Shopping For MERGERS AND ACQUISITIONS

NEW JERSEY FOOD COUNCIL

NEW JERSEY

APRIL/MAY 2016VOLUME 1, ISSUE 1

IN THIS ISSUE

Exploring Tomorrow Today

Saving The Planet... Quietly

Foundation Inducts Industry Execs

For the latest industry news visit www.njfoodcouncil.com

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OFFICERS Chair Judy Spires Kings Food Markets

Vice Chair Richard J. Saker Saker ShopRites

Associate Vice Chair Joseph H. McCarthy Bimbo Bakeries USA

Treasurer Michael Rothwell Pennington Quality Market

Secretary Michael Murphy Quick Chek Corporation

President & CEO Linda M. Doherty New Jersey Food Council

DIRECTORS Dan Croce Acme Markets

Debbie Pregiato Advantage Solutions

Ken Weingartner C&S Wholesale Grocers

Eva Kohn CBA Industries

Kelly Johnston Campbell Soup Company

Michael Sullivan Coca-Cola Refreshments USA

Rafael Cuellar Cuellar Family ShopRites

Peter Rojek Fairway Market

Phil Scaduto Food Circus

Andrew Kent Glass Gardens

Luis Tejada Goya Foods

Joseph F. Pagano Inserra Supermarkets

Lisa Angeles Kraft Heinz Company

Howard Kent Krasdale Foods

James J. McCaffrey III McCaffrey’s Markets

Michael Biase Mission Foods

John Wachter Murphy’s Markets

Jody Avallone Nestle USA

David Maniaci Nicolas Markets

Leonard J. Sitar ShopRite of Carteret

Colleen Meares Stop & Shop Supermarkets

Jason Ravitz Ravitz Family Markets

Frank Mastrangelo Supervalu, Eastern Region

Rebecca Peifer Unilever

William Sumas Village Supermarkets

Richard Wood Wawa

Joe Sofia Wegmans Food Markets

Christina Minardi Whole Foods Market

N J F C | Board of Directors

Retail moves quickly. Does your accountant?

Whether it’s protecting customer data, implementing new point-of-sale technology, or navigating the tax impact of a business strategy, work with a team who speaks your language—and moves at your speed.

WWW.MOSSADAMS.COM/RETA IL

Certified Public Accountants | Business Consultants

FEATURESMergers and Acquisitions 2015 was a record year for all merger and acquisition activity and 2016 might hit the same heady heights. The reasons are simple and not surprising.

Saving the Planet... Quietly For years now, there’s been a quiet movement under way on the part of the food industry to save the planet. And best of all, these sustainability efforts are…well, sustainable.

Exploring Tomorrow TodayA California-based think tank is exploring global economics, generational trends and technological developments to learn more about where and how people will live, eat and shop in the future.

COLUMNSPresident’s Message Minimum Wage... So if They Jump Off a Bridge, NJ Should Follow? .................................5

From The Chair Strong Despite Challenges of a Difficult Business Environment ..............................7

Viewpoint – Kevin Coupe The Shopping Path of Least Resistance .................8

Inside the Beltway POS Credit Card Fraud Escalates ....................... 20

Washington Report Challenges Continue for EMV Implementation.... 22

DEPARTMENTSNJFC News ........................................................10

Government Relations ....................................... 17

15 Minutes With ................................................40

C O N T E N T S | Issue 1

44

NEW JERSEY FOOD COUNCIL

President & CEO Linda M. Doherty

Asst. V.P. for Govt. Affairs Mary Ellen Peppard

Director of Public Affairs Gary La Spisa, II

Executive Assistant Office Manager Sandy Malecki

Meeting Planner Kori Little-Buro

Financial Manager Christine Higgins

New Jersey Grocer is the official publicaton of the New Jersey Food Council.30 West Lafayette St. Trenton NJ 08608 (609) 392-8899 (609) 396-6571 Fax www.njfoodcouncil.comFor association members, subscription is included in membership dues.

Annual Subscription: $50 © 2016 New Jersey Food Council

Editor Gary La Spisa, II

For advertising information contact: Dave Heylen E-mail: dheylen@cagrocers.com

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P R E S I D E N T ’ S M E S S A G E

Minimum Wage... So If They Jump Off a Bridge, NJ Should Follow?State Legislators should consider mom’s age old advice before enacting a disastrous minimum wage increase.

Growing up in Brooklyn and following other

kids into some benign mischief, my Mom would

say, “So if they jumped off a bridge, you should

follow?”

Today, I clearly see the wisdom in my Mom’s

sentiment as NJ is again considering a dramatic

increase in the minimum wage to $15. Just

recently, both California and New York approved

a significant incremental minimum wage increase

to $15. Both initiatives were negotiated with

union leaders without any participation or input

from the business community, the payers of

the wage. How ironic that labor officials, who

would never stand to be outside the door of a

negotiation, had no issue keeping the paying

party out of the discussion.

In Massachusetts, the Labor Department just

revealed the retail and hospitality sectors

experienced its longest stretch of net job losses

since their wage hikes to $9 in 2015 and $10

in 2016. The state lost jobs in the grocery

sector and the chairman of a large chain of

supermarkets warned that the minimum wage

hikes would be difficult to bear. In Washington

DC, a higher minimum wage resulted in fewer

hours of work for hourly employees and a

contraction in the pay scale. These impacts were

recently chronicled by Investor’s Business Daily.

NJFC is adamantly opposed to a proposal by NJ

Democratic leaders which would significantly

increase the state’s minimum wage by a

whopping 79 percent! This legislation would

increase the wage from $8.38 per hour to $10.10

per hour on January 1, 2017, and increase the

wage annually from 2018 to 2021 by the larger of

$1.25 per hour or the sum of $1.00 per hour plus

any increase in the CPI-W. Annual increases will

be tied to the CPI-W after 2021.

This is a HUGE and potentially unsustainable

cost increase on our members. Additionally,

employers would have higher costs resulting from

compression. In some cases, collective bargaining

agreements contain provisions for raises which

are triggered by minimum wage increases.

Companies would be forced to make tough

choices including cutting the workforce, reducing

hours or scaling back benefits. Our industry is

facing unprecedented competition from online

and big box stores, and some large chains have

been unable to survive the challenges.

Minimum wage increases reduce access to entry

level jobs, particularly in retail jobs dependent on

teens who live at home, seasonal workers and

retirees who are supplementing their income.

These are not breadwinners supporting a family.

NJFC members currently provide generous health

benefits, savings plans, tuition reimbursement

and other fringe benefits that significantly add to

labor costs. These compensation costs should be

included in the calculation of the wage rate.

This proposal would lead to significantly

increased food prices that would hurt seniors on

fixed incomes who would be forced to pay higher

prices but would not see a corresponding raise.

Their purchasing power would drop drastically.

Even worse, Democratic leaders have warned

Governor Christie that if he fails to approve their

proposal, they will force it to the ballot box. As

we argued in 2013 when the minimum wage was

considered at the polls, it is terrible public policy

to place a labor contract on the ballot.

We implore our legislative leaders to consider the

impact in Massachusetts and Washington DC and

wait to see results from retailers in California and

New York before we jump off that bridge too!

L INDA DOHERTY

President & CEO

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http://www.pepsico.com

F R O M T H E C H A I R

Strong Despite Challenges of a Difficult Business Environment

The New Jersey Food Council remains in a strong

position to take on the challenges of a difficult

business environment in New Jersey.

We currently have sound financial footing with a

healthy surplus, a large and growing scholarship

fund, an effective Trenton team and valuable

relationships at the State House.

Over the course of the past decade, NJFC has

implemented two strategic plans with great

success. Of note, the last plan in 2011 helped

NJFC quickly pay off our victorious gift card

litigation as well as develop and implement the

Leadership Development Project, a program that

is seeing immediate dividends as we mentor

young professionals who will be the industry

leaders of tomorrow.

It’s evident that our past Strategic Planning

objectives has been a thoughtful process for the

relevancy and effectiveness of the New Jersey

Food Council.

Last December, a diverse group of NJFC

members were invited to our latest strategic

planning session to review our progress, examine

industry trends, define our challenges and

chart the future activity of the association. In

particular, we analyzed our capital investments,

member services and areas for growth, trends

in legislative and regulatory food industry policy,

economic outlook, and educational Foundation

opportunities.

It was determined that NJFC will tackle five

categories in our newly developed Tactical

Action Plan:

• Membership growth and defining new non-

traditional member categories;

• Educational Scholarship Foundation

promotion, expansion and legacy building;

• Weights and Measures management and

investigation of price verification system;

• Investigation of disposable bag policies and

legislative opportunities; and

• Member engagement in our government

affairs agenda, association management

issues and political action activities.

As we know, a Tactical Action Plan is a living

document that gains momentum and sets a

course for direction and engagement. For our

plan to be effective, the activism and ownership

of the membership are essential.

Members are being approached to participate in

activities, working groups and provide feedback.

As we began 2016, we already are seeing the

positive response from members who are coming

together to work on our Tactical Action Plan.

We remain grateful for the member engagement

and are hopeful for another successful strategic

approach that keeps NJFC strong, relevant and a

value to the food distribution industry in NJ.

JUDITH SP IRESNJFC Chair of the Board, Chairman & Chief Executive Officer Kings Food Markets

NJFC recently hosted a workshop providing a legal perspective on how to handle weights and measures inspections, following up on the goals set by our Strategic Planning Committee.

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V I E W P O I N T

The Shopping Path of Least Resistance It isn’t quite the replicator technology fantasized about by “Star Trek,” – with which one could just say, “Early Grey, Hot” to a computer and it would magically appear – but that doesn’t mean it can’t – and won’t – change the world.

The fact is, I think it has the potential to do both.

Earlier this year, we learned that Samsung

had unveiled a new refrigerator at the annual

Consumer Electronics Show (CES) in Las Vegas.

But this wasn’t just a refrigerator. It was a

“smart” refrigerator.

Called the Family Hub Refrigerator, this piece of

equipment comes with a 21.5-inch touchscreen

on one of its doors, which people can use

to shop for products as they run low or out.

Even more impressive, the refrigerator also has

cameras inside that keep track of products as

they are removed, so it can let people know

when supplies are running low. And, people

can access all this information from their smart

phones, and use them to place orders.

Wow. I’m old enough to remember when

refrigerators didn’t even have automatic

defrosting. (Young people reading this will have

to trust me on this. We used to have to unplug

freezers and refrigerators and put pots of hot

water inside in order to defrost them. It was a

total pain in the neck, but a routine part of life.

(Barbaric, huh?)

Samsung said that it has partnered with

MasterCard to provide payment services, and,

to start with, MyWebGrocer, FreshDirect and

ShopRite for online grocery ordering. Needless

to say, these platforms are thrilled.

“Commerce-enabled devices like the Family

Hub refrigerator represent an unprecedented

opportunity for our customers because it puts

them right where the consumer path to purchase

begins: in the kitchen,” said Eric Healy, president

of MyWebGrocer. And Jodi Kahn, FreshDirect’s

Chief Consumer Officer, observed that it created

a “frictionless” and “seamless” road between

shopper and shop.

Bingo.

Not long after Samsung made its announcement,

I got an email from Amazon promoting a new

item available on the site – a Brita water pitcher

that comes with a filter that enables the consumer

to have cleaner, better-tasting water.

Except that this was a pitcher with a curveball

– because this Brita pitcher is WiFi enabled.

KEVIN COUPEFounder

MorningNewsBeat.com

Commerce-enabled devices like the Family Hub Refrigerator represent an unprecedented opportunity for our customers because it puts them right where the consumer path to purchasebegins: in the kitchen.

iStock

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V I E W P O I N TV I E W P O I N T

It comes, the email said, “equipped with a built-in

counter that tracks the amount of water that passes

through the pitcher’s filter. The pitcher itself will

automatically order a new filter through Amazon Dash

Replenishment when the old filter nears its capacity.

This new connected pitcher with Amazon Dash

Replenishment gives Brita owners exactly what they

want – a new Brita filter on their doorstep at the time

they need it.”

Pretty cool.

(I’m tempted here to tell younger readers that I can

remember a time when we had to fetch water from

the well with a bucket and a rope... but I’m not quite

that old.)

The Brita Infinity Pitcher will cost about 45 bucks,

which seems to be about a third more expensive than

most of the Brita pitchers that I found on Amazon...

but the argument is that the tech-driven convenience

will make the price difference palatable. And I have to

say that I think the argument is pretty compelling. Or,

to coin a phrase, it is an argument that holds water.

Innovations along these lines have been much

discussed over the years, and it only was a matter of

time before dreams and reality met in such a way

that products like these could become mainstream.

Without a doubt, we’re pretty much there... products

like the Family Hub Refrigerator or Amazon’s

ecosystem-centric strategies (which are tied to the

Echo, Subscribe-and-Save, the Dash replenishment

system and even the delivery drones that probably

will be flying over our homes one of these days) are

putting us right in the middle of what could turn out

to be a pretty remarkable time. And retailers have to

be prepared to embrace this revolution, which almost

certainly will unfold faster than anyone expects.

Interestingly, Ford and Amazon announced at CES that

they are working on an initiative “granting Ford owners

unprecedented access to their connected-home devices

from their cars, and vice versa.”

And the Amazon ecosystem expands a little more.

What is important to remember here is that once one

buys a refrigerator or a water pitcher, it usually will be

quite some time before you have to replace them. The

refrigerator only has value if it is filled with food that

you want to eat... and the pitcher only has value if you

have the filters that create cleaner, tastier water. And

so it is critical for companies like Samsung and Brita

to find ways to be more relevant and useful... which is

exactly what they’ve done.

One of the things that traditional retailers have to

realize is that the advent of smart appliances and the

expanding ecosystems being created by some retailer

platforms – especially, but not limited to, Amazon –

are combining to create an environment in which it

is less and less necessary for people to actually go to

the store. These progressive-minded companies are

creating paths of least resistance that provide few

reasons for consumers to detour elsewhere.

Not everybody, and not all the time. But enough to

have an impact on a lot of bottom lines.

One of the things that one finds a lot at food industry

conferences is people who like to cast doubt on the

e-revolution. They like to talk about the people who

still want to go to the store, about the hiccups that

can affect click-and-collect or delivery services, about

how rural customers have different needs than urban

customers, and about how selling points like “your

neighborhood grocer” or “hometown proud” or

“old-fashioned service” or similar tropes are enough

for retailers to hang their hats on when competing in

this new environment.

All of this may, in fact, be true. And still not enough

to stave off the impact of technology, especially on a

generation of shoppers that does not remember those

ancient pre-Amazon days.

Not all people, and not all the time. But enough to

create leaks in the traditional market shares of a lot

of retailers and manufacturers. Leaks that are likely to

grow bigger with time.

The future is coming. And it is traveling at Warp Eight. n

One of the things that one finds a lot at food industry conferences is people who like to cast doubt on the e-revolution.

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The 2016 Trade Relations Conference will be held on

May 11, at Harrah’s Casino and Resort in Atlantic

City, NJ. John Derderian, President of Allegiance

Retail Services, will provide remarks on the State of

the Food Industry, and Tim O’Conner, Managing

Partner of Retail Performance Group, will present to

the attendees on “Retail Transformation 2020.” The

reception and program will be held from 3:00 p.m. –

6:00 p.m.

Also at the event, Debbie Pregiato, Customer Team

Leader for Advantage Solutions, will be honored

with the New Jersey Food Council’s Max Stone Trade

Relations Award, she will be the first woman to

receive this prestigious honor.

“Debbie’s role as a leader on our new member

development campaign, her business partnerships

with NJFC members and her continuous dedication to

the advancement of the Food Council’s mission made

her an obvious choice,” said NJFC President Linda

Doherty.

“Debbie has forged long lasting food industry

relationships and is a role model as a respected trade

relations leader,” Doherty added.

The Max Stone Award is named in honor of the

longtime trade relations leader for Best Foods, CPC

in recognition of his accomplished career in trade

relations in New Jersey.

The Conference will feature our first annual “Chef

Cook-off Challenge;” an opportunity for retail food

industry chefs to showcase their culinary skills and

compete for the award as NJFC Best Chef 2016.

In addition to the Chef Challenge, we will be

highlighting members’ new products in the market;

which will give the opportunity for product sampling

at the Conference.

In addition to the Max Stone Trade Relations Award,

NJFC will be announcing the winners for the 15

scholarships being awarded totaling $53,000 to

promote future leaders and support the workforce and

families of the NJ food industry.

2016 Educational Scholarship Awards

$5,000 SCHOLARSHIPS

NJFC Founders Scholarship

NJFC Thomas Infusino Scholarship

NJFC Student Award

Lawrence R. Inserra Memorial Scholarship

Raymond J. Maniaci Educational Scholarship

Perry Sumas Educational Scholarship

CBA Industries Scholarship

$2,500 SCHOLARSHIPS

ACME Markets Educational Scholarship

Cuellar Family ShopRites Scholarship

Wawa Scholarships (2)

$2,000 SCHOLARSHIPS

Grace Scaduto Memorial Scholarship

Spires Family Scholarships (2)

Quick Chek Scholarship

Trade Relations Conference Gets a New Date and Location!

As is tradition, the event will conclude with a golf

event at Galloway National Golf Club on May 12 at

9:00 a.m. in Galloway, NJ.

Contact Kori Little-Buro at (609) 392-8899 with any

questions, or to register for the event go to http://

njfoodcouncil.com/register-today

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May 11, 2016

Harrah’s Resort & CasinoCocktail Reception, Awards Ceremony and Presentation 3:00 p.m. — 6:00 p.m.

7:00 a.m. Networking Breakfast Buffet9:00 a.m. Golf Outing - Galloway National Golf Club

May 12, 2016

Trade Relations Conference

GALLOWAY NATIONAL GOLF CLUB

The Future of The Food Industry

Guest Speakers:

John Derderian PresidentAllegiance Retail ServicesState of the Food Industry Tim O’Conner

Managing PartnerRetail Performance Solutions

Retail Transformation 2020

Debbie Pregiato Customer Team LeaderAdvantage Solutions

Presentation of the Max Stone Trade Relations Award

1st Annual NJFC Chef Cook-off Challenge Viking Kitchen @ Harrah’s Casino

Industry Chefs compete to win the title of the NJFC Best Chef 2016!

NJFC_TR_2016_Ad.indd 1 4/10/16 8:10 PM

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Members of the Eickhoff Family and NJFC President Linda Doherty lead Assemblyman Troy Singleton (D-7) on a tour of the ShopRite of Burlington.

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Store Tour Tuesdays Kicks Off 2016Starting in January, the Food Council has embarked

on a plan to host a minimum of one legislative

tour each month in a program called “Store Tour

Tuesdays.”

The goal is to provide legislators a perspective on the

impact of the overzealous layers of government laws

and regulations on grocers, suppliers and convenience

stores.

In January, NJFC hosted Assemblyman Troy

Singleton (D-7) at the ShopRite of Burlington. We

were joined by members of the Eickhoff Family, the

owner-operators of that location, for a 90-minute

tour and issue briefing. NJFC continues to work with

Assemblyman Singleton on some of the issues which

were covered during the visit.

In February, Assemblyman Jack Ciattarelli (R-16)

joined the Food Council Team at Kings Food Markets

in Bedminster for

a tour led by Kings’

President and COO

Rich Durante,

Vice President of

Operations Joe

Parisi and Store

Manager Bill

VanBuskirk.

As one of the Food

Council’s closest

allies in Trenton,

the tour provided Assemblyman Ciattarelli with an

opportunity to gain first hand industry knowledge

before returning to Trenton to defend business from

overregulation and the progressive agenda.

In March, the Food Council hosted the first annual

Assembly Agriculture Committee store tour.

Committee Chairman Bob Andrzejczak (D-1) and

Assemblyman Eric Houghtaling (D-11) participated in

the tour with several members of their staff.

The tour included stops at Campbell Soup Company

in Camden, and Wawa and Wegmans Food Markets

in Cherry Hill. Thank you to Kelly Johnston

and Jennifer Sweeney of Campbell’s, Leonardo

Impagliazzo of Wawa, and Joe Sofia and Todd Ferrera

of Wegmans for providing a thorough and diverse

overview of the food chain in New Jersey.

Members who would like to host a legislative

visit should email Gary La Spisa at glaspisa@

njfoodcouncil.com.

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Rich Durante, Joe Parisi and Bill VanBuskirk of Kings Food Markets; and, NJFC President Linda Doherty lead Assemblyman Jack Ciattarelli (R-16) on a tour of the Kings Food Market in Bedminster.

Assemblyman Eric Houghtaling (D-11);

Joe Sofia of Wegmans; Assemblyman Bob

Andrzejczak (D-1); NJFC President Linda Doherty;

Todd Ferrera of Wegmans; and Mary Ellen Peppard of NJFC during the tour of the

Wegmans Food Markets location in Cherry Hill..

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Honorees Barry Schiro of CBA Industries and Dan Croce of ACME Markets, pose with their awards at the Night of Distinction.

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Food Council Honors Industry LeadersThe New Jersey Food Council hosted its annual

“Night of Distinction” Reception at The Palace at

Somerset in Somerset, New Jersey in March. The

event with its powerful slate of honorees drew over

500 guests including prominent food industry

executives.

At the event three industry leaders were honored with

Industry Achievement Awards for their meaningful

contribution to advance the mission of the Food

Council, for achieving significant food business

success and for their history of civic service within the

New Jersey food community. The honorees were Dan

Croce, President of Acme Markets and his Executive

Team; Rafael Cuellar, President & CEO Cuellar

Family ShopRites;

Barry Schiro,

President, CBA

Industries.

Linda Doherty,

NJFC President

& CEO, also was

presented with

the Excellence in

Leadership Award

recognizing her 23

years of service at

the Food Council

and her 12 years as President.

NJFC Chair, Judy Spires, CEO of Kings Food

Market stated, “This distinguished class of food

industry leaders was recognized for their continued

achievements in the competitive NJ marketplace. We

were thrilled with the outpouring of support for this

event and the honorees, which is no surprise given

these honorees are among the most respected leaders

in the industry.”

In addition to their Industry Achievement Award,

each honoree was presented with Joint Resolutions by

State Senator Jennifer Beck of the NJ State Legislature

commemorating their industry achievement and

dedication to business in the Garden State.

Joe Gozzi, Wakefern; Len Sitar, ShopRite of Carteret; Joe Colalillo, ShopRite of Hunterdon; and Herman Dodson, Chase

Dan Croce of ACME Markets, Barry Schiro of CBA Industries, Senator Jennifer Beck (R-11), Linda Doherty of NJFC and Rafael Cuellar of ShopRite of Passaic pose with their Joint Senate and Assembly Resolutions at the Night of Distinction.

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Members of the 2015-2016 Leadership Development Class with State Senators Thomas Kean, Jr. (R-21), and Fred Madden (D-4).

Members of the 2015-2016 Leadership Development Class with NJ Lieutenant Governor Kim Guadagno.

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Leadership Development Class Gets Politically Active in TrentonMembers of the New Jersey Food Council Leadership

Development Program participated in the “Getting

Politically Active” session at the Statehouse.

Participants met with Lt. Governor Kim Guadagno,

Senator Thomas H. Kean, Jr. and Senator Fred H.

Madden to discuss political leadership, legislative

process, and the role of government and its impact

on business. The session began with a tour of the

Statehouse.

This is the second class of the NJFC Leadership

Development Program, created to provide both

orientation and skill development to future leaders of

various segments of the NJ food distribution industry.

The program combines elements of mentoring,

organizational education, leadership training, policy

trends, and guided experiences to prepare the

industry’s up and coming professionals for future

leadership roles.

Two of the inaugural class members have already

been elected to the NJFC Board of Directors.

This year’s class of eight was chosen by a selective

criteria and includes Antonio Acosta, Kings Food

Markets; Keith Breen, Perlmart; Paula Colatriano,

Acosta Sales & Marketing; James Haslett, Bimbo

Bakeries USA; Nicholas Lewandoski, Acme Markets;

Michael Nelson, Wegmans Food Markets; Jessica

Riley, Food Circus Super Markets and Kevin Sullivan,

Acme Markets.

NJFC President Linda Doherty stated, “This program

will allow these young business leaders of tomorrow

to gain the experience and skills needed to grow in

their organizations and promote the food industry for

years to come.”

The program consists of five sessions meant to

introduce the future leaders to business and public

policy at both the State and National levels. Sessions

include meetings with elected officials, regulatory

agents, policy makers, NJFC Committee leaders and a

food industry CEO.

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NJFC Receives Nearly $250,000 for Food Handlers Training GrantsFor more than a decade, the Food Council has

received a food handlers training grant from the

Customized Training Program within the New Jersey

Department of Labor.

In February, the grant was renewed for $248,000 and

will continue to cover Food Handlers and Soft Skills

Training through our administering partners at

Rutgers University Office of Continuing Education.

The Food Handlers Training Grant has been an

immense success as Food Council members have

taken advantage of the funds to train almost 25,000

NJFC member associates since 2002.

NJFC President Linda Doherty stated, “The

success of this member training program has been

unprecedented and it is evidenced by the annual

renewal of the grant for 14 consecutive years. Since

the program’s inception, close to $3 million in funds

have been awarded to help train NJFC member

associates so we are thrilled to receive the grant

and offer the program for another year as an NJFC

member benefit.”

This newest grant will be used to fund food safety

certification and soft skills training programs

on more than 30 topics, ranging from employee

development, CPR, and soft skills to computer skills

through courses administered by Rutgers University.

“Our partnership with Rutgers University is

paramount as they do a tremendous job of

recognizing the increasing demand for training

programs in the retail environment, and have

continuously delivered a grant program with courses

designed to better prepare our workforce for the

changing marketplace,” stated Doherty.

NJFC President Linda Doherty to Sit on Board of ‘Opportunity New Jersey’Earlier this year, NJ business leaders announced

the formation of a grassroots organization called

Opportunity New Jersey whose mission is to increase

awareness of the impact that policies and legislative

action will have on the state’s economy and job growth

for New Jersey residents.

Opportunity NJ will use grassroots outreach to inform

policymakers and the public about how proposals out

of Trenton will impact the state economy. The 501(c)(4)

organization will raise the donations from individuals,

businesses and organizations.

NJFC President Linda Doherty has been elected to a

seat on the Board of Directors of this new initiative.

“It is crucial that the business community establishes

a vehicle which can effectively educate New Jersey

residents on the impact that Trenton’s unsettling

business climate can actually have on their daily

lives, whether they own a business or not,” said Linda

Doherty.

The coalition’s most immediate agenda involves

opposing three economically-damaging initiatives

that have recently been proposed. They are increasing

the minimum wage to $15 per hour; constitutionally

requiring quarterly public pension payments; and

mandating paid sick leave.

Long term, the coalition hopes to address numerous

other taxes and regulations which make it harder to

do business in New Jersey.

The coalition is comprised of business organizations,

trade associations, labor groups, educational

institutions, not-for-profits and individual companies

throughout the state of New Jersey.

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2014 2015

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New Jersey’s food retail and distribution industry is

being challenged by several devastating legislative

proposals simultaneously.

Much of this is caused by significant political

infighting by Democrats in the Legislature to be

viewed as the most “progressive” as they jockey for

support in next year’s gubernatorial election.

Adding to the mix is Newark Mayor Baraka who

started advocating for a bottle bill, which would of

course be extremely detrimental to our industry, to

fund testing for elevated levels of lead in water.

Mayor Baraka began pushing this decade old

proposal with the false promise that the funds from

unredeemed beverage containers would go toward

water infrastructure testing and abatement after the

recent unfortunate discovery that many schools in

Newark have elevated levels of lead in their water

systems.

Given the political pressure to address the water

problems, the New Jersey Assembly Environment

Committee agreed to pass a bottle bill out of

Committee, despite significant opposition from

the New Jersey Food Council, American Beverage

Association, county and municipal recycling

organizations and many other business groups that

registered concerns.

The Food Council is working to ensure that this bill

does not get any more traction in the Legislature.

Two major New Jersey Newspapers came out strongly

against the bottle bill proposal and one journalist

noted that the proposal is “not to recycle bottles for

people but to recycle cash for politicians.”

NJFC recently met with the Mayor and Assembly

Envrionment Committee Chair Grace Spencer to

advocate for a carefully crafted bag fee modeled on

the Montgomery County, Maryland, program which

has benefitted both the environment and retailers, in

lieu of the bottle bill proposal.

Additionally, like many other food industry

associations around the country, New Jersey is facing

a proposed minimum wage increase. Legislative

leadership is pushing legislation that would phase in

the wage increase to $15 per hour plus indexing by

2021. NJFC is working with a coalition of business

trade groups to fight this proposed increase through

advocacy and grassroots outreach.

Of significant concern is that New Jersey’s legislative

leaders have indicated that they intend to once again

put a minimum wage increase on the ballot as a

constitutional amendment if the Governor vetoes the

legislation, which is likely.

There are several other proposed legislative mandates

we are challenging including paid sick leave. NJFC

has been fighting this onerous, expensive legislation

for two years, and trying to interject common sense,

reasonable recommendations into the discussion,

such as an exemption for employers who already

provide paid time off, and state preemption.

Already New Jersey has a dozen local paid sick leave

ordinances.

The latest harmful proposal to advance is predictive

scheduling legislation, which contains numerous

time consuming and inflexible mandates pertaining

to employee scheduling.

We continue to explain to the Legislature how a one

size fits all solution does not work for every employer,

and these types of prescriptive bills have unintended

consequences that often harm the very person the

legislation is intended to help- the employee.

Unfortunately, we can expect to see even more

counterproductive legislation in the coming months

as legislators try to position themselves for the 2017

Gubernatorial and legislative elections.

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2017 Gubernatorial Election Looms Large in Trenton Already

The latest harmful proposal to advance is predictive scheduling legislation, which contains numerous time consuming and inflexible mandates pertaining to employee scheduling.

Mary Ellen Peppard NJFC Assistant

Vice President of Government Affairs

iStock

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Eric Pearlman, Dir Independent Sales WC 1.916.373.4286 www.cswg.com

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Jennifer Hatcher Senior Vice President

Government and Public Affairs, Food Marketing Institute

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POS Credit Card Fraud Escalates Post EMV – Best PracticesNORMALLY THE FOOD MARKETING INSTITUTE ELECTRONIC PAYMENT SYSTEMS

COMMITTEE IS FULL OF CREATIVE IDEAS AND SURE THEY CAN TACKLE ANYTHING

PRESENTED TO THEM. BUT THE LATEST ESCALATION OF CHARGE BACKS ON CREDIT THAT

OUR EXPERTS PUT AT A 400-1,000% INCREASE OVER 2015 NUMBERS HAD THEM STUMPED.

We reached out to law enforcement, reached out

to congressional committees, reached out to the

card associations and reached out to asset

protection experts.

We put the best ideas of the group together and

offered the following advice and a webpage where

we can add additional ideas, suggestions, tips and

encouragement to get this problem under control.

The first step is understanding the scope of problems

you are experiencing, as there seem to be a couple

of different problems. Some of our folks are seeing

what we are calling “organized crime.”

When a card is used 100 times in your store(s) in a

couple of days; that is organized crime and clearly

there are multiple people involved in this fraud.

On the other hand, when one individual uses a card

in your store and then tells their credit card company

that they were not in the store and did not buy the

products, that is still a crime, you are still out the

money, but at least for now, it seems to be the work

of one person attempting to take advantage of a bad

system or bad issuers happy to charge back and ask

questions later because of their “zero liability.”

This term “organized crime” – is clearly not based

on a legal definition, just a recognition that there

is clearly more than one type of problem we are

seeing simultaneously.

Getting a handle on the problem:

n Track your chargeback rates and work to identify

where your greatest vulnerabilities are in the store.

n Coordinate with local law enforcement and ask

for any trends they may see that could be the work

of an organized criminal element. Share your

experience with them.

n Fraudulent transactions are a crime, so ask law

enforcement how and when they may suggest you

file a police report for chargebacks resulting from

fraudulent transactions and any terminology you

should use if you believe a particular chargeback

may be linked to others.

Putting in-store controls in place:

Gift cards are a prime target for criminals for

a number of reasons. A person can buy a high

denomination gift card, they are lightweight and easy

to transport and they are easily sold on the Internet.

Several FMI members have taken steps to mitigate

this risk using one or more of these approaches:

n Moving the card-branded gift cards that can be

used in any store, behind customer service.

n Restricting selling high value gift cards to certain

hours of the day (example: 6am–10pm).

n Only allowing cash, or PIN-enabled debit cards for

the purchase of gift cards.

n Requiring a photo ID for gift card transactions.

n Removing gift cards from self-checkout lanes.

n Setting up a point of sale system prompt for

managers’ approval for gift card transactions above

a certain dollar amount.

n Not allowing purchase of gift cards with a prepaid

or reloadable Visa, American Express, MasterCard

or Discover card.

n Limiting the value and/or the number of gift cards

that can be purchased in a single transaction or on

a single card in a certain period of time.

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I N S I D E T H E B E LT WAY

Looking Beyond Gift Card Fraud to All Credit Transactions

We are seeing fraud now well beyond gift card fraud.

You may want to put additional precautions in place

for any credit card transaction:

n If you are testing EMV in-store and have a register

running EMV, direct all gift card, high value

or questionable transactions through that lane.

This could significantly lower your chargeback

exposure.

n Require a 100% ID check on all credit card

transactions, or ID over a certain dollar value or

ID on any customer not using a loyalty card. If

you can say that you check ID 100% of the time or

can link a transaction that was charged back by a

customer who presented a loyalty card or is shown

via camera to be in the store purchasing products

at the time of the transaction, your ability to fight a

chargeback is greatly enhanced.

n Post signage at the POS explaining this fraud and

your response to combatting fraud and protecting

your customers and your intent to involve law

enforcement. The sign alone may be enough to

move the criminal to another location. Plus it cuts

down on time your cashier has to explain why they

are asked for ID and the customer in front of them

using a PIN debit card was not asked for ID.

n Some companies have added address verification

system (AVS) to their credit card processing. As

frequently seen at gas pumps, it prompts the

customer to enter their 5-digit zip code at the point

of sale. If they get a mismatch, they have trained

all cashiers to ask for ID.

n Prohibit manual entry if the magnetic stripe does

not work or send that transaction to a customer

service desk for more scrutiny.

n Implement CVV verification on manually entered

credit transactions or all credit transactions.

n A manager’s override on any large order (over

$1,000). An order at a grocery store for more than

$1,000 (unless you know the customer and the

reason for the transaction – hosting a large party/

caterer/restaurant owner) should cause immediate

concern/scrutiny.

n ID check and transaction amount limits per

customer and per day to help mitigate risk.

Members are reporting cards

that have been used more than

100 times in stores in 2 days.

You need to have a mechanism

in place to make sure this type

of “organized crime” does not

happen to you.

Remain vigilant against any kind of suspicious activity, such as:

n Guest/customer attempting

multiple credit cards with

declines.

n Guest has a stack of credit cards

visible and outside of wallet.

n Pay close attention to cards

issued by international banks in

Asia and the Middle East, etc.

n Buying large quantities of open

value gift cards.

n Buying large quantities of beer or wine.

n When asking for ID, the customer becomes

agitated, nervous or in a hurry.

In response to our requests, both Visa and

MasterCard have offered more specific information

available on our web page.

FMI EMV Chargeback Page:

http://www.fmi.org/emv-credit-chargebacks-best-practices-and-guidance

Bottom line, you are certainly not the only

supermarket being defrauded, but be aware, be

vigilant, be prepared, and share what you learn.

In considering any actions, you need to consult

your contracts and the operating rules of the card

associations. n

We are seeing fraud now well beyond gift card fraud. You may want to put additional precautions in place for any credit card transaction.

Why am I asked for ID on credit transactions?

The supermarket industry has seen an extraordinary level of fraud on credit card transactions in the last several months on both chip and magnetic stripe cards. In an effort to keep your information safe and keep our prices low, we are asking for your ID to confirm your identity on a credit card transaction. We are not experiencing fraud with PIN debit or PIN credit, so if you insert a PIN, you will not be asked for ID. We are working closely with law enforcement and are filing police reports when fraudulent transactions occur.

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Peter J. LarkinPresident and CEO National Grocers

Association

Challenges Continue for EMV ImplementationTHE ONGOING TRANSITION FROM MAGNETIC STRIPE TO EUROPAY, MASTERCARD AND VISA,

KNOWN AS EMV, HAS GATHERED MUCH ATTENTION FROM BOTH BUSINESS OWNERS AND

CONSUMERS. AND ALTHOUGH THE OCTOBER 1 LIABILITY SHIFT DEADLINE IS BEHIND US,

MERCHANTS STILL CONTINUE TO FACE CHALLENGES ON THE ROAD TO IMPLEMENTATION.

Not a day goes by that I don’t hear from NGA

members who are beyond frustrated with the slow

pace of EMV implementation.

To be clear, the vast majority

of NGA’s members – from

single-store operators to

regional chains – invested

tens of thousands of dollars

in new hardware and

software well before the

October 1 shift only to be

left waiting on a massive

backlog in the certification

process which is controlled

by the card networks.

As an example, NGA has one retail member who

installed EMV capable hardware in its 70-plus stores

well over a year before the October 1 deadline and

yet continue to wait on certifications so it can begin

accepting EMV cards. Meanwhile, these retailers are

being hit with thousands of dollars in chargebacks

from the banks and card networks simply because

they are not “EMV compliant.”

We understand that the certification process, which

is mandated by the card networks, has experienced a

number of delays that range from the card networks’

late delivery of technical code to other complications

slowing the certification process.

None of these delays are the fault of merchants, yet

it’s the merchant who is facing an onslaught in new

chargebacks as well as confusion among consumers

who don’t understand why they can’t use their chip

cards at their local supermarket.

While some people may feel that EMV technology

is more secure for consumers, the reality is the chip

has one main purpose and that is to validate the

authenticity of the card at the point of purchase,

making it more difficult to counterfeit the card.

Unfortunately, the vast majority of EMV credit cards

being issued by banks in the United States are being

issued without PINs, which raises the question why

go to all the expense to

issue EMV cards without

adding a simple PIN

authentication as well?

Many independent

supermarkets are

investing in advanced

technology such as

tokenization and end

to end encryption to

further protect the

consumer’s data from

the swipe on through the transaction processing.

Some are even making further investments to protect

consumer data with products such as First Data’s

TransArmor® Solution – the same technology that

secures Apple Pay – to offer an added layer of security.

Merchants who have made the investment to

comply with the October 1 deadline should be given

a “safe harbor” and shielded from EMV specific

chargebacks. NGA has reached out to Visa and

MasterCard leadership to open a dialogue in regard

to the significant backlog in the EMV certification

process and the increased number of chargebacks

to merchants.

NGA is also working to educate federal policymakers

on the challenges merchants have faced during this

transition period.

It’s time for the card networks and banks to stop

passing the buck onto the backs of merchants, but

rather they should work together with merchants to

further eliminate fraud by issuing credit cards with

PINs, work to speed up the EMV certification process,

and put a hold on chargebacks. n

iStock

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©2011 The Coca-Cola Company. “Coca-Cola,” “open happiness” and the Contour Bottle are registered trademarks of The Coca-Cola Company.

F E AT U R E T I T L EBYL INE/CONTINUED

There’s still a major need for retailers to achieve economies of scale,especially as they face specialist competition that has a much lower cost base.

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M E R G E R S A N D A C Q U I S I T I O N SBY LEN LEWIS

T

simple – economic fundamentals are sound, the need to acquire expertise and distribution is essential; and there are plenty of strong regional chains and independents looking to wed.

“There’s a lot of interest in the grocery sector,” said Brian Todd, president of The Food Institute. “Private equity firms have a lot of cash on hand and are looking for a profitable investment rather than starting up something new. Some are just looking for a safe haven for cash.

“Meanwhile, some family owned chains, especially third- or fourth generations are looking to cash out,” he adds. “Also, grocery is seen as a lot sexier business than it used to be.”

Joel Rampoldt, retail and consumer lead for KPMG Strategy noted: “There’s still a major need for retailers to achieve economies of scale, especially as they face specialist competition that has a much lower cost base. The ability to spread out things like distribution, marketing and sourcing costs and SG&A across a broader perimeter is imperative.”

His comments underscore KPMG’s 10th annual survey focusing on the outlook for M&A activity across a wide variety of industries this year.

The executive survey, conducted in partnership with FORTUNE, anticipates an acceleration of M&A

activity this year and an increase in the average deal size. The average value per acquisition will be less than $250 million, according to 52 percent of respondents.

While not focused strictly on retailing, the survey found that 38 percent of executives surveyed will initiate between one and three acquisitions this year. And the vast majority of deals will be in the U.S. given the relatively strong economic outlook.

About 12 percent of those surveyed expect the consumer-retail market to be among the most active in M&A activity this year.

The need to get bigger in new markets is not necessarily driving M&A at retail, according to Rampoldt.

“It’s about elevating capabilities,” he says. “When you think about all the things that retailers need to be good at – everything from pricing and promotions to localized assortment – it’s obvious they need to be sharper than they were five years ago.”

Rampoldt says its especially true when it comes to amortizing the cost of those capabilities over a bigger store base.

“The ability to execute better and drive more sales and EBIDTA out of every square foot requires capabilities and, in some cases, technology,” he says. “It’s a totally different game. Retailers must be more data driven in order to make a rapid response.”

No one is ruling out the possibility of more mega-deals this year since, as Todd put it, “There are always surprises.”

However, with the industry coming off a year of mega-mergers, the total number of stores involved in merger activity this year will be down, according to David W. Schoeder, principal in The Food Partners, a Bethesda, Md.-based investment banking firm, providing merger, acquisition and divestiture and restructuring services to the food industry.

“But over the next 36 months, we’re going to see consolidation driven by two factors,” he says. “First, if you’re operating a conventional store you’re probably in denial. You have to be focused on

2015wasarecord

yearforallmerger

andacquisition

activityand2016

mighthitthesame

headyheights

he reasons are

BY LEN LEWIS

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Continued from p. 25

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operating a conventional store with a twist. Otherwise you won’t be in tune with the new world order and what it takes to be successful today.”

Schoeder says the other factor is an aging group of independents with no succession plan. Many of those will probably exit over the next 36 months and the majority of stores will be sold to other independents.

These are the ones Schoeder called “pac-men” who have grown by gobbling up others.

“These are the super independents,” he says. “They’ve got management teams in place, they’re generating cash flow and have the money to reinvest and buy stores as they become available and make them far more successful.”

Rampoldt also expects to see smaller chains absorbed by larger counterparts if the multiples are attractive to both sides.

“Most grocery retailers are not truly nationwide, so filling in their portfolio is always attractive,” he says. “This will probably happen more in supermarkets than other classes of retail.”

This is also true for independents who are not only selling out but interested in buying new locations to expand their territory, said Todd.

“Competitive concerns are also driving deals,” Todd says. “Everyone’s selling food – dollar stores, convenience stores, clubs and other alternative formats. Retailers are looking to protect their market or expand into new ones to increase sales and profits.”

Clearly some geographic areas are more ripe for deals than others, Todd said, noting that the Southeast and, to some degree, the Southwest are still growing. Some secondary markets can be attractive due to their low capital costs, but it’s the major metro areas with built-in demographics that are more appealing. The economy in and of itself will have little impact on

consolidation, according to Schoeder. What does have an impact is availability of credit, he said, noting that some banks shied away from lending to grocery stores after the Haagen and A&P bankruptcies.

“They’re still very skittish,” Schoeder says. “The ability of a private equity firm to get a deal done at a higher multiple is based on their borrowing more money, not putting more equity into it,” he says.

“You used to be able to borrow four times the cash flow to get a deal done,” he says. “The debit to cash flow ratio is probably off a bit for strategic buyers. But everything depends on the quality and vision of the operators. You have to have a credible plan and the bite size has to be manageable.”

But scrutiny by lenders could be eclipsed by that of government agencies.

“The Hagen debacle embarrassed the Federal Trade Commission,” Schoeder says. It even slowed down the Ahold/Delhaize merger he said, noting that the FTC is doing an internal investigation to see what went wrong.

Nonetheless, Schoeder believes the agency’s stance is still far more liberal than it was 10 or 15 years ago.

“The focus now is making sure there are credible buyers that can operate the stores to be divested,” he says. “Their mandate is to make sure there is a viable competitor to maintain competition in the marketplace.”

Meanwhile, Rampoldt believes the U.S. supermarket industry is still attractive to overseas buyers.

“I worked a lot in Europe,” he says. “The competitive intensity there is enormous and the ability to grow by opening new units ended decades ago. We’re only just getting to that life stage in the U.S., yet there are still lots of places to grow by opening new stores and increasing square footage.”

So you want to sell the business or maybe buy another one but can’t find the right partners?

A former Italian comedy writer and MBA v, Brian Pallas, has come with a unique idea called the Opportunity Network designed to connect nearly 6,000 ceos and owners of family businesses with potential merger and acquisition partners in 75 countries.

Opportunity Network is headquartered in London, but the company now has offices in New York and Barcelona along with reps in cities like Dubai, Paris, San Francisco and is in the process of moving into Asian markets.

The business has been described as something like the Craigslist of mergers and acquisitions. Members can list businesses anonymously and connect with another that they think might be a good fit. However, there is a minimum deal size of $1 million.

The app enables members to filter the deal by size, location and industry. So, if you’re tired of looking for bargains on golf clubs or restaurants, you can shop around for another company.

“Thereareplentyofexamplesofsuccessfulretailersbeingownedby

non-merchants,”hesays.“Inmanycasestheytrytofreethebusiness

byshiftinginvestmentandassetsfromthingsthatdon’tdoanything

tothingsthatdoandimprovethecustomerproposition.”

Continued on p. 28

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M E R G E R S A N D A C Q U I S I T I O N SCONTINUED

Continued from p. 26

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Foreign investors might also be attracted to acquiring stores for alternative delivery formats like “click and collect,” according to Rampoldt.

“It’s very big in the UK and France and those who have cracked it in Europe may see a greater opportunity to do it in the U.S.,” he says. “In fact, it may be more attractive than just buying a company for brick and mortar (sales). It’s inherently more complicated, but I wouldn’t be surprised if many companies weren’t thinking about it.”

However, entry as a startup, like the route that German deep discounter Lidl is taking, is certainly feasible.

“They decided not to come in through acquisition but it all depends on the format. It makes sense to grow organically if you’re operating a format that appeals to a specific segment of customers. Where you site those stores is key,” he said, noting that an acquisition would not necessarily provide this flexibility.

When considering acquisitions, a strong cultural fit continues to be essential.

“If you look at the companies that have been successful you’ll see that they’ve paid a lot of attention to individual cultures when bringing two firms together – with associates, the culture they project to their customers as well as the pace at which they make changes,” he says.

“Companies that go slowly tend to do better than those that put their names on the building and open a completely different operation the next day. ”

You’ve got to think about the customer experience and protect the one-on-one interaction between customers and associates,” he adds. “It’s important that the quality of that relationship is not jeopardized.”

But the trickiest part of any acquisition may be the decision involving central vs. local control and how much autonomy the regions and stores will actually have.

“It’s critical to get right,” Rampoldt says. “There are examples of both strategies being successful, but you have to be one or the other.”

Asked whether buyers are shying away from turnaround situations, he replied: “Not really. There’s still an appetite for that when the price is right and it’s clear what levers have to be pulled to turn the acquired company around.”

This is especially true for private equity firms who are likely to continue acquiring retail operations.

“They like businesses where they understand what to do to get results,” Rampoldt says. “They’re very good about basic blocking and tackling around inventory management, distribution, store operations and efficiency. Those things are cause and effect in retail and private equity firms have a good idea of what to do, what they have to put into the business and how long it will take before they get out.”

But, he quickly noted that acquisitions are not necessarily a short-term play for private equity firms.

“There are plenty of examples of successful retailers being owned by non-merchants,” he says. “In many cases they try to free the business by shifting investment and assets from things that don’t do anything to things that do and improve the customer proposition.” n

37%Entry into new businesses

37%Expand customer base

36%Expand geographic reach

34%Enhance Intellectual

Properties, or acquire new

technologies

25%Opportunistic-target

becomes available

16%Acquiring additional

supply chain elements

25%Opportunistic-target

becomes available

16%Acquiring additional

supply chain elements

WHAT’S DRIVING ACQUISITIONS IN 2016?

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We’re making adi�erence

Albertsons Companies is focused on the challenges of food waste to help shrink our environmental footprint while

addressing hunger in America.

Our backhaul process picks up reusable trays and recyclables at the point of product delivery. Recyclables are collected and sent to the appropriate recycler, composter, or farmer for reuse, resulting in:

• Reduced GHG emissions• Over 71.8 million pounds of food donated• Fewer trucks on the road• 475,491 tons of recycled materials diverted from land�ll (2014)

How we do it

Diverted from landfill

31 tonsALUMINIUM

134,494 tonsMISC RECYCLING

*of waste kept out of land�lls as of 2014 from Safeway stores alone

228,540 tonsCARDBOARD

8,198 tonsPLASTIC BAGS

84,655 tonsCOMPOST

475,491+ tons*

19,573 tonsANIMAL FEED

Reducing food waste is the right thing to do for our communities, our customers,

the environment, and for California.

Food donated

71.8 million lbsIN CALIFORNIA ALONE!

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F E AT U R E T I T L EBYL INE/CONTINUED

It wasn’t so long ago that sustainability for a grocer

meant breaking down cardboard for scrap collectors

and giving the local Boy Scout troop a spot near the

store entrance to collect bottles and cans. Locating

a market for recycled wood and metal was almost

considered progressive.

Today, sustainability has become an essential

part of every business across the nation.

California consumers lead the nation in the

demand for preservation of our planet and its

resources; sustainability is no longer an option,

it’s an expectation for customers. And, where our

customers go, as they say, we follow.

Take Kroger, for example. In the middle of their

49-acre campus in Compton, Calif., sits the first-

in-the-state anaerobic digester. Billions of bugs

cleaning up the environment under the Ralphs and

Food4Less banner.

“Our perishable food program donated $4 million

of food to our community partners last year,” states

Kendra Doyel, Vice President of Public Relations and

Government Affairs for Ralphs/Food4Less. “Food

which can’t be sold or donated is run through our

anaerobic digester which converts food to fuel. This

fuel powers about 20 percent of our home offices,

our warehouse, the creamery and the transportation

center – all located at our Compton facility.”

“The digester has reduced diesel truck trips by

500,0000 miles each year – miles we used to drive to

take food to our composting center. It also cleans up

about 29,000 gallons of wastewater, every day, from

our creamery.”

By Cassandra Pye

For years now, there’s been a quiet movement under way on the part of the food industry to save the planet.

These efforts are important to consumers, they shave operating costs in a variety of ways, they align with a complex and intricate supply chain and they’re having a real impact on the industry’s environmental footprint. Best of all, these sustainability efforts are…well, sustainable.

iStock

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Wastewater from the creamery is mixed in with food

waste – including packaging – creating a “milkshake”

which is heated and fed to the bugs. Upwards of 150

tons of food waste is processed each day. The result:

the equivalent of power for 8,000 homes, annually, is

produced to support the facility.

And, clean water – a byproduct of the process – is

reused. Doyel says the company is now looking at

ways to eventually use particulate matter as compost.

The processor sits in a compact space and, according

to Doyel, is both odorless and emits very little noise.

“This is a fairly unique project,” says Doyel. “There

are anaerobic digesters all over the world but this one

sits in the middle of an urban area, surrounded by

businesses, homes and people. We’ve been operating

the project successfully for three years.”

Ralphs/Food4Less also engages in traditional

sustainable practices, recycling about 7 million

pounds of cardboard, plastic and metal, annually.

“And, we’re also helping our customers live a more

green lifestyle by offering recycling inside our

stores, offering green products – like light bulbs, for

example – which help them to save energy,” she says.

For Ralphs, she adds, sustainability means striving

to reduce the company’s impact on the environment

by using natural resources responsibly while

minimizing waste in their operations.

Brian Dowling, Vice President for Public Affairs for

Albertsons-Safeway, says the term sustainability, over

the last decade, has evolved.

“I would say sustainability wasn’t a term that was

tossed around too much,” Dowling said. “But if I look

at what companies did 10 years back it was about the

environmental footprint – so recycling, collecting

cans, cardboard, etc.

“If you look at where it is today, it’s an opportunity

for companies to create value for their organization

and do good for the broader community at the

same time.”

Albertsons-Safeway, whose 14 operating divisions

include Acme, Shaw’s and Jewel in the east and

midwest and Vons on the west coast, has taken

environmental stewardship to a whole new level.

“Sustainability has been at the root of what we do –

for a long time,” says Dowling. “Recycling cardboard

and plastic didn’t get headlines but our efforts in

recent years – on the seafood side and, more recently,

on the human trafficking side of the business – are

taking things to a whole different level.”

Whole different level, indeed. The nation’s second-

largest grocery chain is close to hitting

an unprecedented target for seafood.

“In the seafood space, our goal was to

have all of our fresh and frozen label

sustainably-sourced by end of 2015,”

states Dowling. “Although we did not hit

our target for fresh, we were pretty darn

close with our frozen – at 99 percent.”

Dowling says that in fresh [seafood], the

challenge is there aren’t good alternatives

available yet.

“So we’re really working hard with that

industry and that objective continues

– especially now that we’re a larger

company,” he says. “We don’t have a goal

yet, but we’re working with FishWise and

expect to wrap up by June.”

FishWise is a sustainable seafood

consultancy that promotes the health and

recovery of ocean ecosystems through

environmentally responsible practices.

Dowling says Albertsons-Safeway will

establish a goal for all of its banners.

Sustainability efforts are in play on land,

as well as sea.

“Legacy Safeway stores did recycling,

starting in the 1960s,” recalls Dowling.

“In California, we have the opportunity

to also backhaul and aggregate materials like

cardboard, soft and hard plastic, metal, wood. But,

we’re also focusing more on food waste.”

Dowling says Albertsons is taking a tiered approach –

expanding its partnerships with food banks to be able

to get food that’s at the point where it can’t sell it but

can get it to food pantries by sell-by dates.

“We’re always looking for new alternatives; if we can’t

send product to a food bank but don’t want to send to

a landfill, then we can compost it or send to farmers

for animal feed,” he says. “Our objective is to move

towards zero-waste.”

JUST THE NUMBERS: ALBERTSONS -SAFEWAY

n Over 22 million pounds of soft plastic (plastic film and grocery bags) recycled.

n Well over 104,000 tons sent to compost or animal feed.

n 29 million pounds of seafood transferred to responsible sources since 2009.

n First retailer in the world to offer Fair Trade Certified seafood – sushi grade tuna.

n Set a goal to source 4.8 million pounds of CSPO (certified sustainable palm oil) in 2016 that is either mass-balance and or segregated for Own Brand items.

n Set a goal to source only cage-free eggs for store operations by 2025, based on available supply.

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S AV I N G T H E P L A N E T … Q U I E T LYCONTINUED

The Albertsons-Safeway distribution facility in Tracy,

Calif., is one of several which has achieved zero-waste

status.

Dowling says his company is now constantly

examining every part of their organization –

products, community, employees – against what

can be done for the planet.

“There’s also been a shift in consumer attitudes and

what they expect companies to do in this area,” he

asserts. “There are real issues in seafood supply so we

want to provide product for our customers but do so

in a responsible way.”

The Albertsons-Safeway partnership with FishWise

was established in 2009 and the organization,

Dowling states, continues to counsel and advise

the company on seafood issues. He adds that the

organization is showing retailers ways to continue to

sell a lot of product

but do so in

a responsible

way – for many

years to come.

“We’re a penny-

on-the-sale

business,” says

Dowling. “That

makes us look

carefully at

opportunities to

save on water,

energy, shipping

costs. All these

efforts make

good sense for the business; there’s a duality which

drives what we do.”

For Richard Draeger, Chief Operating Officer,

Draeger’s Market, San Mateo, Calif., sustainability is

a collection of practices.

“It’s not one thing, it’s pretty much everything,” he

suggests. “It includes energy-efficiency initiatives,

recycling programs – including containers but

also hazardous waste. It has a lot to do with energy

renewables that you employ as part of your overall

energy consumption.

“We don’t want to burn energy,” he says. “After labor

and labor-related costs, it’s the next highest line item

for our company. We’re trying to mitigate cost.”

And, he says, his company is looking at everything

because as a small company “we’re looking at decent

paybacks – often five years for many of these items,”

he states.

“We’ve got R-30 [insulation] on our rooftops and

R-19 on our walls,” Draeger says. “We’re looking at

photovoltaic energy production for our facilities and

at the moment we are looking at “Bloom Boxes”* –

cogeneration of energy derived from natural gas – for

our operation.”

Draeger says LED lighting – lighting, in general, for

that matter – is incredibly important to lower costs

and sustainability.

“We’ve changed lighting, literally, throughout our

stores,” he says. “There will not be a traditional light

anywhere. For our Los Altos store (where they’re

rebuilding the store, from the ground up, adding

25 percent more square footage), we’re going to

include photovoltaic energy production, we’re also

considering Bloom Boxes and anything else that’s

sustainable.”

Including food.

“The food we select for sale is sustainable,” says

Draeger. “The more we accept from local vendors

– especially produce that’s considered much more

sustainable as those from distance sources – the

better. We’re also using better refrigeration gases;

so much has changed – including those more

dangerous gases from years ago.”

What do Draeger’s’ customers think?

“Consumer response is always positive,” Draeger

insists. “They like to see that you employ sustainable

practices. For example, we’ve just started on closing

our open merchandised refrigerated fixtures

with doors – really nice glass doors on all of our

refrigeration fixtures – that’s sustainable.”

Draeger also thinks that when a customer looks at

sustainability, they’re really looking at the types of

foods a retailer is presenting to them in the produce

department – buying locally, and folks who are within

Continued from p. 31

Ralphs Grocery Company’s anaerobic digester.

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S AV I N G T H E P L A N E T … Q U I E T LY

60-100 miles of your store. He says consumers notice

that and they’re willing to pay for it.

“We don’t waste a whole lot of food either, to be

honest with you,” says Draeger. “Most of it is

backhauled. We get rid of a lot of organic waste that

way. Not all communities we’re in provide backhaul

to the farms. It’s expensive to do that for a small

retailer. But, if you’ve got a community providing the

service, it’s more cost effective to do it that way.”

Draegers recycles materials often.

“Those things aren’t even on the radar,” says Draeger.

“They’re happening on the natural and have been for

a long time.”

The updated Los Altos store will have more natural

lights by way of skylights and windows. And, there

will be charging stations for electric vehicles (EVs).

“Again, these communities are maturing and these

technologies are now available – so we provide the

support services to our customers.”

Draeger also poses a challenge to the industry.

“The better we become at messaging [about] what it is

that we do, the greater customer appreciation would

be,” he insists. “That’s the trick. You do these things

as a business and don’t necessarily tout what you do.

It’s important to do that.”

Draeger says they tell their customers about his

company’s reusable bag program and some of the

energy efficiency programs they carry out with

the support of Pacific Gas and Electric Company –

including electronic control monitors and variable

speed compression motors, all aimed at lowering

energy usage – but they can always tell customers

more of that story.

Albertsons’ Brian Dowling also sees a future where

retailers begin to collaborate more on these efforts.

“Early on,” he says, “the work we did made us

independent of other retailers. It’s not going to

happen that way anymore.

“The supply chain is where there is greater

opportunity now for companies and others to have

an impact,” says Dowling. “We were looking at our

own four walls and spent the last few years reducing

our footprint through our own initiatives. Now, we’re

looking at the supply web – that complex mix of all

involved – and deciding where opportunities for

sustainable efforts exist.”

Human trafficking in the seafood supply chain, for

example, is complex and difficult to monitor, says

Dowling. Specifically, where it’s happening and to

whom.

“That’s where the opportunity exists now,” he says.

“There’s so much more collaboration possible that

includes the industry, governments, NGOs and

others. We need everyone at the table to discuss these

issues because they are larger than our companies.”

Doyel, Dowling and Draeger mimicked each other’s

remarks on the question of why sustainability.

Doyel: “These efforts are in line with our core values

for our customer and our community.”

Dowling: “They are good for the planet and good for

our business, too.”

Draeger: “We’re doing good and doing good for the

business.”

In all cases, customers win. n

Cassandra Pye, is CEO of 3.14 Communications, LLC, a regular contributor to New Jersey Grocer.

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“The Food Futures Lab is one of our longest

running programs,” said Rebecca Chesney,

research manager for the Lab, who also oversees

the group’s 10-year forecast program.

“We look at cities, food, water issues and every

year, we take a different angle,” she said. “This

year one of our goals is to focus on kids and how

these digital natives will impact the business

model we use and how to communicate with

them.”

Other studies have also led IFTF into areas that

might be closer to impacting today’s food retailers

when it comes to consumers and employees.

“Our workable futures initiative is looking at the

‘gig’ or on-demand economy and how it’s going to

affect things like health insurance and social safety

nets,” Chesney said.

“Basically, the work landscape is changing and

more people are becoming freelancers and moving

away from the traditional jobs and locations.

A lot of people are trying to figure out what benefit

structure they’ll need in the future and how to do

things differently.”

The goal, according to Chesney, is to get people to

think beyond next week or the next quarter when

shaping their (business) strategies.

Furthermore, the loss of traditional benefits or

reduction of the traditional 9–5 workday will start

to impact what people eat at lunch, how they

socialize and redefine work and school days.

“For example,” she said, “Uber drivers might

make most of their money at night. In this kind of

fragmented workplace, we have to look at the types

of foods they need, where they’re eating them and

what they’re shopping for.”

That means mapping food experiences – not only

eating food but also packaging branding, accessing

food – the entire food experience.

The eminent British statesman Winston Churchill once said: “It’s always wise to look ahead, but difficult to look further than you can see.”

Difficult as it may be, but that’s exactly what the Institute for The Future, a Palo Alto-based think tank and non-profit research organization, is doing through diverse projects ranging from global economics and generational trends to technological developments – all of which can yield interesting insights into where and how people will live, eat and shop in the decades to come.

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By Len Lewis

Continued from p. 37

E X P L O R I N G T O M O R R O W T O D AY BY LEN LEWIS/CONTINUED

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“And access to food impacts where we get our food,”

she added. “Retailers need to think about that today.“

The Institute is not only tracking the further

fragmentation of retail, but the next iteration of

retailing, which is likely to be a mixture of on-demand

and fully-automated food delivery, the latter of which

could be about 10 years away, according to Chesney.

As an example, she cited Amazon’s Subscribe and

Save program which offers consumers up to 15

percent savings on recurring delivery of everyday

items like toilet paper, paper towels, flour and

baby wipes.

On another level, Amazon Dash is partnering with

companies like Britta to develop a filter that can track

how much water a consumer is filtering using the

company’s system.

“It’s tied to your Amazon account and knows how

much water you’re using, when you will need filters

and automatically orders them for you,” she said.

“It’s a different type of online retail that changes

the extent to which consumers are involved in

shopping decisions.”

Cheney said itt’s a new purchasing pathway that’s not

been fully researched and brings up the question of

how much consumers will care about brands in the

future and whether they will simply tell Amazon to

send them the cheapest item in any given category.

However, customer involvement could increase in a

different way.

Consider a San Francisco-based company called

Betabrand, a clothing designer with a platform

similar to Kickstarter.

“You post an idea of what you would like then

other people can build on it with their ideas to help

designers refine the item.” Chesney noted. “Once an

item gets enough votes it moves to a crowdfunding

stage for prototype designs.”

If it reaches a certain threshold and the company

can guarantee a minimum market, Cheseny says,

Betabrand will manufacture the item and apply the

amount you donated towards the purchase of the

finished item.

“This way the company can reduce space, inventory

costs and risk. It’s almost the opposite of automated

retail yet another online environment to watch,” she

said, noting that many people are already funding

food products on Kickstarter.

“Even if people are not purchasing, they are involved

in a community,” Chesney said. “We call it engaged

shopping. They are not just consumers they are

actually participating in the development of a

product. Betabrands is a signal of the future. We look

for those signals and that’s how we do our forecasts.”

People want to be able to access whatever kind of food

they want at any given time. This isn’t just a 24-hour

grocery store. The idea of convenience has changed

and retailers need to rethink what it really means.

Another field of study for the Institute is automation

and automated shopping via “Body Area Networks,”

as Chesney called it.

“Think about what’s becoming networked and all the

different technologies that are connected,” she said.

“Today it’s a smartphone or Fitbit. But people are

working on clothing with sensors to detect hydration

levels when you’re working out. There are skin or

injectable sensors that could track biometrics and

detect illnesses. All these technologies on or in our

bodies will be connected to the other technology

around us.”

Chesney said people are focused on understanding

e-commerce and online retailing, but “the thing to

understand now is what information is being tracked

about health and nutrition from the different fitness

apps that are on the smartphone. The question is how

retailers can be involved with that.”

All of these things add up to the next step in data

analytics.

“It will be much more nuanced and will offer views

into preferences and tastes for different types of

consumers,” she said. n

Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a frequent contributor to New Jersey Grocer and several retail publications and trade groups in the U.S. and Europe.

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California Grocer: The industry seems to have a

love affair with anything tagged local. What do

consumers really think?

Kummer: “It’s more important than ever even

though consumers don’t really know what it

means. Everyone has their own definition of how

many miles around the store or restaurant it should

come from. Tut they like the idea of helping local

economies. It’s the main reason I care about it.”

Is there a mileage number?

“Some people say 40 miles some say 100. It depends

on where the settlements are around you. You’re

helping keep a place that’s not very far from your

home thriving.”

What about environmental issues?

“I’m not entirely convinced buying local is better for

the environment. It can use more resources than

big farms that offer more economies of scale. And

shipping in huge trucks consumes much less energy

per unit to get to a store or restaurant.”

The whole Chipotle E.coli contamination has put

a spotlight on safety of local products.

“That’s complicated. Organic and local doesn’t mean

safer. Unfortunately, that’s part of the lesson learned

from Chipotle. It generally means it’s better for the

people who raise your food. That’s what I think

consumers should be focused on.”

Is local overrated considering availability of fresh

products from around the world these days?

“Undefined but not overrated. But I think that people

are asking how companies treat their employees

and put a premium on hiring people from the

community. That’s what it means to me. It’s about

making sure people are able to live comfortably

in a community that’s supported by community

services. It’s about farms, small businesses, or artisan

producers creating jobs locally rather than seeing

everything move to cities or big packing centers.”

I get the impression that ‘local’ has just become

a marketing and advertising buzzword?

“I think that’s absolutely true. People have to make

up their own minds by going to their stores and

asking questions. It’s up to consumers to enforce

the definition.”

Are they asking questions?

“No, they just take their word for it.”

Who’s driving local food trends?

“I think it’s Millennials. It starts with concerns about

their own health and that of their families. Then, it’s

about how much money they’re spending on food

and then it’s about incorporating social ideals.”

What’s considered healthy food? Will the

argument over GMOs continue?

“I think the GMO argument will go away regardless

of the demographic group. Lower income people

are equally concerned with health and fresh

products. They may not have access to it and lack

time to make it but they are aware and concerned.”

What do you see coming in new food trends?

“A lot of it was what I saw at the recent Fancy Food

Show – Paleo diets, higher fat meats. There’s much

less fear of fat today so people are returning to meat.

1 5 M I N U T E S W I T H …

Corby Kummer is an acclaimed food journalist, whose books and columns in The Atlantic,

Boston magazine and the New Republic have become must-reads for foodies, amateur and

professional chefs. Kummer, who isn’t shy about sharing his views on what’s being sold and

how, spoke with California Grocer about a few of his favorite issues.

Corby Kummer

Continued on p. 42

BY LEN LEWIS

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41

Continued from p. 41

Gluten-free is still roaring along and I don’t see a

reduction. But I saw organic leveling out and not as

much product with whole grains as two years ago.”

Natural and organic is price of entry in retailing

these days.

Yes. But organic what?

As a food writer do you think consumers are

interested in getting back in the kitchen and

doing more prep?

“No, I don’t think they are. It’s just wishful thinking

on our part. It’s not that this generation doesn’t

want to return to home cooking, there’s just a

certain fear of it. There’s always the excuse there’s

no time, and buzzwords like local are often proxies

or excuses for not making food for your family.”

Anything retailers can do to get people back

in kitchen?

“I think there should be more chopped, fresh

vegetables. Also, cooking classes at supermarkets,

and community centers would help, as well as

demos in stores if retailers are willing to make the

investment. These ideas have been around a long

time. Generally, what gets people to cook again is

when they realize they can save money by doing it

themselves.”

What do you think about home delivered

meal kits?

“I did a recent column on that in the New Republic. I

asked why anyone would ‘pay a premium for a large

box filled with ice packs and little baggies and tiny

shampoo-sized bottles whose contents will produce

a few meals and a lot to recycle.’ Clearly, they are

competing with supermarkets. I’ve tried a variety of

meals from four different companies and what they

had in common was a lot of packaging. It has its

advantages, but I wouldn’t buy another meal kit.” n

1 5 M I N U T E S W I T H …|

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To schedule an appointment, contact:Heather DoughertyCommercial Solutions Group | Food Waste SpecialistsM 216-200-9439 | Heather.Dougherty@emerson.com The Emerson logo is a trademark and a service mark of Emerson Electric Co. All rights reserved.