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creating cultures of leadership PAGE 30 the devil is in the details PAGE 36

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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

redefining the rules of engagement – Digitally

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CONTENTS | ISSUE 2

FEATURES

COLUMNS President’s Message What You Need To Know When Talking To Political Candidates . . . . . . . . . 6

Chairman’s Message Gearing Up For A Successful Year . . . . . . . 8

20 Redefining the Rules of Engagement, Digitally Digital engagement can be poison if not managed correctly but, for companies willing to embrace the transformation, digital engagement is just what the doctor ordered. 4

Washington Report Snap Shot – Food and Nutrition Policy Inside the Beltway . . . . . . . . . . . . . . . . . . . 17

Inside the Beltway Next Steps for Secure Supermarket Payments . . . . . . . . . . . . . . . 18

Viewpoint The Retail Apocalypse is B.S. . . . . . . . . . . 20

14 24 30

Creating Cultures of Leadership What makes for a good leader? How do you foster a culture of leadership in your workplace? Noted expert Drew Dudley shares his insights in finding and how living leadership teaches leadership.

36 DEPARTMENTS AGA News . . . . . . . . . . . . . . . . . . . . . . . . . 11 Out and About . . . . . . . . . . . . . . . . . . . . . 16 Outside the Box . . . . . . . . . . . . . . . . . . . . 22

The Devil is in the Details You would be hard pressed today to find a retailer in any sector that is not involved in some form of digital retailing in order to enhance the shopping experience and the customer life cycle, but as one expert says, “the devil is in the details.”

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ALABAMA GROCER |

AGA | BOARD OF DIRECTORS

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

Treasurer Jay Mitchell Mitchell Grocery Corporation Secretary Bo Taylor Coca-Cola Bottling Company United, Inc.

Immediate Past Chairman Peter "Greg" Gregerson Gregerson's Foods Past Chairman Jack Howell Forster & Howell

Chairman of the Board Frank D'Amico, III

executive committee

BTC Wholesale Vice Chairman Johnny Collins Dean Foods

vice presidents David Bullard

Wade Payne Food Giant

Bill Davis A&R Super Markets

Bob Crawford United Johnson Brothers of Alabama

Piggly Wiggly Alabama Distributing Company

Harold Garrett Gateway Foods

directors Naseem Ajlouny

Eddy Quinley Advantage Solutions

Kris Jonczyk Publix Super Markets, Inc.

Mike Coggins Sherwood Food Distributors John Fargason Acosta Sales & Marketing Mark Gallivan Alliance Sales & Marketing Robert Gamble Bunzl Distribution Julie Anderson Goolsby The Hershey Company

Buy Lo Quality Foods Stan Alexander Associated Grocers of the South Danny Babb Associated Wholesale Grocers Jack Carlile SuperValu Kirk Clark Mitchell Grocery Corporation

Dana Weldon Dutch Farms John Wilson Super Foods Supermarkets Jimmy Wright Wright's Markets

Melanie LeBlanc Anheuser-Busch Curtis Lyons, Jr. Flowers Bakeries Mike Oakley Alabama Power Austin Peake Peake & Associates

ex-officio board members

Mike Fuller Fuller's Supermarket

Mac Otts Autry Greer & Sons

James Scott Lighting Specialists

R. Kevin Miller "Official Board Photographer" Acosta Sales & Marketing

Darwin Metcalf Western Markets

Secretary/Treasurer Paul Burnett Byars | Wright

President Ellie Smotherman Taylor Alabama Grocers Association

Vice Chairman Phillip Davis A&R Supermarkets

Board of Trustees Chairman

Bob Crawford United Johnson Brothers of Alabama

Brian Smith Community Coffee Cliff Thomas

Bubba Lindley EdLinco

Larry Garrett Vietti/Southgate Foods Kevin Gillespie Acosta Sales & Marketing Ken Hestley Sell Ethics

Gerry D'Alessandro Fourth Avenue Supermarkets Chris Crosby UTZ/Golden Flake Jai Freeman Freeman Foods

Rob Renfroe Renfroe Foods Don Richardson Coca-Cola Bottling Company United, Inc.

Snyder's Lance Chris Woods Truno, Retail Technology Solutions

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I S PROUD TO SUPPORT

ALABAMA GROCER |

PRESIDENT’ S MESSAGE

What Yo u n e e d t o know wh e n ta l k i ng t o P o l i t i c a l c and i dat e s

ELLIE SMOTHERMAN TAYLOR PRESIDENT ALABAMA GROCERS ASSOCIATION

3. Currently, there are 1.9 million Alabamians in a food desert. We need state funding to help us eliminate this problem. In additional to increasing families’ access to affordable and nutritious foods, new and improved grocery stores can help revitalize lower- income neighborhoods by generating foot traffic and attracting complementary services and stores such as banks, pharmacies and restaurants. By employing local residents, stores create jobs for those who need them most and help create a virtuous cycle that enables residents to increase economic activity. 4. We need legislators that work to provide economic development and stimulation for our economy. This includes economic incentives and working with the business community on issues such as infrastructure, workforce training, and eliminating burdensome obstacles for new development and growth. 5. The grocery industry is constantly changing and now includes the challenges of online grocery delivery and pick-up, competition from new non-traditional grocery competitors in the market and changing consumer preferences from Millennials and Generation Z consumers.

2018 is gearing up to be a highly contested election year. almost one-fourth of Alabama lawmakers have decided not to run for re-election.

These include twenty-three of 102 members in the Alabama House of Representatives and nine of the 35 members in the Alabama State Senate. Some are retiring, and some are seeking statewide office, including Lieutenant Governor and Commissioner of Agriculture and Industries. Many of our members often ask me when talking with potential candidates what the priorities are for AGA in the upcoming elections. Through working with our Legislative Committee, I have outlined our top legislative priorities here and hope that you will convey these when talking with candidates both local, state and federal. All politics is local, so please let us know any relationships you have with current and potential candidates. We will be sending out more information on grocery

favorable candidates as we get closer to the primary and general election. 1. The grocery industry is a highly regulated industry. We need lawmakers that are pro-business and will not overregulate the grocery community. Healthcare, OSHA, FSMA (Food Safety Modernization Act), and GMO Labeling are oftentimes onerous and expensive. 2. The grocery industry is an easy target for consumer taxes. Customers only have so much in their budget for their food dollar. We do not need an increase in new or current taxes. Products like tobacco, candy and soft drinks are oftentimes easy targets. Regulations such as Country of Origin Labeling, Menu Labeling,

All politics is local, so please let us know any relationships you have with current and potential candidates.

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“For many americans, being a grocery bagger or working in a fast food chain was their first job.”

We need legislators that will be open to new progressive legislation like online alcohol delivery for brick and mortar stores and expanded offerings to meet new demand and help grocers be competitive in the market. 6. The grocery industry works on both the federal and state levels to ensure that the Supplemental Nutrition Assistance Program proactively benefits consumers and hunger in the community. We need lawmakers that will ensure that

we preserve consumer choice, stagger benefits, and eliminate fraud and improper payments without increasing the burden on the retail community. We need to ensure that these benefits are preserved in a retail format and Alabama receives the maximum benefits allowable for their customers. 7. In 2016, the Alabama Legislature passed the Alabama Minimum Wage and Right to Work Act. This was very important to the grocery industry as we

operate on an extremely competitive profit margin of less than one percent. These low entry wages are paid to first time workers, but they do not usually earn these wages for extended periods of time. These are important because they allow people to establish a track record, learn new skills, and advance over time to a better paying job. For many Americans, being a grocery bagger or working in a fast food chain was their first job. These are vital positions in our economy and we cannot make these positions so expensive that their hourly efforts to do justify their pay.

Getting to know you and what you care most about—planning for college, taking care of an elder family member, passing a legacy to future generations, buying a second home—is so important. Once we understand your priorities, together, we can help you pursue the goals you’ve set for yourself and your family. Call to learn more today. The Chambliss and Chastain Group Webb Chastain Senior Vice President Senior Financial Advisor NMLS#: 510838

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ALABAMA GROCER |

CHAIRMAN' S MESSAGE

g e ar i ng u p f o r a s u c c e s s f u l y e ar

FRANK D'AMICO, III BTC WHOLESALE DISTRIBUTORS AGA CHAIRMAN OF THE BOARD

Several AGA members will also be going to the NGA/FMI Day in Washington the week of April 9. We will be lobbying our Congressional Delegation about important issues facing our industry. If you have any specific issues you would like our Association to address, please contact the Association office. It's important that our voice is heard in Montgomery and in Washington. The Membership Committee met earlier this month and are on task for member recruitment and retention for 2018. This committee recruited a record number of 51 new members in 2017 and are hot on the trail for this year. We have put a new incentive in place this year. Any person that recruits 5 or more members will receive a free registration to the AGA Convention in July! Membership is essential to further grow our Association. Please help this committee if you can. Let non-members know what you and your company receive from your membership. Our Convention Committee has definitely hit the ground running this year. It is gearing up to be an very exciting 2018 convention in Sandestin! As of this writing we only have 9 booths left for the Exhibit Hall on Tuesday, July 31st. If you want to have a booth in the

As the first quarter of the year comes to a close please know that your association is just getting started on what will be a very productive year.

committee by donating items for our auction, please let the Association Office know. All of the funds we give to scholarships come from the Silent Auction and our two golf outings, so please be generous. I would also like to mention later this year we will be announcing a new Industry Certification & Tuition program for AGA Member employees that are looking to further their skill in our industry. We are excited about this journey and hope to have more details in the coming issues. The Legislative Committee has been hard at work watching the bills that come before our state Legislature. While you will read later in this publication, there has not been a lot of movement at the state level, we are still staying alert for any legislation that affects our industry.

Your Education Foundation Board of Trustees have been very busy already. The scholarship cycle has come to an end and we are looking forward to notifying winners of our Scholarships in the next couple months. We have three new Board of Trustee Members I would like to welcome aboard, Jai Freeman of Freeman Foods, Bubba Lindley of EdLinco and Rob Renfroe of Renfroe Foods. This Board is currently putting together the Spring Golf Outing, which will be April 5 at Inverness Country Club. They are also assisting Julie Goolsby, Silent Auction Chairman with hosting a successful Auction later this year at the Annual Convention. Through fundraisers such as this we have been able to donate over $1.25 million in scholarships to children in college. If you can help her

The Legislative committee has been hard at work watching the bills that come before our state Legislature.

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If your company is looking for a way to support the AGA and receive some recognition in the process, i would highly suggest sponsoring an event.

exhibit hall, I recommend you reaching out to the Association Office quickly. Sponsorships opportunities are also still available. If your company is looking for a way to support the AGA and receive some recognition in the process, I would highly suggest sponsoring an event. Sponsorship opportunities range from $1,000 and up. We have companies from all aspects of the industry supporting the event and if you can, you should attend. This convention is the only place you can visit with independent retailers, chain

retailers and wholesalers and spend a limited amount of time and money. In addition, we are happy to announce the we have ‘branded’ the AGA Convention with a new logo and theme. You will start to see our new

opportunity to grow and be successful in our industry. I am happy to be serving as Association Chairman during this exciting time of growth!

logo and theme being used on everything related to the convention. AGA Annual Show – Bringing Grocers to the Table. As you can tell, all aspects of your Association are up and running already with a lot on their plate. We are looking forward to another year and another

ALABAMA GROCER |

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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

Four Star Sponsors

ALABAMA GROCER |

AGA NEWS

2018 BUY ALABAMA'S BEST CAMPAIGN SPRING DETAILS ANNOUNCED The Alabama Grocers Association, the Alabama Department of Agriculture and Industries and the Alabama Food Manufacturers and Producers Association held a media briefing for the Buy Alabama’s Best campaign on March 7 on the Alabama State Capital Lawn. Speakers included Agriculture with Alabama product displays, ads, signage, special promotions and will sell Children’s of Alabama icons to support our fight to find a cure for pediatric cancer. When consumers shop in their local grocery store, they need to look for the Buy Alabama’s Best logo under products to

ensure they are buying the best products made right here in Alabama. “We hope that people will look for the Buy Alabama’s Best logo when they are shopping at their local grocery store,” said Ellie Taylor, President, Alabama Grocers Association. “Purchasing Alabama-

Commissioner John McMillan, Secretary of State John Merrill, Speaker Mac McCutcheon, and Senate President Del Marsh. The food retail industry

John Merrill, Alabama Secretary of State.

local economy and purchasing products made in our state, Alabamians can feel good about supporting both local businesses and helping families with children facing cancer.” Since 1911, Children’s of Alabama has provided specialized medical care for ill and injured children. Ranked among the best pediatric medical centers in the nation by U.S. News & World Report , Children’s provided care for youngsters from every county in Alabama, 42 other states and 10 foreign countries last year, representing

in Alabama provides over 69,000 jobs with over $2.2 billion in annual wages paid. Grocers pay over $1.2 billion in state taxes and have a total economic impact on the state’s economy of over $12 billion dollars. Retailers throughout Alabama will be supporting this campaign in their stores

Commissioner John McMillan, Alabama Dept. of Agriculture and Industries.

made products supports both our local economy and Children’s of Alabama.” The Buy Alabama’s Best campaign will run throughout the year and is designed to inform and educate consumers on what products are made,

produced, manufactured and/ or headquartered in the state of Alabama. A portion of the proceeds of the sales of these products will benefit Children’s of Alabama. To date, the campaign’s efforts have raised $736,000. “Children’s of Alabama is thankful for the community partners and the difference made through the Buy Alabama’s Best Campaign,” said Emily Hornak, Community Development and Cause Marketing manager at Children’s of Alabama. “By supporting the

Senator Del Marsh, AGA President Ellie Taylor and AG Commissioner John McMillan.

Senator Del Marsh, Senate Pro Tem.

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AGA NEWS

Johnny Collins of Barber Dairies; AL Speaker of the House, Mac McCutcheon; AGA President, Ellie Taylor; Wade Payne of Food Giant and Patrick McWhorter of The McWhorter Group.

Consumers sample products offered.

more than 653,000 outpatient visits and nearly 14,000 inpatient admissions. With more than 2 million square feet, it is the third largest pediatric medical facility in the U.S. Children’s offers inpatient and outpatient services across its Russell Campus on Birmingham’s historic Southside with additional specialty services provided at Children’s South,

Children’s on 3rd and in Huntsville and Montgomery. Primary care is provided at more than a dozen medical offices in communities across central Alabama. Children’s of Alabama is the only medical center in Alabama dedicated solely to the care and treatment of children.

It is a private, not-for-profit medical center that serves as the primary site of the University of Alabama at Birmingham (UAB) pediatric medicine, surgery, psychiatry, research and residency programs. More information is available at www.childrensal.org . For a complete list of Buy Alabama Best participating companies, visit www.buyalabamasbest. com .

Sampling crowd.

ALABAMA GROCER |

AGA NEWS

TOP "BUY ALABAMA'S BEST" RETAIL CAMPAIGNS RECOGNIZED

The 2018 Buy Alabama’s Best Retail Campaign Awards luncheon was recently held at The Club. The group is made up of the Alabama Grocers Association, the Alabama Department of Agriculture & Industries, and the Alabama Food Manufacturers and Producers Association. Presentations were made by Commissioner John McMillan with the Alabama Department of Agriculture and Industries; Mrs. Ellie Taylor, President, Alabama Grocers Association; Mr. Frank D’Amico, III of BTC Wholesale Distributors and Chairman, Alabama Grocers Association; Mr. James Cochran of Buffalo Rock

Pepsi Cola and President, Alabama Food Manufacturers and Producers Association; and Dr. Kimberly Whelan, Associate Professor of Pediatrics, Children’s of Alabama. Alabama Food Manufacturers and Producers Association members, as well as retailers and wholesalers throughout the state of Alabama were also in attendance. Commissioner John McMillan with the Alabama Department of Agriculture and Industries; Mr. James Cochran, President, Alabama Food Manufactures and Producers Association; and Mr. Frank D’Amico, III, Chairman, Alabama Grocers Association, presented Display Contest Award Certificates for 2017.

These displays featured participating Alabama food products to help consumers identify which products are headquartered, produced or manufactured in the state of Alabama. Awards were given to the following retailers: • Foodland, Gardendale, AL • Western Markets, Vestavia, AL During the year, a portion of the sales of participating Alabama food product companies along with retail sales of icons raised monies for the UAB Division of Pediatric Hematology and Oncology at Children’s of Alabama. A check was presented to Dr. Kimberly Whelan in the amount of $47,725 for

First Place Dry Certificate Presentation.

Kris Jonczyk, Publix and James Cochran, Buffalo Rock Pepsi.

First Place Wet Certificate Presentation.

Check presentation to Childrens of Alabama.

Carolyn Smith, Red Diamond and Phillip Davis, A and R Super Markets.

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AGA NEWS

2017. Since 2007, the Buy Alabama’s Best Campaign has raised $726,033 to fight pediatric cancer. “This generous donation from local Alabama businesses associated with the Alabama Grocers Association will help us meet our mission of working to cure every child with cancer,” said Whelan. “Children’s of Alabama is working to find a cure each and every day.” Mrs. Ellie Taylor, President, Alabama Grocers Association, announced to those in attendance that the Buy Alabama’s Best Campaign would continue to be a quarterly event. This year they will target March, June, September and December as designated months for retailers to show support of the Alabama products.

Following the presentation, a buffet featuring all Alabama food products was enjoyed by those in attendance. The purpose of the Buy Alabama’s Best Campaign is to identify and increase awareness of Alabama food products and increase sales of those products. Alabama food product sales have a $2 billion

Andy Tiption, Director of Food Safety, AL Dept. AG; Ellie Taylor, President of AGA; Commissioner John McMillan, AL Dept AG.

impact in Alabama’s economy, tax base and along with the food service industries, employ one out of every four Alabamians.

Ben Ray, Millie Ray's Rolls; Darwin Metcalf and Butch Smaters, Western Markets; and David Gulledge, CCBCU.

Wade Payne, Food Giant; Butch Smathers, Western; Don White, UTZ Golden Flake; and James Cochran, Buffalo Rock Pepsi.

Jessica Brown, AGA and Frank D'Amico, BTC Wholesale and Chairman, AGA.

Andy Tipton, AL Dept. of AG and Naseem Ajlouny, Buy Lo Quality Foods.

Harold Garrett, Gateway Foods; Kevin Gillespie, Kelley Foods and Bob Taylor, Red Diamond.

Scott OBrien, PWADC and Jason Stone, Blue Bell.

ALABAMA GROCER |

AGA HAPPENINGS OUT AND ABOUT

President Ellie Taylor Retires from NGA Board of Directors.

Congressman Mike Rogers Visits AGA Member Jimmy Wright's store in Opelika, Alabama.

AGA attends PWADC Food

Show. Seen here - Bubba Lindley of EdLinco; Jessica Brown of AGA; Tracy Crane of Tracy's Casseroles and Ed Lindley of EdLinco.

AGA Member John M. Wilson receives the 2018 Crenshaw County Chamber of Commerce Citizen of the Year award.

AGA Attends AG of the South Food Show. Seen here is Stan Alexander of Associated Grocers of the South; Jessica Brown of AGA; and Anthony Marino of Marinos Market.

Ellie Taylor, President of AGA meets with John Weidman, Deputy Executive Director, The Food Trust to learn more about how our grocers can get involved in the FINI SNAP Double Bucks Program.

Congressman Bradley Byrne visits customers at the Grove Hill Greer’s location.

AGA Member Jimmy Wright retires from NGA Board of Directors.

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WASHINGTON REPORT

SNA P Sho t – F o od and Nu t r i t i on P o l i cy i ns i d e t h e B e ltway

PETER LARKIN PRESIDENT AND CEO NATIONAL GROCERS ASSOCIATION

The Trump administration’s “Harvest Box” proposal has grocers up in arms.

burdens and fees onto retailers. No clear standard exists for defining foods as healthy or unhealthy. Managing a SNAP eligible foods list presents operational challenges and complexities. This type of undertaking would require identifying, evaluating and tracking the nutritional profile of the hundreds of thousands of food products available for sale – a sizable and costly task for supermarket operators. NGA believes policies designed to promote healthier eating and food choices should focus on providing incentives to low-income populations and expanding access to healthy foods. Rather than further stigmatizing the SNAP program, grocers are working with their customers and communities to incentivize healthier eating through programs such as Double Up Food Bucks, a program that allows SNAP recipients to stretch their benefits further with a one-to- one match to buy fruits and vegetables. Further, in addition to paying $70 billion a year in credit card interchange fees, retailers take on large equipment, compliance and training expenses to participate in the SNAP program. Adding further costs would harm the ability of grocers to serve low-income populations. NGA will continue to work with various stakeholders to improve SNAP’s efficiency and effectiveness, and find common-sense solutions to address the lack of food access in rural and urban areas. ■

Congressional efforts to put the government at the center of delivering nutrition benefits fails to recognize the competitive principles that have made the SNAP public-private partnership a successful program. While the President’s budget request officially kicks off the formal process and outlines many of the administration’s priorities, Congress typically creates their own authorization bills. The Harvest Box debate comes at a relevant time as Congress is set to reauthorize the Farm Bill this year. At the time of this writing, introduction of both the House and Senate Farm Bill versions are expected this spring, with House Agriculture Committee Chairman Mike Conaway indicating that the committee could release a draft as early as mid-March. As Congress begins the hard work of reauthorizing nutrition programs in the Farm Bill, NGA will be working to ensure the voice of the independent supermarket industry is represented throughout this process. In addition to fighting against the “Harvest Box” proposal, other policy ideas that are being discussed in Washington include SNAP choice restriction and placing additional fees onto retailers. NGA is concerned with policies limiting consumer choice and put new administrative

A lot has been going on these days in Washington, D.C. regarding food and nutrition policy, especially surrounding the Supplemental Nutrition Assistance Program (SNAP). Here’s a brief “SNAP shot” of the various proposals that are being debated by federal lawmakers and other important stakeholders. In February, the Trump administration released its fiscal year 2019 budget proposal, which included drastic changes to the SNAP program by replacing about 40 percent of household SNAP benefits with a government run commodity box delivery service. Instead of letting households use their SNAP benefits at their local grocery store, SNAP funding would be used to send eligible households a box of non-perishable food items. As soon as this “Harvest Box” proposal was released NGA’s government relations team hit the ground running, meeting with White House policy officials, USDA, and key stakeholders on Capitol Hill to express our opposition to any proposal that cuts out the private sector from food delivery. NGA also organized a letter to Congress signed by nearly 900 independent retail and wholesale grocery companies from all 50 states with the message that any

ALABAMA GROCER |

INSIDE THE BELTWAY

N e x t S t e p s f o r S e c u r e S u p e rma r k e t Payme n t s

JENNIFER HATCHER SENIOR VICE PRESIDENT GOVERNMENT AND PUBLIC AFFAIRS FOOD MARKETING INSTITUTE

also foster innovation and ensure that all stakeholders have access to and utilize the most secure authentication forms available. Security Standards Credit card security standards are centrally set by the card brand controlled entities PCI and EMV Co. Both entities are closed, and no retailer has a vote on the board to set the standards for payment cards. These entities establish security standards retailers and other stakeholders must accept. All too often these standards are based on business decisions, not true security enhancements without retailer input resulting in stifled innovation and a lack of transparency in the electronic payments market. By establishing an open and fair security standards setting body, all stakeholders will have an opportunity to affect policy and decisions based on what is best for the system, not one business interest over another. Secure Routing In 2010, Congress recognized the dangers of relying on only one or two networks to transmit all debit transactions. The 2010 debit reforms required every debit card issued in the United States have at least two unaffiliated networks enabled on the card. This requirement has been incredibly successful by providing retailers and their

This month, grocers from throughout the country will be in washington D.C. as we seek for solutions to our industry's most pressing issues.

FMI, along with several of our retail association partners, have turned the focus to explain and advocate for three market- based solutions to start addressing the systemic weakness of the U.S. payment card system, while bringing transparency and greater security. Customer Authentication In March, all major card brands lifted their requirement for retailers to collect a signature for any transactions. Retailers cheered this change and welcomed the card brands’ acknowledgment that a signature provides no additional authentication. What is next? Our industry advocating for stronger user authentication. In today’s market that would include changing the card brand rules to allow retailers to require a customer to enter a personal identification number (PIN) to complete either a debit or credit transaction. PINs are proven to reduce fraud, and retailers would like to be able to require PIN, or other authentication methods that are ubiquitous and adopted for ATMs, on both debit and credit card transactions. While PINs are widely used today, policy should

Grocery retailers from across the nation will be attending our annual lobbying event. In addition to SNAP and the many issues facing supermarket retailers, we will talk about the next steps for payments. Last month marked my 20th year at the Food Marketing Institute and our work with payment systems. In 1998, only a portion of our country had moved to EBT, with the remaining states still collecting paper coupons. The EBT system was not yet national but was governed by regional coalitions of states. Checks were the most popular payment with more than 45 percent of the payments by value. There were no rewards on credit or debit; on-line debit fees were a maximum of 13 cents and while credit card interchange was annoying at 1.15 percent, it was still only 11 percent of sales. How much has changed in the last 20 years. Yet, in many payment areas, the U.S. is lagging behind the rest of the world, including in both security and innovation. In 2016, while the nation accounted for 23.9 percent of credit and debit card volume, it shouldered 39.5 percent of global card fraud.

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INSIDE THE BELTWAY

the success of the debit card ecosystem and enabling a second network on every card in the U.S. we would increase security, network availability and drive greater innovation. Perhaps we will look back 20 years from now and be proud of the work we were able to do to enhance our payments system efficiency, as well as security and innovation for our customers. ■

across the market. U.S credit cards do not enjoy the same protections of having a second network enabled on a card. Therefore, if that sole network goes down, customers cannot use the card and in a large enough outage, commerce can slow to crawl at best. In a time when we are focused on securing our infrastructure

iStock

customers a contingency if one network goes down. Additionally, the competition from having multiple networks on the card has driven innovation to improve security and reliability

against cyber criminals and state sponsored economic disruptions, it is essential that we also fortify our streams of commerce. By having the credit card market follow

ALABAMA GROCER |

VIEWPOINT

T h e R e ta i l A p o c a ly p s e i s B . S .

KEVIN COUPE FOUNDER, MORNINGNEWSBEAT.COM

“I love the smell of napalm in the morning.” – Apocalypse Now

the things they offer that are not available in a competitor’s store, or on a competitor’s website. I also think it’s going to go beyond products. Bricks-and-mortar stores, I believe, are going to have to evolve past where many of them are now. And fast. I think that if any retailer is planning or building a store without factoring into the plans: a) where the click-and-collect depot will be, and b) how e-commerce can be run out of the store, they ought to be charged with retail malpractice. I think that more retailers ought to be looking to companies like Michigan’s Westborn Market for inspiration. Westborn found an old and decommissioned post office in Plymouth, Mich., and converted it into a beautiful and food-driven store that uses things like mail boxes as design cues; it offers great food and a shopping experience that can’t be replicated online. More companies ought to be looking for unusual venues for stores of varying sizes that compel shoppers to walk in the front door. One other thing that Westborn does is hire great people and invest in them – because in that way, employees will feel invested in the business, creating connections between shopper and (to use an old-fashioned term that ought to be revived for the current age) shopkeeper.

But…it isn’t going to happen today. Or tomorrow. Not for everybody, anyway. That doesn’t mean, however, retailers can rest easy. In fact, just the opposite. The retailers that rest easy are the ones who are in the most trouble, because complacency is a primary sin for anybody trying to succeed in this marketplace. The ones that will succeed, and even thrive, are the ones who understand they have to be constantly listening hard to their customers and then going beyond what they hear to innovate in fundamental ways, adapting to changing consumer behavior, impulses and mindsets as quickly as possible. They are the ones willing to take risks, challenge legacies and traditions, and accept the inevitability that risk means failure, but also not taking risks means irrelevance and obsolescence. These retailers are far less likely to be devastated by any sort of apocalypse because they understand that they cannot simply be an alternative for shoppers. They have to offer distinct and differential advantages. They understand that if 80 percent or more of the products they sell also are sold by the competition, they have to find ways to focus on and draw shoppers’ attention to

“Retail apocalypse” seems be a word pairing that has entered the lexicon. Everybody is writing about it. (I just checked, and Google News offered me more than 53,000 results for the phrase.) Everybody seems to accept it as a current reality. Well, I’m getting really tired of it. I think it represents an awful lot of hand-wringing, whining and glass-is-half-empty thinking. I think it is so much B.S. I’m not saying it’ll never happen. Never is a long time, and I’ve decided to get out of the never business. It doesn’t pay very well, and experience shows that when you say “never,” there’s a pretty good shot that you’re going to be wrong. Eventually. I’m also not saying that there aren’t retailers in trouble. Big trouble. Like, say, Sears… which has been a dead-company-walking for so long that it qualifies for a guest appearance on “The Walking Dead.” There’s no question even retailers that had decent end-of-year holiday shopping seasons in 2017 are facing some significant challenges in 2018. For some, the bombs are ready to be dropped, and there is little they can do to avoid the competitive napalm used by bigger, better funded and more innovative competitors.

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VIEWPOINT

There are lots of reasons to bemoan a coming retail apocalypse, but there are many ways to avoid such a fate. Retailers just have to work at it, and probably get outside their comfort zones. Sometimes way outside. I was talking to a fellow the other day who suggested that one of the ways some retailers will remain relevant is by creating a convenience version of a food truck, and then use data to figure out when and where to position these trucks and assure that the merchandise they carry is targeted and relevant to people who live or work in those locations.

This isn’t just the purview of up-market stores, by the way. There are value-driven retailers out there that turn their employees into owners, thereby assuring that they’ll feel invested in the business and act that way. Another thing that retailers absolutely have to do is figure out the best way not just to collect actionable data about shoppers, but actually use it. There was a retailer last year who did an interview in which he expressed concern that Amazon has more data about its shoppers than he does, which puts him at a disadvantage.

“The ones that will succeed, and even thrive, are the ones who understand they have to be constantly listening hard to their customers.”

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Now, to be honest, I’m having a little trouble wrapping my head around the logistics of this concept… but I also didn’t see how drones were going to work as delivery vehicles when they were first proposed. The failure here may be in my lack of imagination, or my ability to figure out how such an idea would be implemented. I suppose that’s why I’m a writer… I can tell stories about the people who conceive and create these concepts, as opposed to actually doing it myself. Besides, I’m out of the never business. ■

I’d agree with that conclusion – it will give Amazon an advantage… one that it will not hesitate to exploit over and over and over. But in this case, the retailer made a decision not have any sort of card, loyalty or data collection program. That’s the retailer’s right, and defensible… though I’d disagree with it. But this is a choice, not an inevitable fact of retail life… and I would argue that nobody can afford to this approach in 2018 and beyond.

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OUTSIDE THE BOX NEW RETAIL PERSPECTIVES

Being a retail icon doesn’t shield you from losing sales to online sources. What’s to do? Sell some real estate. This is what Lord & Taylor, the 114-year-old retailer did. The retailer, which has been operating on Manhattan’s Fifth Avenue since 1914, sold its 12-story flagship building to WeWork, operators of shared work spaces. L&T and its parent Hudson’s Bay Co., is using the proceeds to pay down debt. Not a bad deal since the building appraised for $650 million a year ago was sold for $850 million. Strategic Sales

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SWEATING IT OUT In an effort to attract younger women, UK-based Debenham’s department stores are installing in- store gyms called Sweat! In three stores, offering studios for spin classes and aerobics, free weights and other equipment. The move will also enable the chain to take advantage of cross-marketing opportunities.

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ROOM FOR

When one part of your business is slowing down what do you do? Look for something else to pick up the slack. That’s exactly what WHSmith, the retail chain with locations in airports, railroad stations, hospitals, and even post offices, did as the magazine and newspaper business became more challenging. Their answer is to expand its food-to-go business with its Munch line of healthy snacks and convenience foods and is beefing up a new format with M&S Food-To-Go. ON-THE-GO

GROWTH

It’s been said that the hardest part of supply chain logistics is the last 100 feet. Amazon.com has come up with a delivery solution that consists of taking over package rooms at large apartment buildings in order to get products to consumers more efficiently. The company has reportedly signed contracts with apartment owners and managers of about 850,000 units to install Amazon lockers, many of which were available before the peak holidays. Apparently, packages, not building maintenance are the landlords’ biggest problem.

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OUTSIDE THE BOX

fava beans Furniture

Sainsbury supermarkets in the United Kingdom is growing the one-stop shop concept by expanding mini Habitat stores selling furniture upholstery, lighting, housewares and textiles. The stores include a healthy 600 items, but they are clearly a showcase for the 4,500 items that Habitat sells online through its own website.

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GENDER EQUALITY

Anew study in a recent issue of the Journal of Financial Economics indicates that CEOs who have daughters have a greater tendency toward equitable treatment of women and their company has a higher level of corporate responsibility.

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dog days Barkbox, the monthly delivery service with 500,000 subscribers that tailors products to individual dogs size and sensibilities, has surveyed subscribers and found that about 44 percent of millennials consider their pets to be “starter children” and that’s the way it’s handled online. “About 85 percent of our content doesn’t even mention Barkbox. We form relationships with people around dogs in general,” Barkbox told AdWeek .

House bound Consumers in New York City no longer have to leave their apartments to get prescriptions. CVS Pharmacy has launched a same-day prescription delivery service offered free of charge. Orders placed by 11 a.m. are delivered by 4 p.m. and orders placed by 4 p.m. are delivered by 8 p.m.

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REDEFINING the rules of ENGAGEMENT:

DIGITALLY

By Craig Rosenblum

Manufacturers and retailers of fast-moving consumer goods know all too well that price reigns supreme for attracting and retaining shoppers.

Today’s well-informed shopper has more purchasing options than ever before. Despite being time-starved, shoppers are willing to forgo convenience for savings, which promotes channel-hopping and threatens brand and banner loyalty. In response, retailers turn to promotions to gain a slight, albeit temporary, competitive edge. According to a recent benchmark report by Retail Systems Research, one-third of respondents report they are increasing the number of promotions and, at the same time, offering steeper discounts. This approach is something of a double- edged sword for while it’s driving increased sales, it’s accelerating the race to the bottom as razor-thin margins are being shaved even more. Ironically, in the same report, the No. 1 job for a retailer’s pricing strategy was identified as maximizing gross margin. Price as a competitive lever may be further neutralized as digital technologies increase price transparency across banners, formats and channels. Digitally-savvy shoppers – willing to shop across the spectrum of omni-retailing, will cherry-pick products “on deal,” regardless of brand. This further erodes loyalty, which can lead to a death spiral.

The brighter side of digital transformation Despite the dark introduction, digital transformation does not mean gloom and doom. Digital engagement can be poison if not managed correctly but, for companies willing to embrace the transformation, digital engagement is just what the doctor ordered. It’s the shot-in-the-arm that has eluded the industry for decades. Implementing digital engagement strategies can take many paths. Ultimately, the approach must consider the organization’s existing position in the marketplace and its ability to manage disruption. Some of the steps along the path require proper sequencing. For example, merchants must understand shopper behaviors before they can create targeted offers. However, there are no prerequisites for retailers migrating from pricing strategies based on Known Value Items (KVIs) to strategies using Personalized Known Value Items (PKVIs).In fact, implementing PKVIs is among the least disruptive solutions and delivers a rapid time-to-value return in terms of sales gains and competitive positioning. Below is a sample path for leading retailers to effective digital engagement.

Note: Sequenced items are grouped together. • Implementing Personalized Known Value Items • Understanding Shopper Behaviors and Defining Shopper Demographics • Segmenting and Weighting the Value of Each Shopper or Household • Creating Targeted Offers • Executing Influencer Marketing

Continued on page 26 ▶

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◀ Continued from page 51 ◀ Continued from page 25

Implementing Personalized Known Value Items For decades retailers have driven their price-value image by focusing on KVIs. These KVIs, which may include as many as 600 product lines, are believed to disproportionately improve the shopper's value equation. Retailers assume these items, and their corresponding price points, appeal to the majority of their shopper base. While this approach does have merit, it is far from optimal. Thousands of households may not consider a particular subset of products to be relevant, or may fail to notice the retailer's aggressive prices. This dilutes KVIs as a key competitive pillar and further erodes margins by needlessly lowering prices. Conversely, PKVIs ensure shoppers are getting the best-in-market prices on the products that matter most. Using proprietary analytics and historical transaction data, PKVIs redistribute incentives by household to maximize impact – all while protecting margin. The path to personalization begins by analyzing product purchases at the household level. These products are then weighted and ranked based on household penetration and PKVI density. 1 Products with high household penetration and high PKVI density become store- wide KVIs with lower prices offered to all shoppers. This process typically reduces the number of store-wide KVIs by about 70 percent. The remaining products become candidates for PKVIs based on specific shopper behaviors. Figure 1 illustrates product classifications before and after PKVIs. 1 PKVI density reflects the likelihood of a product being in Personal Known-Value Item baskets.

Understanding Shopper Behaviors and Defining Shopper Demographics Using shopper analytics, trading partners can develop strategic initiatives to increase sales and drive category growth while improving bottom-line performance. Critical analytic outcomes include: • Defining core shoppers and understanding their purchase behavior • Understanding category-specific drivers and identify opportunities for growth, differentiation, and loyalty • Increasing ROI on promotion spending by increasing offer relevancy • Quantifying category growth by attracting new shoppers into the aisle

26%

25%

19%

15%

4% PERCENTAGE OF CUSTOMERS

11%

45–54

55–64 65+

18–24 25–34 35–44

AGE

BEFORE

AFTER

Mean age: 46 years old

STORE– WIDE KVIS

MRS. JONES‘ PKVIS

MR. ADAMS‘ PKVIS

Figure 2

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BANANAS CHIQUITA

■ ■

BISON COTT CHSE PINEAPPLE

CAMPBELL V8 JUICE PLST 100%

70% FEMALE

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CAPRISUN FRUIT PUNCH 10PK 10%

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CARROTS PEELED 1 LB.

■ ■ ■ ■

CELESTE PEPPERONI PIZZA

30% MALE

DAISY LIGHT SOUR CREAM

88% MARRIED

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IMPERIAL MARGARINE QUARTERS

NESTLE COFFEEMATE HAZELNUT 32 OZ.

12% SINGLE

■

POLAND 24PK 16.9Z SPRING WTR

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PREGO SPAG SCE MEAT

71% KIDS

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PRIVATE LABEL BUTTER QUARTERS

■ ■

SABRA HUMMUS GREEK OLIVE

29% NO KIDS

SIMPLY OJ HIGH PULP 100%

Figure 3

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STROHMAN BRD D'TAL PLAIN

Figure 1

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