RESTON, Va. -- The National Grocers Association here is optimistic that 2001 will be a year of significant and positive progress.
Thomas K. Zaucha, president and chief executive officer, said the industry is optimistic that the repeal of the estate tax could occur this year, and there's also reason to expect the Federal Trade Commission to give independent operators parity with chains in acquiring divested stores and enforcing antitrust laws.
Zaucha was interviewed before this week's NGA Annual Convention and Concept Show in Dallas.
Repealing the estate tax has been an NGA priority for years, Zaucha said, "because it would provide an incentive for family businesses [to endure] by eliminating the need to worry about recapitalizing and instead enabling families to reinvest in the business. In essence, repealing the tax will provide a major source of energy for independents."
The industry has won approval on the repeal from both houses of Congress in the last two sessions, but the measure was never signed by President Clinton, Zaucha pointed out.
"But with President Bush in the White House, I think we have darn good reason to be upbeat because he supported the estate tax repeal during the campaign, and he's made tax cuts a major priority."
What's been most encouraging, Zaucha said, is the repeal effort has had bipartisan support, "so the message is getting across that an investment in the future of the family business is an investment in the economy, not a bailout for the rich. In fact, the evidence is overwhelming that family businesses are actually threatened by the estate tax."
To ensure the vitality of family-owned businesses, Zaucha said NGA has been encouraging families that want to sell to consider selling to an employee or someone else willing to keep the business independent.
"Statistics indicate many businesses don't last into the second and third generation," he said, "but if we look at the future of the independent grocer and say we'll only carry on if someone from the family runs the company, then there won't be enough managers to go around. So NGA is trying to provide a forum for families to make the right decisions -- to consider letting a new entrepreneur from within the company take over a family business if the family doesn't want to continue.
"There are also district managers and store managers at the chain-store level that might be more interested in working with community-based retail companies, with the intention of finding investment opportunities. But they must be aggressive in going after it. We can't allow attrition to take place.
"Owning your own business is still part of the American Dream, and we want to make sure we communicate that to as many managers in the industry today as we can, so they can begin looking for opportunities in the independent sector."
Another NGA initiative that seems to be bearing some fruit is the effort to maintain a level playing field between chains and independents.
To achieve parity, NGA and other associations have been trying to educate members of the Federal Trade Commission about their concerns over market-share concentration in the grocery industry, and Zaucha said he sees reason for optimism.
"What's most beneficial to consumers and the industry is a food system that's diversified, and our commitment to that value has been reflected in the change in attitude we're beginning to see toward mega-mergers and acquisitions," he said.
"We think we've been effective in explaining to the FTC the need to change the rules as they relate to store divestitures when mergers occur. There's absolutely no question the FTC's 'clean sweep' approach [in which it prefers to see divested stores go to a single buyer rather than to a variety of independent operators or a wholesaler] precludes independent operators and regional chains from qualifying for stores after divestiture orders.
"We feel that ultimately will lessen competition, and we've been able to communicate that to the commissioners."
NGA officials spent a day briefing FTC commissioners in October, Zaucha said, "and we made significant progress. For example, the FTC didn't appreciate the fact that discount stores, clubs and drugstores all carry many of the same stock-keeping units as supermarkets, but we demonstrated to them just how much overlap there really is as part of our effort to make sure they give all players the opportunity to acquire divested stores to maintain competition.
"We also discussed the importance of uniform enforcement of Robinson-Patman antitrust laws, which represents a significant leveling of the playing field as it relates to trade practices -- the fact pricing, promotions, packaging and product availability should be offered to independent retailers and wholesalers on a proportional and equal basis to the chains. And we pointed out it would be a violation if some major companies are making excessive demands for special treatment."
Zaucha also said NGA is making progress finding ways to use technology to expand independent retail services, including:
Reaching agreement with manufacturers to use NGA's Web site to provide retail members with links to direct access to information on new products, merchandising strategies, category management programs and in-store equipment, "so even the smallest rural store can have access to the same information his largest competitor has," Zaucha said. He said the association hopes to announce its first link with a manufacturer shortly.
Offering members a pre-authorized debit card program that enables a company with a check-cashing card to add a debit-card function using the store's own name or a company with a loyalty card to offer payment features through a local bank.
Introducing Schoolpop, an Internet-based program that allows shoppers to sign on with a credit card and make contributions to local schools based on purchases at a variety of retail locations, "so the independent has the ability to develop a marketing opportunity with manufacturers, which is another way of leveling the playing field through innovative merchandising and new technology."
Forming a partnership with SupermarketLearning.com, Farmingdale, N.Y., to provide an educational resource for independent operators dealing with a broad range of operating issues, including sexual harassment, front-end service, food safety and sanitation.
Linking 7,000 retailers to an on-line electronic payment system with the ability to make credit and debit transactions through their own systems, "which makes the independent as competitive as anyone," Zaucha said.
Making a program available from Financial Management Services, Pasadena, Md., which allows independents to outsource accounting functions or receive timely financial and management reports, thereby eliminating the need to invest in their own software.
