2017Issue4_Alabama_v3_COVER_Proof

Alabama

workplace harassment PAGE 24

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A L A B A M A G R O C E R S A S S O C I A T I O N

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3600 Vanderbilt Rd., P.O. Box 11044, Birmingham, AL 35202

CONTENTS | ISSUE 4

COLUMNS

FEATURES

Chairman’s Message Deja Vu All Over Again .. . . . . . . . . . . . . . . 6 President’s Message Off-Premise Alcohol Tasting: Huge Win for AGA .. . . . . . . . . . . . . . . . . . . . 8 Viewpoint Tomorrowland . . . . . . . . . . . . . . . . . . . . . . . . 14 Washington Report Let the Games Begin .. . . . . . . . . . . . . . . . . 18 Mommy Blogger Diary of an Online Shopping Newbie.. . 31

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Aligning Loss Prevention with CEO Goals Noted loss prevention expert Larry Miller shares his insights on the importance of aligning corporate goals with asset protection.

Workplace Harassment: Low Profile, High Price Tag Harassment lawsuits in the grocery industry may not be as headline grabbing as some industries, however, understand new nuances in the law is critical to a company's reputation should an incident occur. 24

DEPARTMENTS

AGA News .. . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Outside the Box .. . . . . . . . . . . . . . . . . . . . . . 16

15 Minutes With Samantha Barnes The founder of "Kitchen Kid" and a noted culinary coach shares her insights into exciting ways of raising the awareness as to the importance of cooking at home. Read new ideas and approaches for a new generation of shoppers. 28

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AGA | BOARD OF DIRECTORS

Chairman of the Board Peter "Greg" Gregerson Gregerson's Foods Vice Chairman Frank D'Amico, III BTC Wholesale

Past Chairman Jack Howell Forster & Howell Treasurer Darwin Metcalf Western Markets

Secretary Bo Taylor Coca-Cola Bottling Company United, Inc.

Sergeant-at-Arms James Cochran Buffalo Rock Pepsi Cola Company

executive committee

vice presidents David Bullard

Harold Garrett Gateway Foods Keith Lusk Golden Flake Snack Foods

Jay Mitchell Mitchell Grocery Corporation Wade Payne Food Giant

Piggly Wiggly Alabama Distributing Company

directors Stan Alexander

Johnny Collins Dean Foods Bob Crawford United Johnson Brothers Bill Davis A&R Super Markets John Fargason Acosta Sales & Marketing Mark Gallivan Alliance Sales & Marketing

Robert Gamble Bunzl Distribution

Austin Peake Peake & Associates Eddy Quinley Advantage Solutions

Associated Grocers of the South Danny Babb Associated Wholesale Grocers Jack Carlile SuperValu Kirk Clark Mitchell Grocery Corporation Mike Coggins Sherwood Food Distributors

Julie Anderson Goolsby The Hershey Company Kris Jonczyk Publix Super Markets, Inc.

Dana Weldon Dutch Farms John Wilson Super Foods Supermarkets

Curtis Lyons, Jr. Flowers Bakeries Mike O'Shell Rouses Enterprises

ex-officio board members

Mike Fuller Fuller's Supermarket

R. Kevin Miller Acosta Sales & Marketing

Mac Otts Autry Greer & Sons

James Scott Lighting Specialists

Vice Chairman Phillip Davis A&R Supermarkets

President Ellie Smotherman Taylor Alabama Grocers Association

Secretary/Treasurer Paul Burnett Byars | Wright

Board of Trustees Chairman Jay Mitchell

Mitchell Grocery Corporation

Gerry D'Alessandro Fourth Avenue Supermarkets Chris Crosby Golden Flake Snack Foods Jimmy Freeman Freeman's Shur Valu

Larry Garrett Vietti/Southgate Foods Kevin Gillespie Acosta Sales & Marketing Chip Harden Bank of America

Ken Hestley Sell Ethics Mike Oakley Alabama Power Company Don Richardson Coca-Cola Bottling Company United, Inc.

Brian Smith Community Coffee Cliff Thomas

Snyder's Lance Chris Woods Truno, Retail Technology Solutions

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CHAIRMAN' S MESSAGE

d e j u v u a l l ov e r aga i n

PETER GREGERSON, JR. GREGERSON'S FOODS AGA CHAIRMAN OF THE BOARD

Young and of course our President, James Smotherman. These people played a huge role in what the Association is today and are greatly missed! Today the Association has continued to grow and prosper while maintaining its Mission Statement, “The mission of the Alabama Grocers Association is to promote and support the growth and success of the food industry in the state of Alabama through advocacy, education, public relations and networking.” This is due to each and every one of you that have continued to support our Association and believe in the work we do every year. Thinking of all the Association has accomplished in 17 years… I would not even know where to begin. We have managed to stay relevant in a volatile market and that in itself is a huge accomplishment. These last two years as Chairman has really shown me what we are able to accomplish when we all come together for the “Good of the Industry.” We have lobbied with national organizations on the repeal of the Durbin Amendment, implemented an Association Coupon Program, started this digital magazine, continued to grow the SACK PAC and have positive impact on Alabama politics,

as my term as your Association chairman comes to an end... i cannot help but reminisce about my first go round as your chairman in 1999/2000.

Resort and watched as our attendance skyrocketed. We continue to see increase in attendance, sponsorship and the overall support of this event. It is safe to say, the Alabama market looked drastically different in 2000. Bruno’s Supermarkets, Delchamps and Winn-Dixie were the powerhouses of the market. In fact, Publix only had 3 stores in Alabama at that time and Walmart only had 37. I do not even need to go into how this has changed, those of us that have been around to watch these changes it has truly been remarkable. As I look back at the directors that are no longer with us, I cannot help but to have fond memories of those that have given greatly to our Association... Mary Lee Hardin, Wilbur Lockhart, Bill Barnes, Larry Eddleman, John Davis, Marvin

My father had just retired, AGA had just created their first website and we fought with Charles Bishop on the Food Safety Bill. Just to give you a sneak peek into where we were vs now: Membership: In 2000, we had 245 member companies, today we have grown to 350 strong. Education Foundation: In 2000 we awarded 40 scholarships, in the spring we had 22 sponsors and the fall we had 11 sponsors for our golf outings. This year alone we have awarded over 60 scholarships and had 36 golf sponsors in the spring and 36 in the fall. Convention: In 2000, we held our convention in Birmingham, Alabama celebrating our 10th Anniversary. It was just two years after this that we moved our convention to Sandestin Golf & Beach

“In 2000, we had 245 member companies, today we have grown to 350 strong.”

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CHAIRMAN’S MESSAGE

“As i turn over the gavel to your new incoming chairman, Frank d'amico, III, I am confident that the association will continue to prosper in his leadership.”

defeated a minimum wage increase, worked with the ABC Board to change the regulations to allow off-premise wine and beer tastings and had a record breaking profit for the Convention. As I turn over the gavel to your new incoming Chairman, Frank D’Amico, III, I am confident that the Association will continue to prosper in his leadership. I

leave him in the very capable hands of our fearless leader, Ellie Taylor and the AGA Staff. I look forward to seeing what his two years will accomplish and I wish him only the best for a successful term. Thank you for allowing me the honor to serve you again as Chairman of the Alabama Grocers Association.

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PRESIDENT’ S MESSAGE

o f f - p r em i s e a l c oho l ta s t i ng s hu g e w i n f o r A GA

ELLIE SMOTHERMAN TAYLOR PRESIDENT ALABAMA GROCERS ASSOCIATION

One of my favorite benjamin franklin quotes is "In wine there is wisdom, in beer there is freedom, in water there is bacteria." I guess this is true for alcohol lovers.

Faulkner who agreed to sponsor SB 5 and HB 134 respectively in the 2017 Legislative Session that would allow off-premise licensees to hold tastings for both wine and beer. Through meetings with ABC Administrator Mac Gipson, Assistant Administrator WilliamThigpen and ABC staff, an agreement was made to work together and make these important changes through ABC Regulation and legislation would not be required. These regulations are now effective after two votes at ABC Board Meetings on March 1, 2017 and June 14, 2017 including time for a comment period and a 45- day wait after regulations are sent to the Legislative Reference Service. These regulations will be effective on August 5, 2017, and can be found in the Alabama Administrative Code 20-x-7.07 (Wine) and 20-x-7-.10 (Beer). This is a HUGE win for our Association and it would not be possible without the relationships we build all year with our Legislators and State Regulatory Agencies. Big thanks go to Senator Jabo Waggoner, Representative David Faulkner, Attorney Paul DeMarco, Legislative Consultant Pat McWhorter and all our member companies who fought so hard to make this happen.

Alcohol seems to always be a hotly contested debate in our state. Whether it be for privatization, the three-tier system or now to allow alcohol sales for grocery delivery, I know our members will always be engaged when it comes to the sale of alcohol. Perhaps this goes all the way to our prohibition days when we were told that it was not allowed and the government had the right to take it away from us. This year we took on the fight for the ability of off-premise license stores to do tastings for beer and wine. For years, grocery stores with on-premise licenses have been doing alcohol tastings. But several years ago, when the Alabama Legislature passed higher alcohol content beer and wines, the ABC Board changed the ABC regulations for an on-premise license. These changes included mandates for an area no smaller than 500 square feet and seating for 16 per ABC Board Administrative Code Chapter 20-x-6, effective May 7, 2010.

To meet these new qualifications, grocery stores would have to spend great expense for costly upgrades so any stores with new remodels or new stores coming into the market would not qualify. Grocery stores operate on a less than 1% profit margin and utilize every square foot of the store for sales. Stores were being forced to choose between square footage to sell goods to consumers or empty space with chairs and tables for a one day, two-hour, once a week tasting. In the 2016 Legislative Session, SB 219, sponsored by Senator Billy Beasley, allowed off premise state stores and private liquor stores the ability to do tastings for liquor and wine. This initiated talks with our Association and the Alabama ABC Board. We believed this legislation gave state ABC locations and private liquor stores a competitive advantage over other stores in the state that sold wine and beer. We also began talks with both Senator Jabo Waggoner and Representative David

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“This is a HUGE win for our Association and it would not be possible without the relationships we build all year with our legislators and state regulatory agencies.”

As we close the year, I want to give a special thanks to our awesome Chairman, Mr. Peter V. Gregerson, Jr. who has done an outstanding job over the last two years. It has been my pleasure to work with him and see the contributions he has made not only to our Association but also to the state. Not many people know and understand all that Greg is involved with – not only is he Chairman of AGA, he also serves

on the Board of the Food Marketing Institute, Alabama Retail Association, WinSouth Credit Union, Gadsden Etowah Chamber of Commerce, Gadsden Etowah Industrial Developmental Authority, Alabama Small Business Commission, Zamora Shrine Center and Shriners Hospital for Children. This year he was deservingly awarded the Glen Woodard Public Affairs Award from the Food Marketing Institute.

I also want to welcome our incoming Vice Chairman, Mr. Frank D’Amico, III. I have known Frank as long as I can remember through the tobacco industry and know he will make his mark on the Association as a true leader and motivator for the future. Thanks to all of you for making this such a great year!

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AGA NEWS

GROCERY INDUSTRY VETERAN RECEIVES PRESTIGIOUS FMI AWARD Food Marketing Institute (FMI)

as I had already known him and his stellar reputation from my work on Capitol Hill, and I’m a witness to his deep dedication to our organization and the food industry – notably, in the two decades I’ve known him, he has not missed a single Day in Washington advocacy event.” “He is devoted to critical industry issues such as swipe fee reform, most evident in his willingness to come back to Washington for a special plea to then Senate Banking Committee Chairman, Sen. Richard Shelby (R-AL) to

recognized Peter V. “Greg” Gregerson, president and CEO of Gregerson’s Food and Pharmacy Inc., for two decades of government relations advocacy for FMI and the food retail industry on Capitol Hill in both Washington, D.C., and Montgomery, Ala. FMI honored Gregerson with its Glen P. Woodard Award for Public Affairs at the organization’s professional development event, Future Leaders eXperience. Gregerson’s three-store operation with a stand-alone drug store has been a mainstay in Gadsden, and consistent with the Woodard Award, Gregerson has been committed to his community and the greater industry at large by serving in a significant leadership capacity with the FMI Board of Directors as its vice chairman of FMI Public Affairs. FMI Chief Public Policy Officer & Senior Vice President, Government Relations, Jennifer Hatcher recalled, “Greg was the first FMI member who greeted me personally when I came to work for FMI,

Greg Gregerson, Gregerson's Food and Pharmacy Inc., receives Glen P. Woodard Award for Public Affairs from Leslie Sarasin, FMI and Kevin Davis, Bristol Farms.

solutions for less costly and more flexible ways of sharing nutrition information with customers.” Gregerson’s successes have been well documented. He received the Community Impact award in 2010 from the Gadsden Chamber of Commerce. He’s been named both Alabama Grocer of the Year (2011) and Retailer of the Year (2012) by the Alabama Grocers Association and Alabama Retail Association, respectively. He was also the Rotary Club’s Paul Harris Fellow. In addition to his role with FMI, he continues to serve on a diverse set of boards that represent both business and community: the Alabama Grocers Association, WinSouth Credit Union, Gadsden Etowah Industrial Development Authority, Greenville, S.C., Shriners Hospital for Children and was recently reappointed by the Governor to the Alabama Small Business Commission. Gregerson and his wife Marcy have four daughters and eight grandchildren.

preserve the 2010 debit reforms, which we argue have increased competition, fostered increased security and helped to contain costs,” she added. Hatcher further commended Gregerson’s sense of community in rallying around industry issues, even when some regulations he advocated for and against in Washington may not directly and immediately apply to his business. She said, “Greg doesn’t hesitate to wear a broad industry hat when he represents FMI in Washington. For instance, even though Greg is an independent operator, he remains resolute in his stance against the application of a chain restaurant menu labeling rule that has sweeping business implications for establishments with 20 or more locations. "Since his representative is a key member of the U.S. House of Representatives Committee on Appropriations, Gregerson continues to play a strategic role in advocating for legislation that offers

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AGA NEWS The Al abama Groce rs Assoc i at i on wishe s to recogni ze it s Di amond and Four St ar Sponsors for t he i r gene rous suppor t of t he AGA Annua l Convent i on . Diamond Sponsors

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©2017 Flowers Foods

VIEWPOINT

T omo rr owl and

KEVIN COUPE FOUNDER, MORNINGNEWSBEAT.COM

Technology can change how business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make.

Listening to the ruminations of a Tesla co- founder, who, it could be argued, is ideally positioned to talk about business disruption, was one of the real benefits of attending the recent GMDC Retail Tomorrow Conference in Silicon Valley. It was one of the most provoking such meetings that I can remember, and GMDC set a benchmark for what a technology conference should be. I always thought I was a reasonably enlightened and imaginative guy, until I spent time on the Google campus and at the Plug And Play “accelerator” that provides infrastructure for startup companies and plays matchmaker between them and major companies that serve as their partners. (Many years ago, we were told, one of the first companies to work with Plug And Play was a little entrepreneurial effort you might have heard of. It was called Google.) I was simultaneously humbled and energized because there were so many business lessons. Tracie Maffei, who runs the retail practice at Google, told us during our visit to the Google campus that there are certain basic realities that businesses have to understand and ignore at their own peril. “Millennials represent the most diverse, educated, socially conscious and tech-savvy group in history…they’ve never used a fax, never used a rotary phone, never listened to a cassette tape,” she said.

“That was just science,” he said, arguing they always knew they could work that part of it out. Unlike co-founder Elon Musk’s other business, Tarpenning said, “this wasn’t rocket science.” No, the bigger problem quite literally had to do with the nuts and bolts of the business. They could design the batteries and design the car…but then they actually had to find someone who could do things like make a door, and a rear-view mirror, and all the other stuff that goes into a physical car.

I recently had the opportunity to attend a presentation at which Marc Tarpenning, one of the co-founders of Tesla, talked about the company’s early development process… and there were two things he said that really grabbed my attention and struck me as relevant to pretty much any business facing 21st century competitive realities. First, there was his observation that in creating the Tesla there were far greater problems than developing the batteries that propel them.

That was a lot harder…until they discovered something about traditional car companies – they don’t make that stuff either. It ends up the only thing traditional car companies really make is the engine, and everything else is outsourced. So, all Tesla had to do was network, network and network some more until they could find outside companies that could meet their standards, and were willing to work on the small- production scale Tesla had in mind. Which they did.

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VIEWPOINT

“Technology can change the way business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make.”

Relonch takes the position that it is in the photograph business, not the camera business – so it essentially gives its customers a high quality camera which automatically sends photos taken back to the company, which then sends the customer a preview version of those pictures, and you pay $1 apiece only for the ones you want to keep. This got me thinking… What would happen if a food retailer went to a customer and said, “We want to give you a new refrigerator/freezer, and all you have to do is commit to buying $200 worth of refrigerated or frozen foods a month from us for X number of months.” I have no idea how the economics of this would work, and I suspect that most retailers would find this unworkable. But I also wouldn’t be surprised if Amazon announced such a program next week. Which I think was the point of a trip and the GMDC conference. Pretty much everything is possible. Tarpenning said that it usually is easier to create a disruptive culture in a start-up company than it is in an established, legacy- based company. I think that is true – but it is an explanation, not an excuse. To compete in the 21st century, it strikes me as critical to understand that new competition can come from anywhere and everywhere, and that this new competition is likely to have a disruptive culture based on questioning traditional assumptions. Competing with such entities won’t be easy. And it seems to me that one of the first things retailers have to do is look at themselves and pose one simple question: If we were starting this company tomorrow, how would we do it? ■

universe – and see some of the unique retail concepts that are being funded by tech guys with big bucks. Some of them are pretty out there, but still can offer lessons for more traditional retailers. For example, there was B8ta (pronounced “Beta”), a fascinating retail store that caters to both consumers and business customers. Essentially, the store leases out small spaces on Apple Store-like tables to technology businesses that want to test out their products’ viability. The products range from electric-powered skateboards to juicers and virtual reality viewers to high- tech security systems. B8ta has a highly trained staff that helps guide customers through the store, and rotates products regularly to make sure there is variety; it also has technology that is able to track how customers interact with products, so suppliers have the maximum amount of actionable data. B8ta has a full supply of products for customers in the backroom, and it only profits from the table lease payments; it takes no cut of the sales. What B8ta made me think about, though, was how retailers may want to approach the whole notion of new products if they want to infuse their bricks-and-mortar stores with excitement and make them a destination. Maybe there should be whole sections of new products with generous sampling available that are used not as a way to get money out of the manufacturer, but as distinguishing the retailer from both online competitors and the guy across the street. We also visited a store called Relonch, which is designed to address the precipitous decline of the traditional camera business – 10 years ago, 127 million cameras were sold, a number that was down to 20 million last year.

In other words, if you are operating a business in a digital world with a rotary phone mentality, you simply cannot succeed. “Ninety-eight percent of the economy will be impacted by digitization,” she said. “And, 65 percent of children entering primary school today will have jobs that don’t even exist yet.” But if those comments pointed to a future that requires imagination to envision, Maffei also talked about Google’s approach to business that is rooted in everyday realities. For example, she asked if the businesspeople in the room (and outside the room, for that matter) are “setting goals that go beyond accepted industry standards.” She talked about the notion of banishing the notion of “online” and “offline,” and focus on “all-line,” creating a new standard that is “seamless” and “end-to-end,” establishing “lifetime value” that is not just transactional. And while technology obviously is a driver – and the notion of voice-activated, artificial intelligence-driven, screen-less and wearable computers would seem to propel us into a Star Trek-like future – Maffei actually suggested that retailers not start with technology as they establish priorities and strategies. Rather, they should start by thinking about what problem they are trying to solve, and what pain points in the consumer experience they are endeavoring to eliminate. Technology can change the way business interacts with consumers, but there is an epiphany that must precede the tech choices that businesses must make. One of the things that a visit to Silicon Valley offers is a chance to visit communities like Palo Alto – where net worth and IQ are in a constant race to see which one will be higher compared to the rest of the known

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!

OUTSIDE THE BOX NEW RETAIL PERSPECTIVES

No one can sell just one category anymore. The solution for fast fashion retailer H&M is a new concept called Arket, which offers a curated assortment of apparel and home accessories, all of which is offered at slightly higher prices than H&M. Some Arket stores, opening in London, Brussels, Copenhagen and Munich, will also have cafes. Meanwhile the company is planning to open stand alone H&M Home stores next year. Branching Out

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When in Rome

For any retailer who thinks they’ve had a hard time with zoning restrictions, consider McDonald’s which recently opened a restaurant just outside the Vatican’s St. Peter’s Square. The company had to suffer some fire and brimstone from Cardinals who objected to the Golden Arches 100 yards from the Pope’s residence. But as it turns out, the Vatican owns the building and will be collecting rent of about $33,000 per month.

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Spacing Out

BOUNTY

Instead of using the backroom to store cartons, mops and carts, retailers could use the space to grow food. An experiment in urban farming or “aquaponics” is taking place in Brooklyn, New York where several companies are growing tilapia in old warehouses. One company called Edenworks is even using the waste produced by the fish to fertilize racks of LED-lit vegetable crops. Local enough for you? BACKROOM

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If you’re wondering what to do with that little bit of extra space or alcove in your store, Staples has come up with a unique solution. The chain is now offering co-working spaces at their stores in Boston, branded as Workbar at Staples. It’s targeting millennials and small businesses with upgraded workstation at $130 per month for unlimited use. Maybe supermarkets can sell them lunch or dinner while they work?

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OUTSIDE THE BOX

KING CA$H

Research company PYMNTS.com said cash purchases are on track to hit $3.5 trillion by 2020. While consumers in the 35-44 age group are increasingly using card and mobile payments, younger millennials show a higher propensity for cash.

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If you’re tired of hearing about millennials, you now have Gen Z to worry about. Also called the iGeneration, post-millennials, plurals or the Homeland Generation, the group includes people born roughly between 1995 and 2015, meaning that the oldest members are graduating college or starting careers while the youngest haven’t yet entered kindergarten. According to some observers, Gen Z consists of about 60 million people, making it larger than the baby boomers and millennials. While there is considerable debate over where these people fit in demographically, they all have one thing in common – none of them have lived in a world without the Internet or mobile phones.

DAY of the CYBORG

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If you’re wondering what your employees are up to, a Stockholm- based tech startup called Epicenter has developed microchips the size of a grain of rice that can be implanted by syringe between the thumb and index finger. It sounds like something out of 1984 but the chips function as swipe cards to open doors, operate printers or even buy a smoothie with the wave of the hand. The idea is so popular at Epicenter that workers hold parties for those being implanted. While everyone is partying, it does raise some security and privacy issues since it shows how often an employee comes to work, what they buy and where they go.

Starbucks is testing a location at its headquarters in Seattle where employees can only order via the chain’s app. Customers can see their orders being made through a window where they can also pick it up. One has to wonder if it will really speed up the painfully slow process of getting a cup of coffee. While this is designed to speed up service, the chain is working on its Reserve stores, high-end coffee shops designed for lingering, and offering small lot coffee beans, and food from a local Italian bakery. NOT REGISTERING

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WASHINGTON REPORT

L e t t h e Game s B e g i n

PETER LARKIN PRESIDENT AND CEO NATIONAL GROCERS ASSOCIATION

Grocers anxiously await action on Republicans’ ambitious policy agenda.

passage of this bill. Included in the bill is a repeal of the small employer tax credit for employee health insurance expenses, a repeal of penalties for certain large employers who do not offer full-time employees and their dependents minimum essential health coverage, and a delay in the implementation of the excise tax on high cost employer- sponsored health coverage. The Senate has indicated it plans to craft its own health care bill rather than considering the package sent to them from the House. Thirteen Republican Senators have formed a working group and are beginning to develop proposals that have a chance at gaining the support of at least 50 members to pass the Senate. Tax Reform The House GOP has put forth their tax reform priorities, as has the White House, and now with health care out of the way on the House side, the question becomes when – not if – tax reform will happen. The House Republican plan raises many questions for the independent supermarket industry, such as, how will deductions be eliminated to pay for the proposed decrease in corporate tax rates, how will the proposed border adjustability tax impact food prices, will the LIFO accounting method be preserved, and will the House and the Senate be able to agree on a bill.

also known as the Durbin Amendment, which was passed as part of the Dodd-Frank legislation in 2010. At the beginning of May, nearly 300 supermarket executives lobbied lawmakers on the issue at the same time as the House Financial Services Committee marked up and ultimately passed the legislation. The bill was introduced by the chairman of the Committee, Congressman Jeb Hensarling (R-TX). The decision to remove the language came after an overwhelming response from retailers, including more than 1,100 independent grocers, made the provision a poison pill that threatened to kill the entire bill. As a result, debit swipe fees will continue to be regulated and the routing provision allowing businesses to choose their routing network will remain in place. Health Care Reform President Trump secured his first major legislative victory with the passage of the American Health Care Act on May 4 from the House of Representatives. The Senate has vowed to make major changes to the House bill, but as the measure currently stands, business owners will be faced with an uncertain regulatory environment given the parliamentary restrictions placed on the

Following a somewhat turbulent first 100 days in office, President Donald Trump and Congressional Republicans are now gearing up for the next chapter with an ambitious policy agenda that includes repealing and replacing the Affordable Care Act and reforming America’s tax code. While there is a lot on the “to do” list, independent supermarket operators are in a unique position to see action on issues that affect them most. From protecting debit swipe fee reforms to amending food labeling policies to rolling back countless regulations, there are never a shortage of issues impacting the supermarket industry. The following is a summary of the issues on the forefront of many grocers’ minds which are being lobbied by the National Grocers Association. The independent supermarket industry and entire retail community scored a major win after House Republican leadership announced on May 25 that the Financial CHOICE Act would no longer include a provision to repeal debit swipe fee reform, Durbin Amendment/Debit Card Swipe Fee Reform

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WASHINGTON REPORT

“Independent supermarket operators are in a unique position to see action on issues that affect them most.”

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With regards to the proposed Border Adjustable Tax (BAT), NGA has joined a coalition that launched February 1 to oppose the tax. Based on initial input from our members it is clear a BAT tax will substantially increase food prices, particularly on produce, ultimately increasing the cost of goods to consumers. The Senate also has its own ideas on how tax reform should be handled, which could slow the ultimate passage of any reform bill. At

this moment, NGA is closely monitoring the changing tax landscape in Washington and engaging with Members of Congress on the issues most critical to NGA members. FDA Menu Labeling Regulations NGA and independent grocers across America recently won a major victory when the implementation date for the Menu Labeling Regulations was delayed until May 5, 2018. Legislation has been reintroduced in both the House and Senate to fix problematic

provisions of the rule and the FDA has reopened the regulation to public comments. NGA and other coalition partners are working to impress upon Members of Congress the regulatory burden imposed on grocers as the law is currently written and to raise awareness on the need to support legislation that would provide the needed flexibility to comply with a law originally written for chain restaurants.

Putting the Resources of the Country’s #1 Food Wholesaler to Work for You!

CONTACT US TODAY. LET US GO TO WORK FOR YOU!

THE INDEPENDENT RETAILER’S SHOPPING LIST FOR SUCCESS

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Prevention with CEO Goals Aligning Loss By Larry Miller

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Many of you know that I have spent the past 25 years teaching, training and consulting with retailers to implement store operations best practices and smart technology to grow profitable sales. In this article (part 1 in a three-part series), we will focus on the building blocks for Profitable Selling (e.g. Loss Prevention, Asset Protection, or my favorite… Profit Protection). Our goal must be to align with corporate goals and shift team thinking from theft reacted shrink loss to recognize total shrink loss for what it really is – Profit Loss. This can be a complex paradigm shift, but when properly accomplished, loss prevention can gain invitation to the CEO’s Round Table.

Continued on page 22 ▶

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BIG 4 Best Practice Areas

2.“GetYour BIG” Every day! Seventy-five percent of all companies we work with have a Known Loss program. Thirty percent of these companies have a good, efficient and effective Known Loss program. Properly implemented, Known Loss can be your portal into Profit Loss. We calculate that Known Loss Control is the No. 1 most failed shrink prevention program. The source of Known Loss can most often be tracked back to breakdowns in the efficiency of ordering, handling, storage, production, display and sales. Hence, training operators in the very best and proven practices for seeing and proactively managing known loss and implementing smart Known Loss control technologies must be a top operational imperative. Implementing an effective Known Loss program is the first step on the yellow brick road to 18 percent lower shrink loss, leading to sales and profit improvement. What is meant by our “Get Your BIG” strategy? It means recording 100 percent of known loss caused by damaged and/or distressed products and 100 percent of any programmed gross margin erosion. When we see our BIG every day and understand the mandate to be sales driven, we can help to change the operational thinking and behaviors associated with profit optimization. The difference between a weak Known Loss program and a best practice guided Known Loss program is 17 percent less shrink with every dollar saved going straight to your bottom line. 3. Smarter Ordering your BIG, operators and loss prevention professionals must think about turns, turns, turns. Smart ordering is all about being 100 percent in-stock with full variety while turning your inventory with minimal associated Known Loss. Building on the concepts of the vital role of inventory control and getting

1. Sales We always want to optimize sales. This demand’s focus on variety, optimal on-shelf availability, and an intense focus on fresh item quality. Customers come to shop, and our #1 job is to ensure they get what they came for. The three consequences of being out-of- stock or selling poor quality perishables include: a lost sale, customer having to trade off to a similar (but not desired) item, or worst of all, sending the shopper to a competing store. In summary, the tracking and managing of variety, freshness and your optimal in-stock condition are vital to profitable selling best practices. Tracking and managing daily sales at the lowest department or sub-department level allows managers to disrupt negative or sub-par sales trends (mid-week or mid- period) to promote for added profitable sales. managers to promote one or two in-store (non-advertised) weekly featured items using promotional signage, displays and CSE best practices to grow sales $1,000 per week ($52,000 annually). Depending upon your situation, sales may or may not be a significant remedy to your shrink rate, but two things always remain true: (1) sales are every company’s life-blood and should be the everyday focus of operators and merchandisers and (2) profitable sales are every CEO’s No. 1 priority. What does this have to do with loss prevention? Traditionally not much, but with 64 percent of store shrink caused by a breakdown in store operations best practices, if loss prevention is to grow its value proposition as a profit realization partner then we must align with and contribute sales profitability and help operations sell its way to lower shrink loss. Next, shifting into high gear. Then, every store manager should collaborate with their department

Here’sWhatWe Know:

64% Operations

36% Theft

Average Shrink: 2.70%

Shrink Caused by Operations

17% Production Planning & Specs Allocations

6% Receiving

14% Store & Handling

22% Ordering

13% Rotation

14% Cashier Errors

6% Damage

3% Accounting

5% Scan File

57% Preventable

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Smart ordering leads to excellent variety and smart Known Loss control. Ordering is key to profitable selling and smart inventory turns is key to controlling shrink loss and making cash flow efficient. By teaching, training and coaching principles of known loss control, every store’s profit will benefit. Easy to understand? Absolutely. Simple to consistently execute? Nope. Not at all, but they are proven to work every time. 4. Daily PerformanceVisualization and Team Action Smart technology will not reduce shrink loss. However, people using smart technology will. For too long, store operators and merchandisers have been victims to data and paper glut, waiting for the end-of-week or even end-of-period to see their results. We need to stop focusing on reports and graphs that provide analytics in the rear-view mirror. Rather, we should engage with and improve all vital key performance indicators every day. We can optimize practices by utilizing immediate performance metrics that discover and disrupt negative patterns before they result in missed budgets. When you put smart technology in the hands of store teams, you provide “disruptive intelligence” to reduce shrink, improve sales and will help to align Loss Prevention with Operations, CEO Goals and Corporate Objectives. By merging best practices, smart technology and operating standards, loss prevention can help store teams to out-perform sales and profit P&L expectations. ■ Larry Miller is President of Smart

6 Smart Take-Aways

1. Sales Matter: When Out of Stocks, sub-par Freshness and less than optimal Customer Service negatively impact Sales, it should be everybody’s concern.Why? Because Lower Sales = Higher Shrink. So, in the pursuit of profit through Shrink Loss Prevention, Sales Matter and Loss Prevention pros should never operate as if they are just along for the sales ride. Consistent execution of excellent shrink prevention best practices helps to grow profitable sales and makes CEO’s very happy. 2. Smart Ordering: Ordering for Optimal Variety and Turns leads to more sales and lower shrink. For this article; excellent Variety leads to increased sales and smart Inventory Turns encourage lower shrink loss, promotes employee productivity and improves cash flow. When Operations and Loss Prevention partner to see and optimize these profitability components through the same prism, great things will happen. 3.Tracking Known Loss: Tracking 100% daily Known Loss and Gross Margin erosion and acting with urgency to control Known Loss is a vital Operations and Loss Prevention best practice.While Known Loss programs are widely implemented, we have tracked 7 different variations in “how” they are implemented. 4. FRESH IS KEY is so many ways. Fresh departments are spreading their in-store footprint and importance to the consumer. Additionally, as on-line shopping expands, the first area for sales erosion will be in center store goods. This will make Fresh Depts. more important as a profit center.With this, shrink prevention for sales and profit optimization will gain importance. Every Loss Prevention professional should train to understand and support Fresh Dept. profit realization. 5. Smart Loss Prevention: Whether you call it Loss Prevention or Asset Protection, these business units should not just be about catching wrong-doers. More than 64% of store shrink is caused by a breakdown in store operations best practices. Loss Prevention should be a vital Operations Partner to assure the in-store behaviors of the 6 Vital Profit Drivers of Shrink Prevention. In this area, on-going education, training and consistent execution are key in creating a smart culture of control. 6. Choose Smart Technology: Smart technology will merge and interpret data from Sales, Known Loss, Out of Stocks, Ordering Efficiency, Cashier Mistakes and Theft to detect precise shrink causing behaviors. This all-in-one solution provides Daily (plain English) Action Alerts for both Loss Prevention and Operations and serves as a vital collaboration portal. For more information on Consulting & Training Services or Smart Technology to Run More Profitable Stores, Larry Miller can be contacted at (602) 448-8500 or Larry@SmartRetailSolutions.com

Retail Solutions. He can be reached at LarrySmartRetailSolutions.com or on LinkedIn and his videos are available on YouTube.

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WORKPLACE Low Profile, High Price Tag HARASSMENT:

Fox TV News personality and author Bill O’Reilly lost his job in April 2017 after allegations by several of his female colleagues of sexual harassment – and subsequent private settlements – were made public. By Cassandra Pye

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The number of sexual harassment cases reported in the U.S. (and Canada) increased by 58 percent since the Hill testimony and continues to climb. At the same time, private companies and agencies also responded by launching training programs to deter sexual harassment. Mary Kasper, General Counsel and Secretary for Unified Grocers, Inc., recalls the Hill testimony and how it raised awareness among “rank-and-file” employees. “We all went through this phase, back then, where we overreacted, when we were overly careful about what we did and didn’t do,” she remembers. “We were careful not to compliment a man on his tie or hug a co-worker.”

against women, women filing against other women and men filing against men. “This is what a diverse workplace brings,” she says. “As women rise through the ranks, it’s not necessarily true that women who rise to senior positions are less likely to behave badly than men.” Unified’s general counsel says what makes the grocery industry so unique is that its workplace is more diverse. “That makes it fun, but also makes for a more sensitized workplace,” she says. “So what has changed, are more hostile work environment claims and they’re far more nuanced. People are more sensitive about what they do and say but also people are more sensitive about what they perceive

O’Reilly denied the reports and Fox stood by their award-winning host as the story heated up. The O’Reilly Factor was cable television’s most popular, and likely among the most profitable, news show. O’Reilly still maintains his innocence. The late Roger Ailes, former Fox CEO, was also accused of sexual harassment and resigned from his post when a high-profile Fox anchor sued him last year. As this story goes to press, it is estimated that Fox will spend more than $45 million in costs related to harassment-related litigation – in addition to those costly severance payouts to O’Reilly and Ailes. Three more claims were filed by employees against Fox News in late May, including one woman who alleges she was both sexually harassed and physically threatened by a former radio news anchor. The O’Reilly story was gripping, dramatic and made for sensational headlines. Harassment lawsuits in the grocery industry may not hold nearly the same intrigue, however, understanding new nuances in the law, and being mindful of the dramatic impact any related online campaign can add to the risk is important. A company’s reputation, once lost, can be challenging to recover. The United States Equal Employment Opportunity Commission (EEOC) states that “It is unlawful to harass a person (an applicant or employee) because of that person’s sex.” According to the EEOC, harassment can include “sexual harassment” or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. The legal definition of sexual harassment varies by state jurisdiction. While most agree the contemporary notion of sexual harassment was conceived in the early 1970s, it was the 1991 testimony of Anita Hill against then-U.S. Supreme Court nominee, Judge Clarence Thomas, that did a great deal to propel awareness.

“Nowadays the trainings are more interactive, demonstrate subtleties; you have to engage on what you would do.”

Kasper says recent news events may have rekindled sensitivities around the harassment issue. “There’s this weird irony again,” she adds. “People are talking about Anita Hill again.” But the truth is employers have invested in raising awareness and providing sexual harassment trainings for going on three decades and, while several high-profile cases have dominated news cycles recently, Kasper suggests the number of sexual harassment claims for the food industry haven’t changed much. “There are very few ‘quid pro quo’ cases – like those alleged in the O’Reilly case,”

and what they hear. “If you are my supervisor and you say something to me that’s inappropriate, now the law looks at how it was perceived by me,” she adds. “In the last five years or so there’s been a lot of conversation around intent vs. impact.” And, says Kasper, a new class of harassment claim is on the rise: bullying. “Bullying claims are on the rise and we’ve trained our people to recognize it when they see it,” says Kasper. “By bullying, we don’t mean ‘my boss is mean to me’ or ‘they didn’t let me sit at the lunch table.’ It’s much more than that. We have to be careful about excluding people from conversations and projects which could ultimately lead to their career development.”

she says. “Gone are the days of only women filing claims against men.”

Kasper says the industry is seeing claims that aren’t the classic women-filing-harassment- claims-against-men. Instead, men are filing

Companies are doing so much more to prepare and manage the threat of

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Recent harassment training modules have been modified to include the definition and impacts of bullying, according to Stallard, and she says retailers need to be mindful of making sure everyone in the workplace is on the same page. “There are multiple generations in the workplace and the notion that ‘I was hazed and you’ll be hazed’ can’t be tolerated,” she says. “Millennials are looking for a different kind of work environment and have a different set of expectations for how they and everyone else should be treated.” Stallard says tone from the top is very important. You want your people to know you’re holding them to the same standard of behavior that you have. “Consistency is important, too,” she says. “You can’t be all places at all times, so making sure management is on the same page and knows who to call when issues arise is critical.” Stallard also suggests paying attention to the new focus on transgender issues. Issues like unisex bathrooms, gender-related terms and pronouns are all a part of what she calls a new frontier for employers. Employers should be sure to follow the guidance of counsel and need to be mindful and respectful of employees as well as customers,” she advises. “It’s important to maintain a culture that’s welcoming and get some training and advice.” Kasper and Stallard used the word “subtle” over and over. “It’s not Mad Men anymore,” asserts Stallard. “People know what’s against the law and they know they’ll get in trouble. But they should be careful of the subtle stuff and mindful of the little things. There’s this sense, in some places, that rejecting ‘PC’ behavior is OK. It’s not.” For example, she says, employers should be careful to not exclude people from opportunities to bond. Yes, some people naturally develop relationships with each other, or develop familiar relationships online.

“You have to accept that some people get along better than others,” she counsels. “However, there are those little things that make people feel like you’re not taking them into account. It costs you nothing to be inclusive.” And, then always remember that someone is always watching. While most would agree that no single factor contributed to O’Reilly’s fate, many point to a digital campaign which online activists affiliated with the Media Matters website launched against News Corp and its advertising partners as the proverbial straw. A list of The O’Reilly Factor’s advertisers was shared online via Google Docs by Media Matters, a group called Sleeping Giants and others. The list of allegations was shared by these groups to their tens of thousands of followers on Twitter and tweets were targeted directly at the show’s advertisers. Released on April 4, by April 18, more than 80 advertisers had issued public statements confirming they removed their ads from the show, costing the network millions. Fox News announced that it parted ways with their star anchor on April 19. “Social media can fan the flames,” says Kasper. Says Stallard: “I think that generally speaking social media is so instantaneous so things can mobilize very quickly. It’s easier than ever before to get messages to people. Educate your staff, educate your supervisors. Retailers have to be consistent and protect their brand.” ■

harassment claims, says Kasper. Most have mandatory legal arbitration to manage these cases internally, through dispute- resolution processes. She also cites the rise and effectiveness of affinity groups, over the last five years or so, as being a critical part of operations – so there are greater opportunities to discuss issues in a safe place. “Most employers believe it’s better to be safe than sorry,” asserts Elizabeth Stallard, Partner in the Employment Group at Downey Brand, LLP. “The Fox story was prominent but not typical; we’re just not seeing much in the way of ‘quid pro quo’ claims. There’s far less of that kind of behavior in the food industry because it wouldn’t be tolerated.” So it’s important to commit to best practices, says Stallard. In addition to providing employee training programs, it’s important for employers to create a diverse environment where there’s an ability to approach Human Resources departments, to deal with claims quickly and to adopt and enforce a zero-retaliation policy (especially where sexual harassment has been claimed). “Diversity is also important so that employees don’t feel isolated – that there’s no one in their department to go to,” she adds. Not healthy for a company to go through this. Most harassment training can be completed online, says Stallard, and is required every two years if you’re a people manager. They’ve been updated and adapted to the times. “Harassment trainings have been online for a long time but they used to be simplistic and somewhat boring. They’re better now,” she suggests. “You’re no longer just checking the boxes. Nowadays the trainings are more interactive, demonstrate subtleties; you have to engage on what you would do. The answers aren’t that obvious – you really have to put some thought into them.” Three years ago the State of California added bullying to sexual harassment training in the law. And, like Kasper, Stallard has seen an increase in these types of claims.

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