CGA GIRDING FOR CHANGE IN ITS SECOND CENTURY

SACRAMENTO , Calif. -- The California Grocers Association here is ending its first century by laying the foundation for its second with a new strategic plan aimed at providing flexibility for the organization to change as the industry changes.Among the initiatives the CGA is considering are broadening its outreach to other state associations, seeking new sources of revenue, finding or developing new

SACRAMENTO , Calif. -- The California Grocers Association here is ending its first century by laying the foundation for its second with a new strategic plan aimed at providing flexibility for the organization to change as the industry changes.

Among the initiatives the CGA is considering are broadening its outreach to other state associations, seeking new sources of revenue, finding or developing new educational programs for its members, and increasing member participation at the grass-roots level.

According to Peter Larkin, CGA president, the new plan is designed to enable the association to operate more as a business than simply as a service organization. "It's not that anything is really broken -- we just feel the organization can be improved," Larkin explained.

"The industry is continuing to change, and we want to make sure CGA reflects those changes and is able to respond. If we continue to do what we've always done, we may miss opportunities to make improvements."

Larkin spoke with SN on the eve of the association's 100th convention and trade show, scheduled for yesterday through Wednesday in Las Vegas. For the second year in a row, the meeting will be open to members of state associations throughout the 11 Western states -- which represent more than 20% of the U.S. population and 21% of total food sales and, for the first time, it will convene under a new name.

"Our convention is now called the Western Food Exposition, sponsored by CGA, because there was a void among other state associations who have discontinued either their conventions or trade shows or both," Larkin explained.

The CGA worked more closely this year with 10 other state associations in the West and changed the convention name to reflect its broader scope, Larkin said.

Along with the name change, the convention will have eight co-sponsors along with the CGA: Arizona Food Marketing Alliance, Idaho Retailers Association, Montana Food Distributors, Korean-American Grocers Association, Northern California Grocers Association, Retail Association of Nevada, Rocky Mountain Food Dealers Association (representing both Colorado and Wyoming) and Utah Food Industry Association.

Asked why state associations in three other Western states invited to the meeting -- Washington, Oregon and New Mexico -- are not listed as co-sponsors, Larkin declined comment.

However, industry sources said each of those associations has its own convention and doesn't want to lose support for its own events by encouraging members to attend another convention.

Larkin said he expects this year's meeting to attract a bigger turnout among out-of-state attendees than in prior years. "Some associations have used the last two conventions to scout us out and see what we offer, and several have now decided to bring larger groups, particularly the co-sponsors.

"But attendance from other associations has been building gradually, and we anticipate a very noticeable difference this year."

He said he expects total convention attendance to be up 25% over last year and exhibitor space to be up almost 10%.

Another notable difference at this year's meeting, he added, will be increased chain support. "In fact, Costco is holding a buyers meeting to coincide with our convention," Larkin said.

The CGA's strategic plan is only its second ever, covering the years 2000 and 2001. The first plan, adopted in 1997, "was a roadmap that takes us through the end of 1999," Larkin said. "But the board thought it was a good idea to revisit the plan and to analyze our strengths and weaknesses and the opportunities and threats we face, to develop ideas and concepts for the future."

The plan also includes the CGA's first-ever mission statement, which says the CGA "represent(s) all segments of the grocery industry by providing proactive leadership, education, advocacy and information. As a united voice, the CGA is a powerful force serving the grocery-distribution system, public and elected officials and the media to support the industry and to ensure the public trust."

Beyond the mission statement, the strategic plan lists six goals to move the association forward:.

To communicate membership obligations to the board by defining the board's obligations and to establish a screening process for future board candidates, "so there's a uniform understanding of what board members are expected to do," Larkin explained.

To create more productive board-member participation, including development of a mentoring program, determining the interests of each director and enabling each to pursue those interests.

To establish and monitor the longterm solvency and integrity of the organization by establishing a reserve fund and by creating financial alternatives to CGA's traditional heavy reliance on convention revenues.

According to Larkin, the CGA was "financially challenged" when he joined the association in 1996, having lost money for several years, although he said he expects the association to be in the black this year.

"The organization itself remains very solid, and membership dues are up this year, but we don't have a reserve fund, as most similar organizations do -- a rainy-day fund to fall back on if there's a service disruption."

Membership dues are currently the CGA's largest contributor to the bottom line, with convention revenues second and revenues from advertising and seminars third, Larkin said. "We have a plan to build and grow the convention, but the board wants to look at how other organizations are financed today and explore alternatives so we're not so reliant on any one area," he explained.

Larkin said the board expects to establish options and to look for financial opportunities to raise additional funding. "It will look at other organizations to see if other success stories can help us balance the equation," he explained.

To initiate strong educational programs by developing a board-level education advisory committee made up of a cross-section of CGA members, including chains, independents, suppliers and wholesalers, "to determine what our members' educational needs are and then to determine what programs already exist to address those needs," Larkin said.

"If programs already exist, we don't want to duplicate them -- we'd rather partner with the providers to help bring them to our members. And if there are areas where the members' needs are not being served, the board will help determine if we should create new programs ourselves to meet those needs."

The CGA is already doing that, he said -- sponsoring a produce seminar in conjunction with the Western Growers Association, a loss-prevention seminar in partnership with the Food Marketing Institute and a category management program with the National Association of Convenience Stores.

Besides looking at educational programs in a traditional way -- holding seminars and convention workshops where people come to a location to hear presentations -- the CGA also plans to look at education in a broader context by using CD-roms and interactive training devices, Larkin said.

"In the next couple of years we expect to see a fairly dramatic expansion of our educational offerings, and that will greatly increase the value of CGA membership," he added.

To explore opportunities for CGA growth, including looking at opportunities in the Western United States and possibly considering a change in the CGA's name.

"Besides the educational programs and partnerships we hope to develop for CGA, there may be opportunities to include other Western state associations in those programs," Larkin said. "If we do a program with the Western Growers Association, for example, maybe we should involve state associations from Oregon, Washington and Arizona so we can provide the same educational opportunities to their members."

He said the CGA doesn't want to dilute what it's doing for its own members in California, "but if it makes sense and benefits all parties, we don't want to pass opportunities by.

"We're also looking creatively at services and the way the industry is structured. We probably don't have the resources to effectively develop programs on a state-by-state basis, but we may be able to find ways to do things together.

"I'm not sure what opportunities may exist, but once our board identifies those opportunities, we will reach out to our peers in other states and discuss things with them, because it can't just make sense for CGA -- it needs to make sense for all involved."

As for a possible change in the CGA's name, Larkin said many state associations have changed their names in the last few years to reflect a broader membership base -- the Arizona Retail Grocers Association, for example, which changed its name to the Arizona Food Marketing Alliance several years ago.

"It may be that the name CGA is too limiting," Larkin said. "On the other hand, it's been good enough for 100 years, and we don't want to make any decisions lightly."

To increase active board participation in all government-relations activities.

"Government relations and political activity are the core reasons we exist," Larkin said, "and the board wants to maintain that focus and help us move to the next level. We are very effective in Sacramento, as well as at the city and county levels, but we feel we can do more and be even more effective at all levels."

One area for possible improvement, he said, would be the ability for CGA members to communicate with state legislators through more grass-roots involvement, Larkin said.

"The food industry is fortunate because members have stores in every city and county, and if we do a better job of engaging more of our members in the process, it will greatly increase our effectiveness in everything we try to do."

On the legislative front, Larkin cited two issues the CGA worked on this year: a new beverage container law and a loyalty-card proposal.

The recycling bill, which was set to expire last January, was extended one more year by emergency legislation that gave the industry time "to go back to the drawing board and find a longterm solution to industry disagreements," Larkin said.

The resulting legislation made several changes to the existing program that contained pluses and minuses for container manufacturers and recyclers, he pointed out.

The most controversial portion of the new law, Larkin said, expands recycling to cover additional containers, including carbonated and noncarbonated water, noncarbonated soft drinks and sports drinks, noncarbonated fruit drinks and coffee and tea drinks.

The CGA supported the legislation, despite some reservations, Larkin said, "because it made some important changes in the convenience zones and handling fees."

Convenience zones are the areas around California supermarkets that must each have a recycling center, run by either the retailer or, as is done throughout the state, by an independent recylcer, "and the bill supports and strengthens that system," Larkin said.

"We believe the new bill makes it easier to exempt certain zones and therefore makes it even less likely supermarkets will have to take the containers back into their stores," Larkin explained. "And it pays the recyclers higher handling fees, enabling them to be more successful and making it less likely again that the stores will have to take the cans and bottles back."

Regarding loyalty cards, Larkin said, there were two bills at the beginning of the legislative system "that would have made it very expensive and impractical for retailers to have a card program at all, and there was industry opposition to both.

"It was a long, complicated process, but CGA played a major role in working with the our members and legislators to ensure the ultimate bill did not unintentionally prohibit or unduly restrict loyalty-card programs.

"In the end only one bill passed, and all it does is prohibit retailers from selling or sharing data with third parties if the data can be traced back to individual cardholders."