ROFDA Report 2015

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A Shelby Publishing Special Section

THE ROFDA REPORT

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DECEMBER 2015 • A Shelby Publishing Special Section 3

THE ROFDAREPORT

From the President and CEO . . . . . . . . . . . . . . . . . . . . . 4

NGA’s Peter Larkin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ROFDA CEOs Speak . . . . . . . . . . . . . . . . . . . . . . . . .9-21

Teri Cameron on the Spouse’s Role in ROFDA . . . . . .22

Teresa Pope’s ROFDA Milestone . . . . . . . . . . . . . . . . .23

GVH Offers Savings Opportunities . . . . . . . . . . . . . . . .23

Belcastro on Holiday Success at Retail . . . . . . . . . . . .24

Topco/Aptaris Study on Ad Practices . . . . . . . . . . . . .27

Preparing for FSMA . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Bunzl’s Retail Solutions . . . . . . . . . . . . . . . . . . . . . . . . .29

The ROFDA Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

CONTENTS

Spring Conference 2015

FallConference

2014


Fall Conference 2014

SpringConference

2015


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REPORT

4 A Shelby Publishing Special Section • DECEMBER 2015

THE ROFDA

A ROFDA Retrospective—The Last Five Yearsby Francis Cameron, President and CEO

The past five years at Retailer Owned Food Distributors and Associates could be characterized as a “whirlwind.”

In May of this year, I officially celebrated my fifth year with ROFDA. Clichés about how time passes seem to fill my mind. I look back at our first five years full of pride and appreciation for all we have accomplished together. Our Members, Associates and Suppliers have embraced the whole idea and spirit of the cooperative, and it has revealed itself through some pretty impactful results.

Identity/BrandingTHEN:

NOW:

TaglineTHEN:“Building for the Future”

NOW:“Strength in Unity”

Digital PresenceTHEN:

NOW:

THE ROFDA

Mission/PurposeTHEN:Promote and support the retailer-owned distribution segment

of the food industry with value-added programs and services, all in furtherance of servicing Independent Retail Grocers located throughout America.

NOW:Purpose:“A cooperative formed to facilitate and enhance the success of

Independent Retail Grocers.”

Mission:“Cooperatively united to utilize and leverage all available

resources, industry best practices, and business relationships to provide added value to our Independent Retail Grocers.”

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Board of DirectorsTHEN:Randy ArceneauxMartin W. ArterMichael BourgoineJ.H. Campbell Jr.James R. DengesJ. Christopher MichaelCalvin J. MillerRichard A. ParkinsonAlfred A. PlamannJames M. ReidRandall M. SimonDean SonnenbergDennis T. StewartGerald TotoritisFerrell Franklin

NOW:Randy ArceneauxMartin W. ArterMichael Bourgoine*Emile Breaux*Ken Nemeth*Christopher Miller*S. Neal Berube*Robert Ling*Bob KetchnerRandall M. Simon*Ray Sprinkle*David Bullard*Stan Alexander*Francis Cameron

*New

Associate AdvisorsTHEN:Associate Member Advisory Group (AMAG)Five Associate Members

NOW:ROFDA Advisory Council (RAC)Seven Associate Members:Denny Belcastro, Kimberly Clark Corp. (Chairman)Rick Brindle, MondelezGeorge Eversman, Dot FoodsJohn Latham, TopcoMike Ridenour, The Kraft Heinz Co.Christina Romas, Park City GroupBrad Thomas, Kimberly Clark Corp.

New AdditionsROFDA Champions Bob Obray, Associated Food Stores, Salt Lake City Curt O’Hara, Associated Grocers of New England, Pembroke, New Hampshire Delma Craft, Piggly Wiggly Alabama, BessemerTerry Palmisano, Associated Grocers, Baton Rouge, Louisiana Stan Alexander, Associated Grocers of the South, Birmingham, Alabama Gregg Young, Associated Grocers of Florida, Miami Jeff Robinson, Affiliated Foods, Amarillo, Texas Scott McCann, Olean Wholesale Grocery Co-op, Olean, New York Joe Falvey, Unified Grocers, Commerce, California Ken Nemeth, Central Grocers, Joliet, Illinois

Paul Christiansen, URM Stores, Spokane, Washington Randy Simon, CERTCO, Madison, WisconsinWayne Hall, Affiliated Foods Midwest, Norfolk, Nebraska

ROFDA Captains (ROFDA’s Program Experts made up of Members)

Share Groups• CEO• Champion• Customer Service• Finance• Human Resource• Information Technology• Marketing• Operations• Procurement• Safety/Risk Management• Store Development

PortalEvent RegistrationResourcesForumsAs we evolve and refine our organization, it has been our Members,

Associates and Suppliers that have made the difference. Their actions have provided new levels of value for our Independent Retail Grocers. We have much more we can accomplish together.

A New RealityCompetition continues to provide new challenges to the independent

as the big keep getting bigger, new retail formats are entering our markets, and omnichannel is providing new avenues to consumers. As if that’s

not enough, new regulations, cybersecurity, consumer engagement and succession planning, to name a few, provide additional concerns. We truly are facing a new reality.

We must find new ways to work together behind the scenes to relieve some of this pressure. We have seen how the independent spirit can over-come what sometimes seems insurmountable. But now more than ever, we must work together. The whole purpose of ROFDA is to push value down in an effort to help our Members’ Independent Grocers succeed. In many cases, our challenges are going to take a collaborative approach and a concerted push. Trade associations continue to play a critical role. We have worked closely with the National Grocers Association (NGA), Food Marketing Institute (FMI), Global Market Development Center (GMDC) and even Grocery Manufacturers Association (GMA). In many cases, we recog-nize a “common pain.” While ROFDA may not have the resources, we have the clout when we combine our efforts. The whole industry is finding ways to work together to minimize duplicated efforts and to provide more impactful results.

Strong leadership has played a critical role in the progress we’ve real-ized in the last five years. While we’ve seen some significant changes in our Board of Directors, these gentlemen have quickly connected with one another in addressing the challenges at hand. Martin Arter has elevated our group to a new level in his role as Chairman of the Board for the past two years. He is all about taking action and delivering results. Mr. Arter’s not afraid to ask the tough questions and roll up his sleeves to get the job done. We are better positioned today because of his passion for doing what’s necessary to support the success of the independent grocer. We are all thankful to him for his service.

While we could celebrate the accomplishments of the past five years, it would really not serve a purpose. There are many things we have yet to address. A whirlwind is created by instabilities and turbulence. We’ve got plenty of that. The future is, without a doubt, going to be a “whirlwind.” But we have a large group of smart and passionate people with a common purpose. May we all have the vision, strength and discipline to support the success of our Independent Retail Grocers well into the future.

Francis Cameron

REPORTTHE ROFDATHE ROFDA

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Peter Larkin, president and CEO of the National Grocers Association (NGA) is staying very busy in the fall of 2015, not only keeping his finger on the pulse of what’s happen-ing with the potential 2016 presidential candidates in both parties but also the myriad issues that are yet to be resolved that have the potential to negatively impact NGA’s independent grocer members.

“The legislative and regulatory environment we find ourselves in today is still very partisan, very contentious,” Larkin says. “There are so many important issues that are left on the table, yet to be decided, this year that it keeps us up at night because we need to get to resolution on some of these key issues.”

There are issues in the areas of taxes, labor, product labeling, food safety and data security that are particularly troubling that NGA is following closely on behalf of its members.

Here’s what Larkin says about some of those key issues:

FSMAOn Sept. 17, 2015, the U.S. Food and Drug Administration (FDA) published final

rules for “Preventive Controls for Human and Animal Food,” and, continuing into 2016, the FDA intends to finalize the remaining five rules it has proposed to imple-ment the Food Safety Modernization Act (FSMA).

FSMA, according to FDA, “is the most sweeping reform of our food safety laws in more than 70 years…It aims to ensure the U.S. food supply is safe by shifting the focus from responding to contamination to preventing it.”

FDA adds that it will conduct “extensive outreach to industry to help ensure that everyone who seeks to comply with these rules, whether legally required to or not, understands the new requirements. The compliance dates vary, in part, according to the size of the business.”

Compliance dates for some businesses begin in September 2016.FSMA, Larkin says, has some “very complicated regulations” and is likely to

impact grocery wholesalers more than retailers, as many food products pass through the wholesale channel before getting to retail.

“Our role is really to provide guidance and kind of help navigate what those rules mean now that the regulations have come out,” Larkin said. “We do have access to food safety experts that can help our members figure out what they need to do to be in compliance.”

GMO LabelingIn July 2015, the U.S. House of Representatives passed the Safe and Accurate

Food Labeling Act by a vote of 275 to 150. The bill, which still must be passed by the Senate before it becomes law, establishes a federal labeling standard for foods with genetically modified organisms (GMOs) and gives the FDA sole authority to require mandatory labeling on such foods if they are ever found to be unsafe or materially different from foods produced without genetically modified ingredients.

NGA, along with fellow trade associations such as the Food Marketing Institute and the Grocery Manufacturers Association, support a nationwide labeling stan-dard, “and hopefully we will have some activity (on the bill) in the Senate,” Larkin said in early October. “It’s another one of those things that’s up in the air in terms of whether or not Congress will move on anything before the end of the year.

“But it’s very important to have one national standard so we don’t have 50 different versions of what a GMO label should look like and what qualifies as a GMO or GMO free,” he said.

Vermont has passed a GMO labeling law that would go into effect next July, barring passage of a national labeling standard, and there are about 70 bills that have been introduced in more than 30 states to require labeling or prohibit genetically engineered foods, according to NGA.

NGA and the other associations have joined together to study how, logistically, a company could comply with the Vermont law, and the reality is “it’s going to be a nightmare, it’s going to be very costly, and it’s really an indication of why we need a federal standard,” Larkin said. “It’s a state’s rights issue almost, but this is one of those issues where anything having to do with an interstate food distribution system, you really can’t deal with a patchwork quilt.”

He added that while science points to the safety of GMOs, this issue remains quite controversial, with activists very vocal in their opposition.

“It’s more of an emotional issue than a scientific issue,” Larkin said. “We have no problem at all with companies that want to label something as GMO free. If they want to satisfy their consumer and that particular consumer is looking for something that is GMO free, we think everybody ought to be able to do it, but we need guidelines and a uniform standard so that people can’t just make up their own minds about what constitutes GMO free…If people want to steer themselves away from a GMO product they ought to be able to do that, but we just can’t have 50 different versions of what that means.”

Cyber Security/EMVNGA also is lobbying for federal cyber security legislation in order to circum-

vent the same kinds of problems presented by patchwork GMO legislation, Larkin said.

“All kinds of legislation exists at the state level in terms of when there is a

breach, how do you share information, with whom can you share information, who is responsible for paying what if there is a breach? Like with GMOs, we are trying to get one federal standard that treats all the various players in the chain of that data…so from the financial institutions to the processors to the retailers, everybody has shared responsibility, and the rules will be uniform from one state to the next.”

In terms of data security, retailers in the U.S. were required to change over to EMV (Europay, MasterCard and Visa) technology on Oct. 1 in order to avoid liability for fraudulent transactions.

The transition included the implementation of chip-and-signature technol-ogy, requiring all merchants to update their point-of-sale (POS) card terminals in addition to the software that runs the front-end systems at an expected cost to merchants of $30 billion, according to the National Retail Federation. For merchants that fail to meet the deadline for upgrading their POS card readers, the liability for fraud committed in their stores using chip-and-signature cards will shift to the merchant.

Larkin said there are a couple of points of frustration surrounding the EMV changeover.

One is that the financial institutions went with the chip-and-signature technol-ogy that is less secure than the chip-and-PIN (personal identification number) technology that has been employed in Europe for more than 20 years.

“If they had done it in a way that they were PIN enabled, they would be a far more secure transaction than with just a signature,” Larkin said. “Yes, it cuts down on fraud from the standpoint that it’s much more difficult to duplicate a card with a chip. With a mag stripe card, it’s fairly easy to duplicate those, so that is one step in the right direction with fraud. But if you were to PIN enable them it would be a far more secure transaction.”

Another frustration—this one impacting independent grocers in particular—is that the new terminals retailers have invested in can’t go online until their connec-tion is certified and tested by an outside company. Major retailers like Walmart and Target have had their connections certified so that they can accept chip cards, but many independents are still waiting for their certification.

“It’s a very frustrating issue for them because a lot of them have spent a lot of money to purchase the equipment at the front end that would allow them to accept a chip card,” Larkin said. “Those that are certifying (machines) are way behind, so a lot of our retailers who have the equipment don’t have the ability to accept a chip or EMV transaction. Unfortunately, there has been a lot of press about how those are the most secure transactions, so if a consumer goes into one of our members and they’re not able to process the transaction, they wonder why they can’t when they could at a Target or a Walmart, because they are certified. So it creates an unlevel playing field. So we are communicating aggressively to try to get that situation rectified and get everybody certified and on the same page.”

In remarks to the U.S. House Small Business Committee on Oct. 6, NGA’s Greg Ferrara said, “NGA strongly believes this is unacceptable and urges Visa and MasterCard to immediately take steps to ensure these merchants do not face losses as a result of the liability shift.”

Larkin also noted that he and ROFDA President and CEO Francis Cameron have worked closely together since this summer to address issues with third-party vendor NCR, which provides point-of-sale financial services. NCR experienced disrup-tions in its Connected Payment service. During the outages, numerous payment methods including, credit, debit, pre-paid and Electronic Benefit Transfers (EBT) transactions, were declined at point-of-sale, causing confusion and frustration for retailers and customers alike.

“They’ve had some significant outages over the past two months that have been causing nightmares for supermarket retailers,” Larkin said.

As a result, Larkin and Cameron, as well as representatives from FMI, have been “coordinating efforts to try to communicate with NCR, get actionable information out of them so we can pass it on to our members.”

2016 NGA Show Expected to Be Record-BreakingEvent coming up Feb. 28-March 2 in Vegas

Larkin says NGA is expecting a record crowd for its upcoming NGA Show in Las Vegas. This year’s show is being held a little later in February than usual due to hotel conflicts: Feb. 28 through March 2 at the Mirage Hotel and Casino. The NGA Show is co-located with the IGA Global Rally again this year.

“That always brings even more retailers and wholesalers,” Larkin said of the co-location with IGA, “and it brings an international flavor to our event. We have a great lineup of speakers and workshops. We have General Stan McChrystal, who is our opening keynote speaker, and we have a great lineup of educational programs, and our exhibit floor will probably be sold out at Thanksgiving. It’s all heading in the right direction.”

The theme of this year’s show is “Proud of the Past. Focused on the Future.”To see a list of the workshops, visit thengashow.com.

Larkin: Resolution Needed on Key Issues for Independents

THE ROFDAREPORT

Peter Larkin

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THE ROFDAREPORT

Martin W. Arter, who is president and CEO of Affiliated Foods Midwest in Norfolk, Nebraska, is finishing up his two-year stint as chairman of ROFDA, with his succes-sor to be named at ROFDA’s Fall Conference, Nov. 6-8 in Phoenix, Arizona. His fellow board members have noted his leadership in the areas of increasing dialogue and collaboration among ROFDA members during his term.

Here is how he responded to five questions posed to him by The Shelby Report.

Q: What are the top three issues that are keeping you up at night in 2015? 1. Competitive landscape and continued dissection of grocery dollars.2. Consolidation of CPGs.3. Single-store operator succession.

Q: What are some of the ways you are helping your members compete in this increasingly omni-channel food sales environment?

We are providing the needed tools to address omni-channel opportunities and working with CPGs to provide relevant offers to consumers through omni-channel platforms.

We will be introducing a new online shopping program that is being devel-oped to address two key needs:

• Allow any retailer of any size to afford online shopping in their store• Allow any retailer who wants to sell “non-conventional grocery items” online

to do so; for example, hardware, restaurant, deli takeout, sporting goods, etc.

Q: What programs are you offering your members to enhance their engagement with their shoppers (technology, marketing programs, fresh/local connections in-store, etc.)?

Some of the programs we’re offering include websites, apps, geo-fencing, i-beacons, email, social media, specialty, organic and ethnic offerings, and meals at home.

Our new app, Bright Aisle, allows every retailer to engage customers inside and outside of the store’s four walls. Push notifications to smartphones can be sent to app users anywhere in the country. Geo-fencing alerts and notifications connect with customers at any distance the store chooses around the store (e.g. ½-mile

radius). Beacon technology alerts and offers connect with customers when they enter the store and shop the store with promotional offers delivered through beacons. Near Field Communication (NFC) and QR Code signage allow consum-ers to “tap” promotional signs to receive information or special offers. We are now able to connect with our customers wherever their smartphone happens to be.

Q: Industry consolidation has again picked up steam in recent years and months, especially among chains. Do you see this as a positive for your independents?

Some benefits would be availability of closed loca-tions that independents should make themselves available for. The downside is fewer chains will demand more vendor funds taken away from inde-pendents.

Although I’d like to be more optimistic about opportunities, the “spinoff” of stores to independent traditionally includes the poorest performing stores. This sets the bar very high for independents to find a way to outperform the chain, and the expectations from consumers seems to be that they would expect the newly branded store to be more attractive, have lower prices, etc., than the previous owner. There is a movement toward “go local,” but it seems that only applies if the “local” is better and offers a better shopping environment—including prices.

Q: Share a “feel-good” story from your company—a charity you support, an employee that has gone above and beyond in some way, employees helping each other in a personal tragedy, etc.

As an organization, we focus on Go Red for Women (American Heart Association), United Way and Relay for Life (American Cancer Society).

ROFDA’s members, no matter where they operate, mention a lot of the same trends and challenges facing independent grocers in 2015.

One that is mentioned by all is the fight for the food dollar, as consumers can find food in dollar stores, discount stores, home improvement stores, drug stores and many others. Keeping shoppers spending their money in the grocery store is a daily mission and requires grocers to keep the pulse of their shoppers to make sure they’re carrying what customers need and want.

ROFDA CEOs also mention the proliferation of smaller format grocery stores, many of them offering deep discounts on a limited assortment of products. These stores often go into smaller markets favored by independents, putting them in a head-to-head battle for the grocery dollar as well as for real estate, in some cases.

Consumers in many areas are gravitating toward purchasing more specialty, natural and organic products, which means independents that might not have

carried many of those items in the past must look at their shelves and decide what they need to add—or subtract—to remain a viable alternative to their chain competition.

Another way to keep dollars, and maybe even gain some incremental busi-ness, is adding new departments to stores such as hardware and general merchandise.

Another oft-mentioned issue is technology investment and the independent grocer. There is no doubt that technology is here to stay; the question for many independents is how do I make the most of technology while not compromising my bottom line?

The good news is that ROFDA’s member-owned wholesale co-ops are there for their retailers as a resource to help them with all these issues and more.

Co-Ops Face Many of the Same Issues Across the Country

Five Questions with Outgoing ROFDA Chairman Martin Arter

Our new app, Bright Aisle, allows every retailer to engage customers inside and outside of the store’s four walls. Push notifications to smartphones can be sent to app users anywhere in the country.

Martin Arter

Arter addresses attendees of ROFDA’s 2015 Spring Conference.

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THE ROFDA

A Shelby Publishing Special Section • DECEMBER 2015

Independent grocers are just that, independent. Each has its own way of going to market, and they are “constantly evolving,” said Bob Ling, president and CEO of California-based Unified Grocers.

One of its customers with an upscale grocery store is testing an Ace Hardware department, for example. That’s the kind of innovation that invites imitators, and Ling said many retailers look to inde-pendents for inspiration.

“Larger members are experimenting with different size stores,” Ling said. “That is not necessarily different in terms of format, but has to be customized to fit the footprint of the store in the neighborhood. That has been going on for a couple of years now, but it is certainly accelerating…an example that you’d certainly see that has gotten a lot of publicity lately is Whole Foods essentially trying to do the same thing. They are trying to keep up with what some of our members have been experimenting with for some time now.”

Success in the West doesn’t come easy, as evidenced by the struggles Haggen encountered when it attempted to expand from 18 stores to 164 after it purchased 146 stores from Albertsons and Safeway following their merger. Haggen filed for Chapter 11 bankruptcy in September. Unified is Haggen’s biggest creditor, but if that is a dark cloud, there could be a profitable lining for other members.

“Working through the fallout from that situation is a big challenge for our team,” Ling said. “We are in the middle of working through that with them, but it also provides some opportunity for our remaining membership to acquire some stores. That is a huge challenge for us, but I think it’s representative of the chang-ing and extremely competitive marketplace in the West.”

A new competitor will make its move into the marketplace in March. Aldi, known for an edited assortment dominated by its own-brand products and 25-cent shopping cart rental fee, plans to have as many as 45 stores open in Southern California by July. It also will open a warehouse and regional office in Moreno Valley.

Retailers already operating in Southern California tailor grocery offerings to the community they serve, and a deep discount format is a good fit for some neighborhoods.

“Our members have learned how to market effectively to the many and varied and changing demographics of the West, whether it’s related to ethnicity or income or any other factor you might consider,” Ling said. “The challenge in the West is to be flexible and remain current, and that’s also the opportunity for the good independent to be successful.”

Unified shares in the success of its partners, and one example is Charlie’s Produce. The employee-owned company has been the exclusive provider for all produce categories for Unified’s Oregon, Washington and Alaska customers since 2013. Now it will grow with Unified.

“We’re working closely with them to provide opportunities for them to create relationships with our retailers in Southern California,” Ling said. “It’s a great opportunity for both of us.”

Unified’s service area is the Western U.S., but its influence extends to the middle of the country by way of Market Centre, a subsidiary company that sells prod-ucts, services and programs to retailers west of the Mississippi.

“When we say specialty in Market Centre, that’s natural, specialty, organic, ethnic, but also GM and HBC,” Ling said. “Just walk in any store, and you’ll see those products are now becoming mainstream. And I think all good retailers are expanding their offering, and it’s important for all of us in the wholesale business to make sure those products are available.”

Unified has made its Market Centre offering and expertise available to another wholesaler, Norfolk, Nebraska-based Affiliated Foods Midwest (AFM). Unified provides procurement and other back-office activities.

Ling said Affiliated has “essentially rolled out Market Centre as their own program.

“We are very excited about how well that has gone, and it hopefully provides a model for them to grow that area and compete successfully in that area of business and to provide a model for other wholesalers to mimic,” Ling said. “We think it’s important that wholesalers be competitive in this emerging and growing category, and we are more than willing to share our learnings with our friends in ROFDA in a way that would allow them to be competitive in those areas as well. There are different ways we can accomplish that, but the AFM relationship is certainly one of those.”

Ling praised ROFDA President and CEO Francis Cameron and outgoing ROFDA chairman Martin Arter of AFM, “who has really pushed the ROFDA members to explore and dialogue and collaborate, and search for ways to collaborate in a bigger way. I personally would like to thank Marty for his leadership in that.”

The 2015 fire season in the West was a difficult one and, unfortunately, the Northwest portion of the country wasn’t spared. The fires forced many small communities in the region to be evacuated, leaving people homeless and without food.

That’s where independent retailers stepped in.Both URM Stores and Unified Grocers had member retailers who stepped in to

fill the gap.“We’ve had several member stores that provided additional resources for

customers and employees who had to be evacuated, supplies to firefighters and first responders as they fought the fires,” Ray Sprinkle, president and CEO of URM Stores Inc., in Spokane, Washington, says. “We even have one store that has its own generator, so while the power was out in that area for a number of days, the store was able to stay open and was able to provide food and beverage, not only to the firefighters but also the citizens of the community.”

It’s no secret that food retailers, and independents especially, typically are among the first in communities to respond in times of need. It sometimes goes under-appreciated, but that’s simply part of the independent spirit, Sprinkle says.

“Independents have really integrated themselves within the community,” Sprinkle says, “and hope to be viewed as part of the community and add back more value to the community because they live there, and their employees all live there and the profits from the local stores stay in the community—whether it’s the number of charitable events they participate with and support, or stepping up and providing in emergency situations.”

Bob Ling, president and CEO of Los Angeles-based Unified Grocers, which serves retailers up into the Northwest, added that large portions of communities were damaged by the fires. Northern California was especially hard-hit.

“The response from the grocery industry, the commu-nity stores, the independents in those communities, was supported by Unified and others suppliers. It’s a great

example of the importance of the community store not only as a provider of food, but as leaders in that community. There are some tough stories of people impacted, but heartwarming stories of how the independents in these communi-ties have led and have contributed already to the rebuilding already of these communities.”

It’s not just a matter of donating product, according to Ling.“It’s one thing to donate product; it’s another to provide that emotional support

and work with leadership in terms of how is the community, as a community, going to respond and move forward?”

Bob Ling, Unified Grocers

Wholesalers Willing to Share Help Independents Thrive

Western wildfires: Independents on the front lines

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THE ROFDAREPORT

A Shelby Publishing Special Section • DECEMBER 2015

Competition always has ranked high on the list of concerns retailers and their wholesalers contemplate as they lay down their heads at night, and it only inten-sifies with time.

“The major chains in our market area are now coming out with smaller formats in smaller towns where we have customers today, so I think that’s keeping me up, as well as the fact that there are just new competi-tors all the time moving into the marketplace,” said Associated Grocers of New England President and CEO Mike Bourgoine. “That keeps me up, wondering how we’re going to be able to continue to stay rele-vant and help our customers continue to grow and our members continue to grow.”

With so many new players and formats, wholesalers work double time to help retailers find points of differ-entiation that will draw in customers.

“Unfortunately, everyone sells paper towels these days. There was a time when we had that business all to ourselves, but that is no longer the case,” he said. “You can buy paper towels just about anywhere, so what we are trying to educate our customers on is you need to look at what’s selling and what’s not selling in your store and get rid of what’s not selling and replace it with something that is maybe going to set you apart from your competition.”

New Hampshire-based AG New England has expanded its natural/organic and specialty product offerings, and modified picking so that smaller operators can be included.

“We have done it in a single-pick environment where the stores can buy less than a full case to allow the smaller stores we have to have access to these products,” Bourgoine said. “We’ve also launched a hardware program as part of our offerings in the past year, giving them something else to sell.”

The paper towels are still in the store, but instead of 12 feet of shelf space, there are maybe four feet of paper towels, four feet of hardware and four feet of natural/organic and specialty items, he said.

“We’re trying to move our customers to be more innovative in what they offer and what they try to sell,” Bourgoine said. “What we have tried to do in the last couple of years, particularly, is the fact that we are trying to find other things for our retailers to sell, other reasons for them to be relevant in their communities.”

More than 400 of AG New England’s accounts now participate in a natural/organics and specialty program. More than 60 stores have been reset with hard-ware.

Pulling independent customers in a new direction is much more challenging than setting up cookie-cutter boxes like the big chains.

“When you’re dealing with independent retailers, they each have their own capabilities, be it financial or technologically. So it’s a little more challenging for us than it is for a chain that has the same store, same systems in every store,” Bourgoine said.

The differences between the independent and a chain store are exactly what can make or break them.

“Part of what we’re trying to do by offering a greater range of products for our retailers to sell is to take advantage of the consolidation of the industry, which typically doesn’t expand programs and services and products to the consumer, and, in some cases, may even contract, restrict the number of products the stores carry because whoever the acquirer is changes what the acquiree wants to sell,” he said. “From that perspective, our independents are much more nimble in giving the customer what they’re looking for than the chains are. Consolidation, I think, just aggravates that situation to some degree.”

Youth and technologyAn important avenue to growth is information technology. The costs just to

stay current can cause a grocer to pale, and for wholesalers, bringing reluctant customers into the fold is daunting.

“When you deal with the independent retailer base, getting them to upgrade and stay current with their hardware and their software in their stores is chal-lenging. Some of them just aren’t there yet,” Bourgoine said. “So we have done some innovative things to help them with financing their improvements in those areas. That continues to be an ongoing challenge and one that we’re going to dedicate more time and resources to going forward.”

Facebook and other social media, direct marketing and loyalty programs and the like can give grocery operators the ability to build strong connections with their shoppers. AG New England has added its first dedicated social media and shopper marketing position and is now transitioning to have a group that can be more engaged with its customers in that arena.

Another challenge for the industry is finding the right people, especially entry-level employees, he said. The uphill part of that battle is convincing people that working behind the scenes on something so everyday as groceries could lead to a satisfying career.

“The industry we’re in is not that glorious; it’s kind of mundane in today’s world relative to the high-tech companies and internet companies and all of that,” Bourgoine said. “So finding good, qualified people is becoming more challeng-ing. Finding entry-level people is getting more challenging, so that is something that is bothering us more than ever before.”

For help with that, Bourgoine said AG New England turns to local universities and community colleges. The wholesale company puts itself in front of students through job fairs and other events.

“We’re there, and we’re trying to entice them to want to look at what’s really good about our industry and not necessarily think about the fact that it’s kind of an everyday thing,” he said. “It’s a stable industry from the perspective that everyone has to eat. It’s an industry that can be very rewarding if you have a passion for it.”

Mike Bourgoine

Keeping Up with Technology Keeps Some Up at Night

In an industry where being green isn’t easy, Alabama-based Associated Grocers of the South had a record year in profits and expense control. The inde-pendent grocers who are both customers and owners of the cooperative are no doubt pleased.

For 87 years, AG of the South’s mission has been “to put goods into those stores at the lowest cost of goods possible,” said Stan Alexander, president and CEO. Cost is not the only way independent retailers compete, but it is high on the list.

“They have to compete with the cost of goods,” he said. “It is so important, with everybody taking a poke at them. More and more companies are fighting for the food dollar, i.e., Dollar General, CVS, Walgreens, Home Depot. Everyone has decided they want to get a little bit into the grocery business.”

Adding to competitive concerns was a Bloomberg report earlier this year that said restaurant and bar sales exceeded spending at grocery stores in the U.S. for the first time ever, he said.

Then there are the costs of some government regulations, like the Food Safety Modernization Act (FSMA), that Alexander sees “breaking people’s backs.” He doesn’t see the sense in it and believes it will follow the same path as country of origin labeling (COOL). That law went too far and now officials are backtracking. It took Canada and Mexico contesting it to knock some sense into Congress. The U.S. House has introduced a bill to repeal COOL for beef, pork and chicken.

“FSMA is going to be the same thing,” Alexander said. “We have what is consid-ered one of the safest food distribution channels in the world. For the small inde-pendent, it takes a lot of work and recordkeeping. I believe there have to be regulations, but you have to realize they can get carried away with that. The main thing is the cost of it.”

Adding to the challenges are consumers who are fickle at best and flat out two-faced at times.

“What they say and what they do is never the same. We read every day about

health-conscious, health-conscious, health-conscious,” he said. “Of the seven top-selling items in a grocery store, five are very bad for you. Your seven leading sellers in the grocery store are pop, bread—but that’s good for you if you don’t eat too much—eggs, milk, cigarettes, beer and chips.”

Consumers seem to be either misinformed or indifferent. That is why Alexander doesn’t see consolidation in the industry as a necessarily good or bad issue, for example, because he does not see consumer interest in it.

“The consumer out there doesn’t care one way or another who owns who. An example: If we were all going to count local owned…and I’m only speaking for the state of Alabama right now…if the consumer was that concerned about local owned, why is it that 50 cents of every dollar spent in this state for food is at Walmart? That answers that. To the consumer it doesn’t matter.”

There are many challenges, but AG of the South is in the solution business. Alexander said that every day the cooperative seeks out programs that will help retailers reach the consumer.

“We work individually with our independents or independent groups to try to figure out what they need,” he said. “There is no one answer to all that.”

AG of the South Seeks Solutions to Growing Challenges

Stan Alexander

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THE ROFDAREPORT

Ray Sprinkle has been at the helm of URM Stores as its president and CEO since March 2013 and already, under his leadership, the Spokane, Washington-based wholesaler has made many improvements and investments in its programs and services.

About a year ago, the company completed a 75,000-s.f. warehouse expan-sion, increasing its freezer and refrigeration capacity by about 40 percent.

“It’s another way we can offer more variety as a point of differentiation at retail,” Sprinkle says.

In addition, URM has implemented a buy local/shop local program, highlight-ing items that are produced, manufactured or harvested in its trade area.

“We’ve also seen significant growth in organics and specialty, so we’ve added a number of items there,” Sprinkle says. “We’ve put in a specialty/natural/organic program, our Cross-Dock Program, to help our membership lower their cost of goods as well as increase access to that product through a third-party distributor. And, of course, we’re always leveraging our volume, whether that’s within ROFDA or other organizations, to lower our cost of goods and within our membership to help them compete with truckload deals, spot buys—simply trying to provide more value to the consumers who shop with our retail stores.”

These programs and others help URM stay competitive in a retail marketplace that is more competitive than ever, especially with the number of mergers and acquisitions of late.

“Any time there’s any consolidation of the large chains, it presents a lot of opportunity for the independents,” Sprinkle says. “The independents are able

to react much quicker; they’re able to customize their marketing programs for the individual neighborhoods they market in. And any time there is consolidation, it disrupts consumer shopping patterns and gives the consumer an opportunity to go somewhere else, and we want our stores to be able to take advantage of that.”

It should go without saying that URM and Sprinkle are proactive in their approach to competition and the complicated challenges that face the food industry today.

Among those challenges right now: the Food Safety Modernization Act (FSMA). It’s top of mind for Sprinkle, as it should be for all in the food retail industry, he notes.

“(It’s a matter of) how that will impact not only us at the warehouse and our produce facility but also what it does to our membership, our retail stores,” he says. “We need to understand that and be able to comply with that.”

The FSMA aims to ensure the U.S. food supply is safe by shifting the focus from responding to contamination to preventing it. It’s slated to take effect in 2016, though it currently is not finalized.

In addition, the amount of government regulation the food industry faces poses another threat, according to Sprinkle.

“Whether that’s increasing the minimum wage by city or county, the require-ments for healthcare, paid time off and those things—it’s just the increased involvement of government that our retail stores face every day,” he adds.

Cyber security, of course, also remains at the top of URM’s priority list. The number of data breaches experienced by retailers in the past few years is not lost on Sprinkle.

“Not all of (our retail stores) have IT people on staff, so we need to help and guide them; and corporately, we need to make sure we are secure,” he says. “It’s a journey, not just a task that’s completed and you can forget about it; you have to be vigilant 24/7 when it comes to cyber security.”

For URM, Challenges Often Present Opportunities

The independents are able to react much quicker; they’re able to customize their marketing programs for the individual neighborhoods they market in. And any time there is consolidation, it disrupts consumer shopping patterns and gives the consumer an opportunity to go somewhere else, and we want our stores to be able to take advantage of that.

Ray Sprinkle

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THE ROFDAREPORT

Information technology and all that it implies isn’t a “nice to have” anymore. It is a concern. Randy Simon, president and CEO of Certco, said getting retail-ers to grab on and go with it has been “our biggest struggle.

“We have probably been working at this for three years, and as an independent wholesaler, we’ve done many interviews and sat down and had many presentations,” he said. “We whittled through that for our indepen-dent grocers, and we’ve pretty much made a list of suggested people to work with…We’ve brought those people into our food shows the last two times.

“We’ve put it out there, and hope-fully they will come drink now,” he said. “We have two different companies now that are working with our retailers, and with both companies our retailers seem happy with what’s going on.”

The Certco customers finding success prompted Simons to be more adamant about bringing others into the fold. He would like to see retailers perhaps start with online shopping, delivery and pickup and then expand from there. Some are getting engaged, he said, but “better late that never is not good enough in today’s markets.

“This has to happen; everybody is going there,” he said. “It’s not just #theyoungpeople; it’s the 30-some-things and 40-year-olds with children that love to go shopping with their cell phone. It’s something those families enjoy, and these kids grew up with a tablet in their hand in the restaurant to behave.”

Technology advances so quickly that it can be intimidating, but it’s the cost that is hard for many to reconcile.

“Especially if there’s a sign-up fee and then part of your gross,” Simon said. “It’s pretty tough when you think about the thin margins that they work with. For them to

take that step and say ‘yeah, it’s going to work,’ you’re putting faith in the fact that the basket size is going to be bigger and that you are going to capture some new customers. That’s the only way to pay for it.”

That leap will help arm them against a sea of Walmart Neighborhood Markets and whatever’s coming next in the Midwest.

“The pie gets smaller all the time,” he said. “It’s making thinner margins at wholesale also because we’re having to find and support all these different ways of doing business…there’s mixed EDLP and high-low and bonus buys and scans and coupons

and…so it’s working really hard with the vendors to make sure we’re getting what we deserve. That’s always a hassle.”

Independents have long counted on perishables to keep their shoppers happy, but even that is slipping away a bit. Now consumers say they are looking for more local products.

“We have a program where we mark on the shelf ‘Wisconsin Made’ so for any manufacturer in Wisconsin, we have that statement on the item, the tag on the shelf. That’s identifiable, and a lot of things that people wouldn’t think of are out there,” said Simon.

Consumers who are more serious about buying local have turned to consumer supported agriculture (CSAs) or food shares, where they can buy in to support a farm in exchange for what is raised and/or grown on it. They take another bite out of the grocer’s business, he said.

“I have gotten to know the other presidents a little better, and just having a one-on-one relationship and knowing someone else that’s doing the same thing I am—basically when you sit down and talk about it, our lives are like mirrors. Whether it’s Salt Lake City or Madison, Wisconsin, we have all the same challenges, so it’s nice to sit and take a deep breath and say, ‘oh, you’re going through that, too.’ Having other people from the warehouse getting connected with their peers (through share groups), I think has helped a lot, whether it’s the warehouse leader or the buying group leader that goes to these functions. There is a long way to go on the things we

could do together, but being spread out, it’s tough to make manufacturers look at us as one because we are spread out throughout the United States, we don’t deliver to the same warehouse, etc. That’s a challenge. The communication is my favorite part. I have some friends, not just some of the presidents but some of the manufacturers that come there, so now I have had relationships with them for five to 10 years. It’s pretty cool.”

—Randy Simon, Certco

Certco Holds Technology Ring, Now Retailers Must Grab It

Certco Launches on CART to Connect Retailers to Solution Providers

Certco Inc., in partnership with the Center for Advancing Retail & Technology (CART), has launched a solutions plat-form, advancingretail.org/certco. It is a free service for member retailers to find, learn about and connect with the best Certco-recommended solutions for their business. CART’s platform also includes a large and growing number of resources, including case studies, papers and publications from universities that can be searched and downloaded.

“Our retailers are looking for new and innovative solutions,” said Dave Ryman, Certco’s VP of sales and marketing. “The CART platform gives our members the ability to quickly find and understand solutions that are recommended by Certco.”

Innovation is transforming the retail industry at a growing pace as increas-ingly powerful cloud-based solutions make sophisticated capabilities avail-able to even the smallest retailer.

“Just as easily as you can search your smartphone for the latest apps, users can search CART for the latest retail solutions and connect with them through a single click,” said Gary Hawkins, CART CEO and founder. “CART is helping the industry keep pace with technology-fueled inno-vation.”

The CART team has drawn upon their experience as retailers and as solution providers to partner with Certco Inc. in creating a platform that supports Certco’s role in bringing the latest innovation to its retail customers.

“The retail industry is undergoing a transformation the likes of which has never been seen before,” said Hawkins. “Two things are different this time. The first is that innovation is occurring in every part of retail simultaneously, not concen-trated in one area, as was often the case in the past. Second, the pace of innova-tion is continuously growing. There are no breathers or time-outs for industry leaders. This environment is putting tremendous pressure on retailers and brand manufac-turers to keep up.”

To learn more about CART, contact [email protected].

Randy Simon

Communication Is theBest Part of ROFDA

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THE ROFDAREPORT

David Bullard, president and CEO of Piggly Wiggly Alabama Distributing Co. in Bessemer, Alabama, on business in 2015:

Q: What are the top three issues that are keeping you up at night in 2015?There are actually four. 1. The economy. I know we hear that is getting a lot better, but for a lot of folks, it does not “feel” like it is getting better. 2. The number of small-format stores popping up in our markets. 3. Continued stiff competition from the likes of Walmart, Kroger, Target, etc. 4. Finding qualified employees to fill the truck driving and order selection jobs at the warehouse.

Q: What are some of the ways you are helping your members compete in this increasingly omni-channel food sales environment?

We try to customize stores to their location.Additionally, we emphasize “fresh” in our perishable departments.

Q: What programs are you offering your members to enhance their engagement with their shoppers (technology, marketing programs, fresh/local connections in-store, etc.)?

We use direct mail, newspaper ads, shoppers, online ads, apps, social media and in-store sign programs.

Q: Industry consolidation has again picked up steam in recent years and months. Do you see this as a positive for your independents? In other words, do you think some shoppers see these things happening and decide to go local with their grocery dollars?

Industry consolidation provides benefits and challenges to the independent retailer. It does provide some buying opportunities for store locations, which is good for the independent retailer. However, the consolidation continues to give the big players added buying power and enhances their chances to get a lower

cost of goods. That is why the ROFDA member companies are working hard behind the scenes to aggre-gate their buying muscle in an effort to also get the best cost of goods.

Q: Share one or more “feel-good” stories from your company. It could be about a charity you support, an employee that has gone above and beyond in some way, employees helping each other in a personal tragedy, etc.

There are so many feel good stories related to our members. To name a few, the work Danny and Debbie Manning of Mobile, Alabama, along with Kamal Constantine do with St. Jude Childrens Research Hospital in Memphis is inspiring. George and Hilda Duren of Port St. Joe, Florida, work closely with the Wounded Warriors program.

Much to the excitement of the local community, Tommy and Sharon

Cain of Mobile, Alabama, recently opened a Piggly Wiggly in their hometown of Spanish Fort. Their grand opening included a reception, the local high school band and cheerleaders performing and many members of the community attending. Their dream of opening a store in their hometown of Spanish Fort has been realized and wonderfully received by citizens of that city.

The support from the Ajlouny family of Birmingham, Alabama, for the Daniel Project is a very inspiring and important story (see box below). It is exciting to

have the opportunity to be involved in these things.

David Bullard

Piggly Wiggly Alabama Keeps Working for Its Independents

The Daniel Project was founded by Piggly Wiggly store opera-tors Basim and Pamela Ajlouny and their son Chase to help educate doctors and the general public on the dangers of Hypertrophic Cardimyopathy (HCM), which claimed the life of their son and brother Daniel Ajlouny seven years ago at the age of 21. Unbeknownst to Daniel, he had an enlarged heart, and the combination of that and the high altitude (10,300 feet) of Leadville, Colorado, where he was living, led to his death.

The Daniel Project aims to communicate the symptoms and possible treatments for HCM.

“With a more clear vision of what and how to approach this condition, hopefully many families can be spared the heartache of the loss of a loved one,” says Pamela Ajlouny.

The Daniel Project launched in 2014, as part of the Paul Meyers Foundation. The Meyers, another Birmingham family, have lost two family members to HCM. Father Greg Meyers died at age 47, and then, more recently, son Paul Meyers at age 33.

The project launched with the First Annual Piggly Wiggly Wine Showcase on Oct. 2014, that raised more than $30,000.

On Oct. 22 this year, Piggly Wiggly presented the Second Annual Wine & Craft Beer Showcase to benefit The Daniel Project.The new Piggly Wiggly in Spanish Fort, Alabama.

Photo: Facebook

Associated Food Stores, a ROFDA member based in Salt Lake City, Utah, has consistently been recognized as an industry leader in many initiatives, including safety.

The grocery wholesaler’s Farr West distribution center was recently awarded a Highly Protected Risk Award from FM Global, the largest commercial property insurer. The award recognizes AFS’ dedication and efforts to protect the distribution center from fire, natural hazards and other property risks while meeting the highest standards for loss prevention. AFS also was presented a special award to commemorate its 30-year partnership with FM Global.

“Organizations that earn an HPR award are to be applauded for taking steps to safeguard their property, instilling a high-quality risk management culture and enhancing their overall resilience,” said Tom Lawson, president of FM Global.

Each year, AFS’ Farr West distribution center undergoes a comprehensive audit. FM Global compares the facility to similar structures and examines policies and procedures against safety and risk management best practices to determine an insurance ranking. Each FM Global audit usually includes recommendations for

improvements. The Farr West distribution center’s audit was returned with zero recommendations for improvement for the second year in a row.

“Our success is due to the initial engineering of the facility, the support from our executive staff and board of directors, the excellent team at FM Global, our maintenance technicians and safety team in Farr West,” said Carl Jensen, director of facilities maintenance at the distribution center. “We couldn’t do it without everyone’s help.”

AFS was founded in 1940 when 34 independent retailers joined together to battle high supplier costs and competition from large chain stores. Today, as it celebrates its 75th anniversary, it serves more than 500 retailers across Intermountain West.

FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management.

Associated Food Stores’ Distribution Center Earns Top Insurance Award

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In today’s rapidly changing distribution environment, it’s critical to look inside and outside the box to optimize the entire network as well as warehouse labor and capacity.

Allan Kohl, president of KOM International, warns that “If you don’t know where you’re going, any road will get you there,” and distribution executives must ask the critical questions up front and then drill into detailed operational data to get the right answers to optimize their network.

Questions should address the following areas: Network Structure: locations, products, clients served, multi-state vs. regional, fast-slow, service levels Layouts and Expansions: timing, size, capacities, slotting efficiency, labor productivity Storage and Handling Systems; conventional, mechanized and automated: ROI, design year Customer Assignment and Service Levels: multiple facilities; time, distance, routing Product Stocking Locations: regional vs. national; vendor location, move-ment, store friendly Inbound: consolidation centers, vendor transport costs, single vs. multiple receiving points Channel and Product Flow: DSD vs. distribution impact, long distance deliver-ies, seasonal flows Service: existing benchmark vs. target, modified lead times/delivery days/cut-off time Procurement: discounts, allowances, rebates, distributor vs. manufacturer sourcing

“To help clients do this, KOM International has expanded our team to include expert network designers Vince Canonico and Peter Reed. We’re really pleased to bring the combination of Peter’s and Vince’s operational level expertise to KOM’s already proven suite of services,” says Kohl.

“AGILE, a comprehensive modelling process developed and proven in real world network applications is the key to producing excellent and actionable results in this arena; it simultaneously addresses network design, DC design, and storage & materials handling system design,” advises Canonico, a KOM senior partner and logistics network specialist.

Emile Breaux stepped into the roles of president and CEO of Associated Grocers in Baton Rouge in May 2015, succeeding longtime president and CEO J.H. “Jay” Campbell Jr.

Breaux joined AG in 1994, with both food industry and military experience.

He started working for Breaux Mart (no relation) in New Orleans when he was in high school, “bagging groceries and stocking shelves and doing what young boys do in the grocery store as a part-time employee.” His older sisters had worked at the store as cashiers when they were teenagers, so it was natural for him to gravitate there, he said.

Breaux worked full-time at the store after high school to save money for college. Before he entered college, he joined the Air Force Reserves and went through some preliminary training. He earned his bachelor’s degree in marketing at Southeastern Louisiana University and then worked for a short time as a manu-facturer’s rep for a major food company, something he thought he would enjoy but didn’t. Not long after that, Breaux says he “got tangled up in the first Gulf War.”

When he returned from the war, he took a full-time position with the federal government and started working on his MBA at night. He earned his graduate degree from the University of New Orleans and then was hired by AG.

Q: Did you think you would ever return to the grocery industry?You know, I always knew that I would. I enjoyed it—enjoyed the interaction with

the customers. I knew that I wasn’t going to be able to achieve my life goals doing what I was doing (early on), but I always saw myself as being part of the grocery industry in some capacity. Frankly, I always thought I wanted to be a manufacturer’s rep because I interacted with those folks at the grocery store, and I thought that was a pretty interesting career. I had an opportunity to do that right after I graduated with my undergraduate degree. I spent a very, very brief time with the Pillsbury Co. and realized that was not the job for me. So I had to move on and do other things, but I kind of always knew I would be back involved in some capacity. I have always loved being at retail.

I’ve always been very aggressive in the way that I work. My mindset has always been to look at when I’ve been given to do and try to do it as quickly and efficiently and accurately as possible and make improvements along the way. I guess I was taught that, or maybe it’s an inherent human instinct, but that’s just the way that I’ve always approached life. I think that is what made me success-ful at retail, and I think that is what has made me successful all along the way. I always sought to make things better today than they were yesterday.

When I was a kid, I don’t remember if it was for a birthday or Christmas, but I had gotten this little plastic truck that had a bunch of little chickens in the back that when you pulled it along the floor it rolled and the little chickens pecked at some feed that was in the back of the truck. I remember it squeaked a lot and made a lot of noise, and I remember as a kid taking that thing apart because I knew there was a way that I could make that thing quieter and roll smoother. So maybe that’s where it came from.

Q: How did you get into AG?When I was on the verge of finishing up my graduate work, I started looking

around for a job, and I noticed there was a position available here at AG. I thought it was something I could do, something that had interested me. It was a space management position, doing efficient shelf merchandising utilizing tech-nology. Although I’m not trained in technology, I have always been intrigued by it, and I understood it. At least at that time I did; can’t say I do today, but I did at the time, and it seemed like a good match of my interests as well as my experi-ence, so I applied for it and lo and behold I was offered the position. We built that program and I was able to hand that off to someone else to run it, then I moved on to anything else the company asked me to do. I never shied away from it; always tried to figure it out. Not that I thought I was the best guy for the job, but they obviously saw something in me that they thought I could do it, so I always jumped at the opportunity and did the best job that I possibly could.

Q: You were EVP and COO before taking the top spot. Do you feel like the positions you had up to that point worked together to give you all the tools you needed to eventually take over?

I think fundamentally it did. One of the best pieces of the education was the

amount of time I spent with our retailers. It really gave me a very unique perspec-tive on what AG, as a member-owned company, is all about. Every one of our retailers is unique. There are, obviously, countless similarities in their business, but for as many similarities as you can detail, there are also that many differences. And I think when you understand how to blend and leverage the similarities such that you can then focus on those differences, then those differences end up being, in many cases, their competitive advantage that help them be success-ful in their marketplace. It may be a retailer who’s a master merchandiser and understands price points or someone who is a showman and can do promo-tional activity or someone who’s very focused on the customer experience and really understands how to present a merchandising offering and physical plant layout.

Whatever those competencies are, I think those positions I had really gave me an opportunity to dig in and work with our retailers and understand what each one of them needs in a very unique way.

Q: So AG offers the buying power but also personalized programs for your members?

That’s true. Businesses talk about how do you establish what differentiates you in the marketplace? It’s you zigging when everyone else is zagging, and I think when you look at what AG does, in fact, what most of the retailer-owneds do today, we’re trying to add services and support mechanisms when some of our publicly traded national counterparts are withdrawing those services. They’re working toward efficiency, efficiency, efficiency at the expense of everything. If all you have is cheap products in a grocery store, there are global enterprises that own that space. What they don’t own is a very special shopping experi-ence; they don’t own the customer service that our retailers can provide; they don’t own the community engagement that our stores can do.

(Our retailers) very much cater to the specific areas of the communities they serve, even within companies.

One of those is Matherne’s, and Matherne’s today has five locations. But each one of those locations is quite unique. And what that retailer has very clearly understood is that I can leverage those areas of my business that have no point of differentiation with the consumers—I can put the same register system in those stores and get an extraordinary amount of efficiency by doing that. We put common technologies in place; we use common fixturing. To some degree we use common merchandising, although that’s tailored in large measure to the communities. Pricing profiles are tailored.

So we understand when we have to be different, but we also understand very clearly when we can be very consistent and achieve a level of efficiency in some of those big-ticket spends. That’s how they succeed in their various markets. And that’s true of the Crifasi family with their Hi Nabor stores; that’s true of Le Blanc’s and all of the other retailers that we serve.

Q: You’ve had about three months at the helm. Has it been a huge differ-ence to be “the big guy” vs. right behind the big guy?

It has been remarkably smooth. The employees and staff here at AG have all been very supportive. It’s like any company; you come in every day and it’s a new challenge…I won’t say that’s any different than it was six months ago. We had our challenges then, we have them now.

Our board, Jay Campbell—they’ve all done a very good job of setting the stage and putting the pieces in place so that the transition could be quite seam-less. Because the goal was to make it seamless; we didn’t want it to be revolu-tionary, we wanted it to be an evolution and something that just happened and we went about our daily business.

I was fortunate enough to be in the No. 2 man position under Mr. Campbell for quite some time, and he was very gracious with his time and the sharing of his knowledge. And I think the transition has been quite smooth. I can’t tell you of any big surprises up to this point.

Q: What are some of the differences between your leadership and Jay’s?I think in terms of who we are as people, we share the same value systems; we

demand excellence out of our people. We demand excellence out of ourselves. And we do share a very consistent set of moral values.

Our backgrounds couldn’t be more different; Jay is an accountant and an attorney, so he has one set of, I guess, biases, in his view of the world and how he approaches things. My background is retail; it’s sales, it’s marketing, it’s business development, so I have biases that are very, very different. I think the beauty of this transition is that ultimately we want the same thing; we may arrive there from

slightly different directions, but both of those paths will be paved with the same set of moral values and high expectations and commitments to excellence that we both share.

Q: Do you think your military service impacts the kind of leader you are?I think everything you do in life impacts you whether you realize it or not. In

the military, one of the things they teach you there is, number one, you’re part of a team; you’re not this army of one, you’re part of a big team. In the Air Force, that’s quite true; those airplanes don’t fly as a result of one person, contrary to the way television or movies might want to romanticize it. It certainly helped me understand the value of teamwork and following directions…I won’t say you don’t question authority, because you do. But you also become a very good arbiter of when it’s time to question that authority and when it’s time to simply follow the directions and you deal with the questions later.

So (the military) is a very structured environment, not susceptible to a whole lot of change. There is a lot of rigidity there, so I think there is value in that, but I think there is also value in being flexible. And certainly, over two decades here, I have learned the value of being flexible. We have to constantly look at what we do and how we do it because the competitors in the marketplace change. I always view that from the retailer’s perspective.

When I got here in 1994, we had a whole host of regional players; people like Winn-Dixie and Delchamps; there was a division of National Tea here, a division of A&P here. Kroger, I think, had bailed out here already, and the landscape was just littered with hundreds and hundreds of small independents. And as time evolved, we had to take a much more prominent role in the marketplace because our chain competitors started to disappear. We were afforded that opportunity in the market, and then we had the entrance of Walmart, Target, dollar stores and their prominence in grocery. So we had to remain quite flexible, quite nimble, and make adjustments as time has moved on.

As an industry, at least our portion of it—the retailer-owned side of the world—I think we have a bright future. I think our challenge is going to be to keep our retailers engaged, keep them focused and to assure that they remain success-ful and profitable—that’s what successful means—and that we keep them in a position to continue to serve their communities the way they know they need to be served.

ROFDA’s Newest Board Member

Emile Breaux, Associated Grocers, Baton Rouge, Louisiana

Emile Breaux


THE ROFDAREPORT

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In today’s rapidly changing distribution environment, it’s critical to look inside and outside the box to optimize the entire network as well as warehouse labor and capacity.

Allan Kohl, president of KOM International, warns that “If you don’t know where you’re going, any road will get you there,” and distribution executives must ask the critical questions up front and then drill into detailed operational data to get the right answers to optimize their network.

Questions should address the following areas: Network Structure: locations, products, clients served, multi-state vs. regional, fast-slow, service levels Layouts and Expansions: timing, size, capacities, slotting efficiency, labor productivity Storage and Handling Systems; conventional, mechanized and automated: ROI, design year Customer Assignment and Service Levels: multiple facilities; time, distance, routing Product Stocking Locations: regional vs. national; vendor location, move-ment, store friendly Inbound: consolidation centers, vendor transport costs, single vs. multiple receiving points Channel and Product Flow: DSD vs. distribution impact, long distance deliver-ies, seasonal flows Service: existing benchmark vs. target, modified lead times/delivery days/cut-off time Procurement: discounts, allowances, rebates, distributor vs. manufacturer sourcing

“To help clients do this, KOM International has expanded our team to include expert network designers Vince Canonico and Peter Reed. We’re really pleased to bring the combination of Peter’s and Vince’s operational level expertise to KOM’s already proven suite of services,” says Kohl.

“AGILE, a comprehensive modelling process developed and proven in real world network applications is the key to producing excellent and actionable results in this arena; it simultaneously addresses network design, DC design, and storage & materials handling system design,” advises Canonico, a KOM senior partner and logistics network specialist.

Canonico states that “the process provides clear and quantified manage-ment decision metrics to ensure a timely implementation approval that maxi-mizes benefits.”

Reed, senior partner at KOM, explains that as vice president of national engi-neering at Sobeys Canada, and in collaboration with Canonico, “we relied on the AGILE modeling approach for all of our recent network solutions and improvements.”

Sobeys Canada is a grocery retailer comprising multiple banners including corporate and franchised supermarkets, convenience stores, food wholesale, drug stores and gas bars, with $24BB in annual volumes across 1,500 locations, 125,000 employees and a network of distribution centers spanning the country.

Reed goes on to explain how the Sobeys distribution network was developed through the output of AGILE’s detailed and comprehensive multi-level manage-ment decision metrics in all critical network areas to be optimized, including: Demand and Supply Planning at the SKU-vendor-day and location level; Network Planning at the facility, product, customer and location level; Facility Planning to the sizing, staffing, productivity, budgeting and capacity level; Transportation Planning of lanes, routes and pro forma cash flows; Scenario Planning with options for growth and trade-offs; and Financial Planning with cost benefit analy-sis, rankings and risk factors.

Allan Kohl is president of KOM International, a global supply chain consulting firm; komintl.com; [email protected]; tel: 514-849-4000.

Peter Reed, senior partner, is a KOM subject matter expert managing design and implementation projects of conventional and automated systems; [email protected].

Vincent Canonico, senior partner, is a subject matter expert at KOM managing network evaluation, opti-mization and implementation projects; [email protected].

Allan Kohl

Answering All the Right Questions for Distribution Network OptimizationGuest Editorial


THE ROFDAREPORT

slightly different directions, but both of those paths will be paved with the same set of moral values and high expectations and commitments to excellence that we both share.

Q: Do you think your military service impacts the kind of leader you are?I think everything you do in life impacts you whether you realize it or not. In

the military, one of the things they teach you there is, number one, you’re part of a team; you’re not this army of one, you’re part of a big team. In the Air Force, that’s quite true; those airplanes don’t fly as a result of one person, contrary to the way television or movies might want to romanticize it. It certainly helped me understand the value of teamwork and following directions…I won’t say you don’t question authority, because you do. But you also become a very good arbiter of when it’s time to question that authority and when it’s time to simply follow the directions and you deal with the questions later.

So (the military) is a very structured environment, not susceptible to a whole lot of change. There is a lot of rigidity there, so I think there is value in that, but I think there is also value in being flexible. And certainly, over two decades here, I have learned the value of being flexible. We have to constantly look at what we do and how we do it because the competitors in the marketplace change. I always view that from the retailer’s perspective.

When I got here in 1994, we had a whole host of regional players; people like Winn-Dixie and Delchamps; there was a division of National Tea here, a division of A&P here. Kroger, I think, had bailed out here already, and the landscape was just littered with hundreds and hundreds of small independents. And as time evolved, we had to take a much more prominent role in the marketplace because our chain competitors started to disappear. We were afforded that opportunity in the market, and then we had the entrance of Walmart, Target, dollar stores and their prominence in grocery. So we had to remain quite flexible, quite nimble, and make adjustments as time has moved on.

As an industry, at least our portion of it—the retailer-owned side of the world—I think we have a bright future. I think our challenge is going to be to keep our retailers engaged, keep them focused and to assure that they remain success-ful and profitable—that’s what successful means—and that we keep them in a position to continue to serve their communities the way they know they need to be served.

Jay Campbell always said it’s about getting the retailer in a position where they want to go put the key in the door in the morning. I think that’s our real mission. We can talk about it as cost of goods or anything else, but it’s really about what’s the right mix of products and services that keeps that independent retailer in a place where they do want to get up and go to work in the morning.

Q: What is the value of ROFDA to you and to AG as a whole?I know the value of ROFDA is that when you have the opportunity to interact

and work with your peers around the country, particularly non-competitive peers, you have to subscribe to the notion that all of us is smarter than one of us,” he said. “You may not agree with everyone else’s decision or idea or thought, but there is certainly value in listening to and understanding those divergent points of view and the way others approach business. It certainly helps you formulate or validate, or invalidate, some of your own beliefs. I am a perennial student; I believe life in and of itself is a classroom, and when you think you know it all, you’re done. I’ll go up against any competitor that thinks they know it all, because they don’t. Our competitive environment is one of the best teachers we could ever have. Every single grand opening that happens in this market-place, I make it a point to get into those stores to look at what those retailers are doing, see if they’re trying anything different, anything that’s unique, whether it’s merchandising or technology or physical plant changes or whatever it might be. I want to make sure I very clearly understand what we’re up against so if we have to make an adjustment, we’re in a position to do that.

And I have no pride of authorship. I will steal the best ideas from the best person in the marketplace.

Q: What do you enjoy outside work?I try to spend as much time as I can with my family—my wife and my two

daughters. They’re both older now; I have a freshman in college and a senior in college, so to the extent that they’re willing to spend time with us, I am going to take advantage of every opportunity. We have, as a family, long enjoyed boating, and I love being in south Louisiana where I can do my saltwater fishing.

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THE ROFDAREPORT

by Teri Cameron

I remember my marriage vows vividly, even after 31 years of marriage, but what I didn’t understand at the time is that we would be partners, not only in marriage and parenting but in all facets of life—includ-ing business.

Like so many other couples, our vows led to a much broader commit-ment.

That commitment begins with a focus on each other’s success and, there-fore, the success of the company or organization that we represent.

Companies and organizations should never overlook the importance of the person that provides a support-ing role. Though not on the payroll, they are critical to an organization’s success.

This industry recognizes the impor-tance of relationships with one another, spouses and family. It’s largely why I love this industry and ROFDA. I had come to know ROFDA through our participation in confer-ences when Francis was with an associate member company. Several years later when he was offered a position with ROFDA, it was a consider-ation we made together. As it related to the ROFDA conferences, we knew that my involvement would change

from partici-pant to host. Francis jokes that we came to ROFDA as a package. But it’s really not far from the truth.

Today, I am involved and enjoy every facet of plan-ning for our conferences . I work not only with my husband; I also work with Teresa Pope to ensure we provide the best confer-ence expe-rience for e v e r y o n e . While we under-stand the

importance of conducting business and the exchange of information, we also understand the importance of strengthening relationships. Spouses are very much a part of that. In fact, at our last conference, I observed wives, through their friendships, connect their husbands in business.

During the ROFDA Fall Conference at the Arizona Biltmore, Teresa and I hosted a luncheon specifically for our attendee’s spouses. This event was one small way of showing our appreciation and acknowledging the important role of spouses, as well as welcoming them into our ROFDA family.

A Spouse’s Role

Teri and Francis Cameron

Though not on the payroll, they are critical to an organization’s success.

Joyce and Randy Simon, Certco Inc.

Peggy and David Bullard, Piggly Wiggly Alabama Distributing Co.

Ray and Kim Sprinkle, URM Stores Inc.

Paula and Bob Ketchner, Olean Wholesale Grocery Co-op.

Lisa and Randy Arceneaux, Affiliated Foods Inc. Chris and Annie Miller, Associated Grocers of Florida.

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“Very impressive event and professionally done. We appreciate our partnership with GVH and the relationship we have. Thanks for inviting us.”

—Neal Berube (left), president and CEO of Associated Food Stores, with Sean Wright of GVH


THE ROFDAREPORT

We have been blessed by Teresa Pope’s can-do, positive attitude for 25 years now.

Teresa started with Retailer Owned Food Distributors on May 21, 1990. No one has spent more time as a part of the ROFDA organization than Teresa. She is a remarkable person and embodies all the qualities of servant lead-ership.

Thank you, Teresa, for all you do for ROFDA and us.May the next 25 years be just as wonderful….we love you!

Francis CameronROFDA President and CEO

25 Years!

GVH Distribution and its Family of Companies have always prided themselves on being family oriented.Along with its family-oriented business practices, GVH values its relationships with retail grocery customers and vendor partners. With the constant support of

ROFDA, GVH Distribution continues to be one of the fastest growing grocery supplies companies in the United States today.With the help of its live cross-dock program and reduced costs, GVH Distribution continues to excel in customer satisfaction.In fact, two of GVH’s customer partners recently renewed their Packaging and Supplies contracts for the next five years. Associated Food Stores, based in Salt

Lake City, Utah, and Central Grocers, based in Joliet, Illinois, are committed to continued savings and success with GVH Distribution. This holds true for all of GVH’s customers across the U.S.“GVH has been a great partner to Central Grocers. They value the same things that we do: transparency, relationships and service. We look forward to the next five years!”

—Ken Nemeth, president and CEO, Central Grocers

GVH Distribution and its Family of Companies continue to succeed by always putting its customers’ needs first. GVH’s bi-annual Customer/Vendor Expo in Coeur d’Alene, Idaho, offers a unique setting for its customer and vendor partners to join together. The GVH Customer/Vendor Expo is a great event for the customers and manufacturers to speak directly about opportunities and challenges. This is an event that opens doors for new relationships to form between all parties and ultimately service the retail grocer in an efficient and cost-effective manner. GVH recently held its second expo in Coeur d’Alene and received much praise.

“This year’s Expo was productive, impactful, and a lot of fun. Your pride for the Coeur d’Alene area was evident and shined through by the activities and venues chosen for the event. The event was not only a great time but an affirmation of what a great company GVH is to be involved with. Truly a ‘family’ of companies.”

—Frank Sciortino, Triple S.

GVH’s Proven Savings Are Rewarded with Long-Term Contracts

GVH Distribution’s goal is to open two new warehouse locations per year for the next 10 years and exceed $1 billion in annual sales.

GVH has opened an office in Coeur d’ Alene and will be opening a new distribution center in Dallas, Texas, in the fall of 2016 to serve grocery and food service customers in the Dallas/Fort Worth metropoli-tan area.

GVH is committed to servicing the grocery industry and is grateful for the customers that support GVH’s mission.

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THE ROFDAREPORT

by Denny BelcastroChairmanROFDA Advisory Council (RAC)

Next time you have a free moment, download and listen to someone playing the piano on iTunes and add to your playlist on your favorite portable device. Whether your personal choice is Vivaldi’s “Four Seasons,” Scott Joplin’s ragtime “The Entertainer” or Jerry Lee Lewis’s honky-tonk approach to “Great Balls of Fire,” each one uses the piano as an instrument to its fullest, relying on its components to ensure the right keys are synchronized and coordinated in perfect harmony.

In piano manufacturing, the sound-producing portion refers to all of the components that endure the string tension, enable the instrument to be tuned, ensure tuning stability and trans-form the string vibrations into sound transmitted through the air. The components—the wooden back frame, the cast iron plate, the pin block with tuning pins, the soundboard and, of course, the strings—all play a key role to produce the perfect note of sound.

This past April, I had the opportunity to address the ROFDA Spring Executive Conference attendees and chose to utilize a piano in delivering my comments. My message was simple: Each ROFDA member represents a note on the industry keyboard—one that produces a unique shopping experience for its custom-ers and serves as their community center. To accomplish this, retailers need to coordinate the key components of their footprint to ensure they have the right products, at the right price, merchandised and displayed effectively to capture that perfect harmony for the shopper.

Of course, that’s easier said than done, considering the mega consumer trends that are impacting your shoppers. The industry will continue to be faced with the several trends driven by the value-minded consumer, the growing aging population of the Baby Boomer generation, the explosion of the multi-cultural shopper, the Millennial mindset and the ever-changing, omnichannel online shopping experience that provides various delivery and pickup locations.

Manufacturers are dedicating record levels of resources to gain consumer and shopper insight to support their brands and drive innovation and new prod-ucts to provide and fulfill consumer needs with solutions for future growth.

Consumers still want products that are convenient and ones that make their lives easier and more rewarding. They will continue to shop retail outlets that provide value, but they also want to have a terrific overall experience with their

favorite formats.Retailers need to find a way to

secure the right information and education on category trends, new products and consumer/shopper insights from their supplier and vendor partners. In addition, they need to utilize our indus-try knowledge partners to stay current on the latest consumer trends and expectations, espe-cially for those peak holiday sales opportunities.

With the holiday season rapidly approaching, Nielsen released its 2015 Holiday Sales Forecast, which is centered on findings from a consumer study that surveyed more than 25,000 U.S. households this past September.

This survey identifies some top holiday spending trends:

• The consumer will shop early and often, continuing to search for values.• Multicultural consumers will fuel and drive holiday spending.• A high level of focus will be placed on the “foodie’s” experience in-store in

terms of cookware, various kitchen items and special recipes for the holiday.• Consumer holiday spending is anticipated to be strongly driven by family

time experiences. •Millennial consumers will drive online “pick & click” growth more than other

consumer segments.

Each of these trends can provide some ideas and, possibly, new ways of working together in a collaborative way to create the best in-store merchandis-ing concepts that can generate strong holidays sales.

We should treat this holiday season much like a piano on which beautiful music we all enjoy hearing is created by its carefully crafted components. By taking a few moments to watch and listen to what shoppers expect to experi-ence during this holiday season, we should make a concerted effort to ensure we are utilizing all of the components of our industry. Then, it is quite possible that we all will enjoy a successful holiday season with a tune that will be pleasing to our ears.

Orchestrating Retail Success During the Holiday Season

Denny Belcastro

“Each ROFDA member represents a note on the industry keyboard—one that produces a unique shopping experience for its customers and serves as their community center. To accomplish this, retailers need to coordinate the key components of their footprint to ensure they have the right products, at the right price, merchandised and displayed effectively to capture that perfect harmony for the shopper.”

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Topco Associates and Aptaris released in October the results of their report, “Advertising and Promotional Practices Among U.S. Supermarket Retailers,” that contains responses from a benchmarking survey of 21 supermarkets representing more than 3,000 stores and $73 billion in annual retail sales.

Results provide a detailed look at successes from current practices in advertising and promotion as well as the future direction for supermarkets.

Topco Associates is a $14 billion, privately held company that provides aggregation and other solu-tions for its member-owners and customers, including grocery retailers, wholesalers and food service suppli-ers. Aptaris streamlines systems, processes and data, from deal initiation through implementation to settle-ment and post-promotion analysis.

In terms of ADVERTISING BUDGET AND ALLOCATION, key findings include:• With an ever-widening array of advertising vehicles, most food retailers run

multifaceted advertising programs leveraging both traditional and new advertising vehicles.

• Advertising spending equates to 1.3 percent of annual sales, excluding gasoline and pharmacy revenues. Budgets have remained the same for 62 percent of respondents compared with 2014, with 24 percent spending more.

• While the focus continues to be primarily on national-branded items at an average of 81 percent of the budget, the advertising mix is shifting. Retailers are decreasing their spending on newspaper and direct/shared mail while increasing their spending on TV, internet, mobile and social media advertis-ing. Spending on radio, billboards and community support have remained relatively unchanged over the past 10 to 15 years.

In terms of ADVERTISING STRATEGIES, key findings include:• The nature of advertising is starting to shift, with nearly half of retailers making

changes to their advertising strategies. Changes include adjustment of the depth of promotional discounts, the delivery strategy and customized content.

• The majority of retailers emphasize quality, variety and service in their company brand strategies, with the value message communicated through their ad strategy.

• More than half of retailers, 54 percent, do not currently run advertising strate-gies based on demographics, psychographics and behavioral variables, such as past purchase history.

• Among those that do collect, analyze and develop targeted customer promotions, behavioral variables and demographic customization are the two most used strategies, utilized by 64 percent of these retailers.

In terms of ADVERTISING EXECUTION, key findings include:• While 72 percent of all food retailers—and 100 percent of the large chains—

track promotional lift, a lower 17 percent of retailers measure ad awareness.• In their advertising planning and executing, more than eight in 10 retailers

use advertising agencies to help with one or more aspects of advertising and marketing.

• Dividing tasks between in-house teams and agencies is commonplace, but what differs most is the allocation of those tasks. The most likely agency-assigned tasks are production (58 percent) and media buying (61 percent).

• Promotional sales as a percentage of total sales varies widely among companies, with 36 percent averaging between 21-30 percent of sales and another 32 percent averaging between 11-20 percent of sales.

In terms of PROMOTIONAL VEHICLES, key findings include:• The number of advertising communication vehicles used increased either

“somewhat” or “a lot” among 71 percent of food retailers in the past three years.

• Two-thirds of food retailers expect further increases in the number of vehicles used in the next three years.

• Retailers use an average of 14 promotional vehicles. Ones used by at least nine in 10 retailers include printed circulars, email, radio, shelf tags, end caps and website communications.

• Areas of increased focus are email, digital coupons, mobile coupons, website outreach and, to a slightly lesser degree, Facebook and Twitter—indicating a clear trend toward more digital and social media outreach over traditional vehicles, including print, television and radio.

• On average, retailers leverage eight different promotional types. Ones used by at least nine in 10 retailers include temporary price reduc-tions (TPRs), advertising bill backs, two for $X events, buy one get one and coupons.

• The largest increases in frequency of use are expected for loyalty discounts, coupons, market baskets and TPRs.

“With consumers’ increasing desire for timely, relevant communications on their terms, decisions about customized messages and optimizing omni-channel marketing are even more critical and urgent,” said Tom O’Reilly, CEO of Aptaris. “Together with Topco, we’re pleased to provide this study to support marketers in identifying best practices and developing communications strategies.”

According to Greg Magrisi, VP of sourcing for Topco, the study was conducted to respond to ongoing questions from Topco member-owners and Aptaris clients about enhancing promotions plans and advertising budgets.

“The study results will help supermarket retailers tailor their current advertising or promotional strategy to maximize growth,” Magrisi said.

Marketers and retailers are invited to review insights from the Advertising and Promotional Practices report in two ways:

By watching a pre-recorded webinar that can be accessed on-demand so they can view the report findings at their convenience.

By downloading the data-rich white paper, complete with charts and graphs detailing survey responses and best practices.

Both can be found at goaptaris.com/AdStudy2015.


THE ROFDAREPORT

Topco and Aptaris Release New Study on Supermarket Advertising and Promotional Best Practices

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THE ROFDAREPORT

According to the FDA and CDC, about 48 million people—or one in six Americans—get sick, 128,000 are hospitalized and 3,000 die each year from food-borne diseases in the U.S. That’s why, in 2011, the FDA Food Safety Modernization Act (FSMA) was signed into law. It’s the most sweeping reform of the nation’s food safety laws in more than 70 years and aims to ensure the U.S. food supply is safe by shifting the focus from responding to contamination to preventing it. It makes wholesaler and retailer executives legally responsible for the safety of their supply chains. With the FSMA’s focus on prevention and proposed new rules, retailers and wholesalers will need to collect, manage and store multiple docu-ments from each vendor for compliance. These documents must be accessible upon FDA request within 24 hours and two years back.

The FSMA rules began to be finalized in August and are expected to be made official in 2016; they arguably, in their current form, create more questions than answers for food retailers and wholesalers.

ReposiTrak, which provides a cloud-based solution to help the food indus-try protect its brands and remain in compliance with business and regulatory requirements, recently hosted a webinar, “The Changing Regulatory, Civil & Criminal Liability Landscape,” about the FSMA. It featured Shawn K. Stevens, global food safety lawyer and founding member of Food Industry Counsel LLC, the only law firm in the U.S. that represents the food industry exclusively.

“Food is extraordinarily scary, and one of the things that makes it scary is because oftentimes we don’t really have a good handle as to the quality and the safety of the food that we are receiving, that we are processing, ultimately that we are distributing to our customers,” said Stevens.

In most cases, he adds, companies are dealing with a variety of different suppliers across the nation and the globe.

“We have to take a broader look at our own opera-tions, our supply chain and the risks that surround us,” he said.

Those risks are everywhere, no matter the product. Danger can come from everything from imported products, fraudulent activity or contamination from animals, the environment and equipment.

“The dangers that result from the risk are extremely visible,” said Stevens, pointing to recent high-profile cases, such as those involving Blue Bell Ice Cream, caramel apples and Peanut Corp. of America.

Inspections today, therefore, are “far more aggressive,” according to Stevens, and will become even more so beginning next year.

Rather than one inspector coming into facilities, the USDA and FDA are sending in teams of compliance officers—“taking swabs, photographs.” They have “unfet-tered access,” Stevens said.

Stevens suggests companies have a written policy in place regarding photo-graphs. For instance, if a policy says that no one—not even the company’s owner or CEO—can take photographs, sometimes that policy can prevent an agency from taking photos.

Nevertheless, when it comes to documentation under the FSMA, if the FDA believes that there is a reasonable probability that the use of or exposure to a product will cause serious adverse health consequence or death, then the FDA shall have access to the records that are needed to assist it in determin-ing whether there is a reasonable probability that the use of or exposure to the product will cause serious adverse health consequences or death.

Stevens calls it a “broad authority” and one that companies need to think about. In other words, here is what Stevens reveals has become the “unwrit-ten” standard: you need to know what’s in your facility before the FDA does. That requires keeping micro records. And, as Stevens notes, the rules will only become more stringent as time goes on. In fact, he predicts that within the next several years, the food industry will see the FDA increasingly borrowing from its strict pharmaceutical rules and “pushing those on the food side.”

In addition to keeping detailed records to ensure traceability, Stevens recom-mends companies do their own regular sampling for problems or potential problems.

“When the FDA comes into our facilities, it’s going to be doing expansive microbiological sampling, and we better have a really good microbiological, environmental control program in place where we’re doing our profiling, we’re doing our sampling…,” he said, adding that food companies must know their

existing capabilities and weaknesses, train employees and embrace new tech-nologies.

“We don’t want to make people sick,” he said. “We want to give the best, safest food possible.”

Visit repositrak.com/the-changing-regulatory-civil-criminal-liability-land-scape/ to view and hear the entire webinar.

Preparing for the Food Safety Modernization Act

Questions Every CEO Should AskReposiTrak suggests all food companies give themselves a “brand protec-

tion audit,” forming a small, multi-functional group and doing the following:• Randomly select a few employees and ask them about your company’s

food safety culture. Is it top of mind?• Review your food safety training and operational materials. Is every-

thing current? Documented? Detailed? • Assess your written food safety plans and look for areas where you

might be exposed. Do you have all required programs? (HARPC, Allergen Management, other cGMPs, etc.)

• Are your company’s policies being executed as written? (Hint: If not, this is a gap.)

• Do you have a procedure for carrying out internal audits? • Are you prepared to provide documentation within 24 hours, if requested

by the FDA? (Do a random test.) • Do you monitor your suppliers? Do you have an accurate list? An evalu-

ation procedure? • Do your indemnity agreements provide an acceptable level of protec-

tion? • If you have foreign suppliers, will you be able to verify their compliance

with the FSMA regulations? • Are you insured? How about your ingredient suppliers? Right amounts? • Do you need or should you consider recall insurance? • Have you ever conducted a mock recall? (Hint: Try it. There is no substi-

tute for experience.) • Do you have a crisis plan? (Be prepared.)

*Source: ReposiTrak, repositrak.com

ReposiTrak, Affiliated Foods Midwest to co-present case study Nov. 17-20

John Grimes, safety director at Affiliated Foods Midwest, and Randy Fields, chairman and CEO of Park City Group, which owns ReposiTrak, will speak at this year’s Food Safety Consortium, Nov. 17-20 in Schaumberg, Illinois. Their session, titled “FSMA Compliance Starts with Knowing Your Supply Chain,” will share Affiliated Foods Midwest’s experience in preparing for Food Safety Modernization Act compliance and how it has leveraged ReposiTrak’s tech-nology to further reduce risk in its supply chain.

The Food Safety Consortium is an event designed to provide practical solutions to today’s problems in food safety and is sponsored by Food Safety Tech. It is designed as a collection of presentations, workshops, roundtable discussions and training programs that run concurrently with related over-arching sessions. Solutions and service providers also will exhibit during conference breaks.

“I am delighted to share the podium with John to discuss our learnings from this journey,” said Fields. “With FSMA finalization well under way, we hope other retailers, wholesalers and manufacturers in the audience will benefit from this discussion, as we will clearly show how technology can scale to automate compliance management with 100 percent of their trading part-ners.”

ReposiTrak is powered by Park City Group’s technology. The platform consists of two systems: Compliance Management, which not only receives, stores and shares documentation, but also manages compliance through dashboards and alerts for missing or expired documents; and Track & Trace, which quickly identifies product ingredients and their supply chain path in the event of a product recall. It can reduce the risk in the supply chain by identifying backward-chaining sources and forward-chaining recipients of products in near real time.

Shawn Stevens

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THE ROFDAREPORT

Bunzl Distribution and ROFDA ‘Think Big’ to Achieve Growth

Bunzl Distribution congratulates ROFDA and its members on their continual dedication to serving independent grocers. Their success is vital to the grocery industry, and ROFDA members are committed to that principle.

Using consolidated buying power and a collaborative selling approach, Bunzl and its ROFDA member partners “Think Big” to develop store packaging and supplies programs that continue to produce exceptional results for ROFDA members and their retailers.

Welcome, Olean WholesaleThis summer, Bunzl joined forces with ROFDA member Olean Wholesale.

Bunzl is grateful to the Olean leadership team for their confidence as the company transitions from a longtime supplier. The move is providing Olean’s cooperative members with a true “One-Stop Shop” experience and greater profits for the entire company.

Bunzl TCM Produces Results for Bunzl ROFDA Member PartnersAll ROFDA members partnering with Bunzl receive the full benefit of the Bunzl

Total Category Management (TCM) approach. This method of working together employs the trusted sharing of store perimeter department sales data on an ongoing basis.

With clear and actionable information in hand, Bunzl and its ROFDA member partners are able to develop individual-ized packaging and supply programs for their retailers. These programs give their retailers a profitable lift in their fresh bakery, meat, produce and deli departments.

Bunzl TCM creates operating efficiencies and promotes sales by means of activities Bunzl refers to as the Four Levers of Category Management:

Reducing CostsLowering InventoryMerchandising BetterCreating Efficient Assortments

Reducing CostsAs ROFDA members know, combined purchasing power

can lead to greater guaranteed savings on quality products. Working with a consolidator like Bunzl also allows ROFDA members to eliminate multiple purchase orders, vendor deliver-ies and accounts payable. These process changes significantly reduce labor and other operating expenses.

Lowering InventoryBunzl acts as its ROFDA partners’ virtual warehouse, with more

than 375,000 SKUs offered nationally. This provides a complete assortment of packaging and supplies available for just-in-time delivery with exceptionally high fill rates.

Additionally, having access to Bunzl’s direct store and cross-dock delivery options help Bunzl’s ROFDA partners reduce their inventories. This frees up working capital for investment in product SKUs that generate more revenue per square foot than supplies.

Merchandising BetterBunzl believes that stores need to find a balance between

quality and cost of goods. Matching retailers’ merchandising objectives with the right packaging drives results via presenta-tion and application. Taking advantage of industry trends in food preparation, grab-and-go and innovations in packag-ing can make a positive difference in retailers’ perimeter sales results.

Creating Efficient AssortmentsBy analyzing retailers’ category assortments by perimeter

department, Bunzl manages SKU counts and packaging appli-cations so that retailers have the right product mix to match their departments’ objectives. At the same time, Bunzl makes recom-mendations that streamline inventories and produce smarter buying decisions. The net result helps retailers better manage

their packaging assortments for growth with innovation and applications that drive results.

Think Big with BunzlBunzl’s ROFDA partners experience a TCM collaboration process that positions

them for success over the long haul. “Think Big” and consider new solutions and a fresh approach to packaging and supplies with Bunzl. For more information, contact Sandy Rogers toll-free at 888-997-5959.

With clear and actionable information in hand, Bunzl and its ROFDA member partners are able to develop individualized packaging and supply programs for their retailers. These programs give their retailers a profitable lift in their fresh bakery, meat, produce and deli departments.

Thanks ROFDA for your ongoing efforts in keeping Independents strong and successful, now and in the future!

America’s Specialized Food Brokers

Ric Larsen [email protected]

Val Clawson [email protected]

DeJarnett W-ROFDA 122014.indd 1 10/20/15 8:53 AM

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BOB LINGPresident & CEO,

Unified Grocers Inc.

FRANCIS CAMERONPresident & CEO,

ROFDA

NEAL BERUBEPresident & CEO,

Associated Food Stores Inc.

RANDY SIMONPresident & CEO,

CERTCO Inc.

RANDY ARCENEAUX

President & CEO, Affiliated Foods Inc.

KEN NEMETHPresident & CEO,

Central Grocers Inc.

MARTIN ARTERPresident & CEO, Affiliated Foods

Midwest Cooperative Inc.

RAY SPRINKLEPresident & CEO, URM Stores Inc.

EMILE BREAUXPresident & CEO,

Associated Grocers, Baton Rouge

BOB KETCHNERPresident & CEO, Olean Wholesale

Grocery Co-op Inc.

DAVID BULLARD

President & CEO,Piggly Wiggly

Alabama Dist. Co. Inc.

STAN ALEXANDERPresident & CEO, Associated

Grocers of the South Inc.MIKE

BOURGOINEPresident & CEO,

Associated Grocers of New Engand Inc.

CHRISTOPHERMILLERPresident,

Associated Grocers of Florida Inc.

THE ROFDAREPORT

THE BOARD“These member presidents and CEOs bring unique qualities and abilities that provide strength to the whole.”

Francis Cameron, ROFDA President & CEO

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ROFDA Report 2015

Documents

Transcript of ROFDA Report 2015