staff rose to 58% from 52%. The only balancing factor was a slight decline in the employer share of employee premium costs, which fell to 62% from 66% in the prior year. How widespread were health care cost increases? They impacted 72% of responding food retailers. Overall cost increases from 2016 to 2017 were an average of 6.6%. How did these food retailers respond to the higher costs? While 51% fully absorbed the benefit plan cost increases, others pursued different strategies: • 49% boosted employee premiums. • 30% looked into other ways to control costs, including changes to plan designs or features. • 15% raised eligibility requirements for various benefits. Concerns Continue Going Forward It’s not easy when a retailer’s biggest concern is likely to continue to grow bigger. Some 69% of responding food retailers said they expect to face heath care cost increases this year. “Employers’ health care costs have been rising for decades, often making it difficult to run a successful business,” says Michigan Retailers Association President and CEO Jim Hallan. “We know how vital the retail industry is to Michigan. We’ve made it our mission to support retailers every step of the way including helping members navigate options for all types of insurance — workers compensation, health, dental, vision, life, and disability.” MRA Private Insurance Exchange In July 2018, after more than a year of intense planning and testing, the association launched the MRA Private Insurance Exchange to give members a way to save on insurance costs and offer their employees the best insurance coverages available. “MRA is always looking for new ways to help members prosper,” Hallan says. “With our new Private Insurance Exchange, our goal is to provide more benefit options and cutting-edge technology so members can quickly evaluate plan benefits and costs.” Members with two to 50 employees can use the exchange to create an insurance plan tailored for their business. The exchange has an array of health insurance options including several plans from Priority Health and Health Alliance Plan (HAP). Also on the exchange: Retailers Insurance Company’s member-only dental insurance, administered by Delta Dental; VSP vision insurance; and Guardian for life insurance, disability insurance, and worksite benefits. “The exchange meets a clear member need and is particularly helpful for small retailers who only have a few employees,” says Hallan. “Now

they have choices for affordable insurance for themselves, their families, and their staff members.” The Exchange offers a defined contribution program, which lets employers decide which insurances to offer employees and define how much they’ll contribute toward employees’ benefits. Employees then use these contributions to select insurance products that best meet their needs. To access the MRA Private Insurance Exchange, go to retailers.com/ private-exchange. To get a quote, you’ll be asked to complete a basic registration form and start your shopping experience. You can apply for coverage immediately or print the quote and enroll at a later date. Personalized customer service is available at any step along the way. Call MRA’s insurance expert, Ally Nemetz, at (800) 366-3699 ext. 681 or email her at anemetz@retailers.com. In addition, MRA also offers Blue Cross Blue Shield of Michigan and Blue Care Network as health insurance options for members. To obtain a quote or get information on BCBSM/BCN insurance, contract Nemetz. Workers Compensation “Back in 1981, we established our own group self-insured fund to provide lower-cost, quality workers’ compensation insurance for retail businesses,” Hallan says. To provide greater benefits to policyholders, the fund eventually was converted to a mutual insurance company, and it is now the Retailers Insurance Company (RIC). RIC offers workers’ comp with low minimum premium requirements and discounts for best practices. Policies have a $2 million employers’ liability limited — compared to the standard $500,000 — and include $100,000 in protection if a business bank account is breached, plus $2,500 in cyber extortion protection. “I’m very pleased to report that in 2018, RIC’s financial rating was upgraded to A Prime Unsurpassed,” Hallan shares. “This rating indicates that RIC offers the superior financial stability that comes with positive surplus for policyholders, liquidity of invested assets, an acceptable level of financial leverage, reasonable loss and loss adjustment expense reserves, and realistic pricing. We are proud of our efforts to achieve this designation. In addition, a rate change was recently filed for January 1 that brings rate reductions to about 37% of our filed rates.” MRA offers two workers’ comp options for grocers. “The Michigan Grocers Fund also provides a strong format for securing workers’ compensation,” Hallan says. The Fund was approved to distribute $424,000 of surplus premium on their 2019 renewal, representing an average credit of 32% off of the premium members will pay in 2019. “The Fund’s continued excellent performance should allow for even more profit returns in coming years,” adds Hallan. “As our members explore coverage options, please consider both industry-supported companies before looking at an unrelated party.” To learn more about Retailers Insurance workers’ compensation, see www.retailersinsurance.com. For information about Michigan Grocers Fund, see www.migrocersfund.org.

Dangerous Property Tax Bill Introduced in Michigan House Recently introduced legislation would change the way the Michigan Tax Tribunal handles large property tax appeals. House Bill 4025, introduced by Rep. Beau LaFave (R-Iron Mountain), HB 4047 introduced by Rep. Julie Brixie (D-Meridian Township), and Senate Bills 26 and 39, introduced by Sen. Ed McBroom (R-Vulcan), would lengthen the appeals process and make it more expensive for taxpayers to file an appeal. Under Michigan law, real property (land and buildings) is taxed based on the usual selling price or the value to the new buyer. There have been several attempts by assessors and legislators to instead base the property tax on the business activity occurring — or not occurring — at a location. However, business activity is already taxed under the Corporate Income Tax Act. “Local assessors claim that a dark or vacant store should be valued differently than an occupied, operational store,” explains MRA Government Affairs Vice President Amy Drumm. “This inherently applies a tax on the business activity occurring on the property since the property itself does not change in value whether it is occupied or vacant.”

MRA opposes HB 4025 because it would effectively prohibit the use of comparable sales of similar stores (if the comparable sale includes a deed restriction) and instead rely on the cost-less-depreciation valuation approach. This significantly increases the property tax owed by the taxpayer. Also alarming is the fact that Michigan’s constitution requires that property be valued uniformly, so changes to the valuation or appeals process will impact all taxpayers, including small businesses and residential property owners. “Even the House committee to which the bills were referred is telling,” says Drumm. “Instead of referring HB 4025 and 4047 to the House Committee on Tax Policy, which was the practice with similar bills in the past, this year the bills were referred to the House Committee on Local Government and Municipal Finance. We urge lawmakers to look at the root of the problem — local government funding shortfalls and unfunded local liabilities. Perhaps then local governments will stop looking for creative ways to increase taxes on businesses.” January 2019  Michigan Food News 9


Paid Medical Leave, Minimum Wage Laws Take Effect March 29, continued from cover Minimum Youth Wage Hourly Wage (85% of Min) Current March 29, 2019 Jan 1, 2020 Jan 1, 2021 Jan 1, 2022 Jan 1, 2023 Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Jan 1, 2029 Jan 1, 2030

$ 9.25 $ 9.45 $ 9.65 $ 9.87 $10.10 $10.33 $10.56 $10.80 $11.04 $11.29 $11.54 $11.79 $12.05

$ 7.86 $ 8.03 $ 8.20 $ 8.39 $ 8.59 $ 8.78 $ 8.98 $ 9.18 $ 9.39 $ 9.60 $ 9.81 $10.02 $10.24

 Tipped wage remains at 38% of the minimum wage. Tipped employees must make at least the state’s minimum wage when tips are factored in. If they do not, the employer must make up the difference.

Paid Medical Leave Act Public Act 369 of 2018 amends the previously enacted “Earned Sick Time Act” and retitles it the “Paid Medical Leave Act.” The act requires certain employers provide certain employees with paid medical leave benefits beginning March 29, 2019. Here’s what you need to know:  Which employers must provide paid medical leave benefits under the new law? Employers who pay payroll taxes on 50 or more employees must provide eligible employees with paid medical leave benefits. Employees on paid or unpaid leave are included in the 50-employee threshold.  Which employees are eligible for paid medical leave benefits? Even if an employer is required to provide benefits under the law, not all employees are eligible to receive them. Seasonal workers (scheduled to work 25 weeks or fewer), part time workers (worked fewer than 25 hours/week on average in the preceding calendar year), and variable hour workers (a term not defined well with a complicated federal threshold to meet) are exempt. Employees with a current labor contract will become eligible once the contract expires. Employers are recommended to track employee hours and schedules carefully to determine whether they are eligible for benefits.  I already offer paid leave, do I need to change my policies to comply? Not necessarily, if an employer offers a minimum of 40 hours paid leave time to employees in the form of paid vacation time, paid personal time, or paid sick time that employer is presumed to meet the new requirements. If the total amount of paid leave is less than 40 hours, those policies are not compliant with the act.  What kind of benefits do eligible employees receive? Eligible employees may use 40 hours of paid medical leave each year. Paid leave must be used in one-hour increments, unless the employer has a different increment policy that is in writing in an employee handbook or other employee benefits document. The act defines a benefit year as any 12-month period used by an employer to calculate an eligible employee’s benefits.  When do employees become eligible to use their benefits and how are they accrued? Eligible employees earn one hour leave for every 35 hours worked. Accrual begins immediately and can be used after 90 days. An employer is not required to allow an eligible employee to earn more than one hour of sick time in a calendar week regardless of the number of total hours that employee worked. Employees may roll over unused hours into a new year but are not entitled to use more than 40 hours during a year. An employer who provides all 40 hours of paid leave at the beginning of the year rather than as it is accrued does not have to allow hours to roll over.  For what reasons can an employee use paid medical leave? An eligible employee may use paid medical leave for diagnosis, care, or treatment of a mental or physical illness, injury, health condition or for preventative medical care for the employee or an employee’s family member (spouse, children, parents, grandparents, grandchildren, or siblings related through biological, adopted, foster, or legal status). It may also be used if the employee or employee’s family member is a victim of domestic violence or sexual assault. In addition, it may be used if a workplace or school is closed due to a public health emergency.  What kind of notice can employers require? Employers can require employees to comply with the employer’s usual and customary notice, procedural, and documentation requirements for requesting leave. Employers must give employees at least three days to provide the required documentation. An employer may discipline or discharge an employee for failing to comply with the employer’s notice requirements.  What documentation do employers need to keep and for how long? Employers must keep records documenting hours worked and paid medical leave taken by employees for at least one year. Those records must be made available for inspection upon request by the Michigan Department of Licensing and Regulatory Affairs. Employers must also display a poster, which will be created and provided by the department, explaining the new law. 10 Michigan Food News  January 2019

Lame Duck Passes Bills that Impact Food Industry Last month the Michigan legislature wrapped up a marathon four weeks of lame duck session — the longest in Michigan history. In total, 408 bills were sent to the governor’s desk, nearly double the average number approved in lame duck. All of the 2018 legislative action will be recapped in MRA’s annual year-end Legislative Report, published in February. The report also offers an overview of legislative priorities for 2019. Until then, here’s a brief look at the notable lame duck issues that impact food retailers. Beer and Wine License Quotas in Rural Areas An MRA-supported bill introduced to correct an oversight in the current law now clarifies that cities, villages, and townships with less than 1,000 residents can assign one Specialty Designated Merchant (SDM) license to a retail business to sell beer and wine. House Bill 5719 was signed into law as Public Act 386 of 2018 on December 19. Cigar Tax Cap The Michigan Legislature passed Senate Bill 304 to remove the current October 31, 2021, sunset on the 50-cent per cigar tax cap. The tax cap is important to keep prices at Michigan retailers competitive with out-of-state retailers and online sales. However, Governor Snyder vetoed the bill saying, “I believe it is appropriate to maintain the current expectation for expiration of the cap in 2021, and return the tax to 32% of the wholesale price.” Water Sales at Wineries HB 5606 clarified confusion in certain communities that had interpreted special-use permits for wine tasting rooms to mean the business can only sell the alcohol they produce and no other beverages. The bill clarifies that businesses can also sell soda or water to customers. It is now PA 560 of 2018. Fireworks On December 29, Governor Snyder approved a package of bills aimed at giving more local communities more control to regulate the use and sale of fireworks. Now Public Acts 633-635 of 2018, these changes to the state’s fireworks law increase fees and add several requirements for sellers of both consumer-grade (large) fireworks and low-impact fireworks:  Locations selling only low-impact fireworks are required to pay a new $50 per location license fee (not to exceed $1,000 for retailers with multiple locations).  An applicant for a consumer fireworks certificate must pay a nonrefundable consumer fireworks certificate fee of $1,250 (up from $1,000) for each retail location that is a permanent building or structure or $1,000 (up from $600) for each retail location that is not a permanent building or structure. If the application includes 10 or more retail locations that are not permanent buildings or structures, the fee is $700 (up from $600) for each of those locations.  For an applicant who applies for a consumer fireworks certificate for a retail location that is not a permanent building or structure and who does not hold a consumer fireworks certificate for a permanent building or structure, a new $5,000 bond is required.  The fee to transfer a consumer fireworks certificate increased from $25 to $250, and the revised law prohibits the transfer of a location between June 1-July 31. The revised law also:  Lowers the penalty for failing to report fireworks safety fees (the six percent fee on all fireworks sales) for a first offense from $10,000 to $5,000. If the fees are reported and paid within 30 days, the fine is waived.  Adds a new posting requirement;  Modifies the days and hours local ordinances can limit fireworks usage;  Prohibits the use of sky lanterns; and  Allows the governor to place weather-related bans on the use of fireworks. Please note: The state is currently unable to process any 2019 applications for consumer sales certificates or low impact registrations due to the changes in the Michigan Fireworks Safety Act. Keep in mind, if you still possess a valid 2018 consumer sales certificate that it remains valid until April 30, 2019.


Study: Consumers Don’t Want to Talk to a Robot When Shopping

People do not want to speak with robots while shopping in-store or online according to a new study conducted by Oracle NetSuite in partnership with Wakefield Research and retail consulting firm The Retail Doctor. The global study of 1,200 consumers and 400 retail executives across the U.S., U.K., and Australia found a huge disconnect between shopper demands and what retailers deliver in areas spanning the overall retail environment, social media, personalization, and the use of advanced technologies such as artificial intelligence (AI) and virtual reality (VR). The study found that retailers and consumer are on very different pages:  73% of retail executives said they believe that the overall environment in retail stores has become more inviting in the past five years. However, only 45% of consumers agree, with 19% stating it has become less inviting.  79% of retail executives believe chatbots (an automated system of communication) are meeting consumer needs. Yet 66% of consumers disagree, with respondents noting that chatbots are currently more damaging to the shopping experience than helpful.  Almost all (98%) retail executives think that engaging with customers on social media is important to build stronger relationships. However, only 12% of consumers think it has a significant impact on the way they think or feel about a brand or company.  Almost all (98%) retail executives believe AI and VR will increase foot traffic; yet 48% of consumers said they do not think VR or AI would have any impact on how likely they are to go into a store. The study also found that personalization is proving to be a challenge for retailers:  80% of consumers said do not feel they are provided with a personalized shopping experience both in-store and online.  Almost half of consumers (42%) and almost two-thirds of millennials (63%) noted that they would pay more for improved personalization; however, only 11% of retail executives said they fully believe that their staff has the tools and information needed to give consumers a personalized experience.

New Opportunities for Advertisers

 Beginning this spring, the Michigan Food News will be published bimonthly. That means in 2019, the Michigan Food News will publish the following issues: January, February, March/April, May/June, July/ August, September/October, November/December.  Starting with the May/June issue, the magazine will be redesigned to take full advantage of the print medium. With a new look and size, the refreshed magazine will invite readers to dive in and spend time reading the on-point information that grocers and other food industry businesses need for continued success.  Michigan Grocers is growing its digital offerings: Beginning April 2019, we’ll publish a biweekly electronic newsletter with timely industry and regulatory updates emailed to members.  Michigan Food News advertisers now have an opportunity to increase exposure by also placing an ad in the MRA magazine, the Michigan Retailer. If you place a full or half page color ad in the Michigan Food News, you will receive a very discounted rate on an ad placed in the Michigan Retailer. For more information on placing ads in the Michigan Food News and Michigan Retailer and to learn how you can sponsor the new electronic newsletter, contact Lisa Reibsome at (517) 449-2256 or MGAReibsome@comcast.net.

Lottery News

Double Play Gives Players a New Way to Play and Win; Add-On Expected to Create Excitement, Boost Sales By Brian O. Neill, Michigan Lottery Commissioner Double Play, a new add-on game, brings player excitement to Fantasy 5 and Lotto 47 and is expected boost sales for retailers. The new Double Play game gives players a second chance to win with each drawing for $1 more per panel per draw. Double Play drawings occur after each Lotto 47 and Fantasy 5 drawing. Another set of winning numbers is drawn from the pool of numbers for each game, so players could match the same number in both the regular drawing and the Double Play drawing. Double Play non-jackpot prizes are doubled. The top prizes are $110,000 for Fantasy 5 and $1.5 million for Lotto 47. Players may win prizes in the regular nightly drawing, the Double Play drawing, or both. The Fantasy 5 and Lotto 47 games are two of the Lottery’s most popular draw games. We expect players to be excited about the opportunity to win even more prizes, leading to increased sales for retailers. January Brings New Family of Instant Games Player research and sales have shown time and again that Lottery players are attracted to instant game “families.” The Lottery’s newest family of instant games features four games based on that knowledge. The new family of instant games: • 5X The Cash - $1 ticket, $5,000 top prizes, more than $6 million in total prizes available. • 10X The Cash - $2 ticket, $50,000 top prizes, more than $18 million in total prizes available.

• 20X The Cash - $5 ticket, $500,000 top prizes, more than $27 million in total prizes available. • 50X The Cash - $10 ticket, $1 million top prizes, more than $54 million in total prizes available. We expect retailers to experience success with this new family of games which went on sale January 8. Lottery Awards Coupons For Player Use at Retail Lottery research shows that there is one thing all players love: free play. To reward players, the Lottery uses coupons for various promotions and award incentives. With last year’s MichiganLottery.com redesign, players received increased opportunities to win coupons up to $500. Players may present a printed or digital coupon to any Lottery retailer for validation. Instructions on how to validate are printed on all coupons. Please work with your staff members to ensure they understand how to validate coupons. If you or your staff have questions regarding Lottery coupons, please contact your district sales representative. State School Aid Fund In the 2018 fiscal year, the Lottery provided more than $941.2 million for Michigan’s public schools, its fourth record contribution in row. Since 1972, the Lottery has contributed more than $22 billion to support public education in Michigan. January 2019  Michigan Food News 11


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Profile for Michigan Retailers Association

January 2019 Michigan Food News  

The January 2019 issue of Michigan Food News, the official publication of Michigan Grocers, a division of the Michigan Retailers Association...

January 2019 Michigan Food News  

The January 2019 issue of Michigan Food News, the official publication of Michigan Grocers, a division of the Michigan Retailers Association...