ARLINGTON, Va. — For 25 years the National Grocers Association has been fighting the good fight for equality of opportunity in an ever-consolidating industry, where big chains and alternative formats have come to dominate food retailing.
Most recently, NGA, which represents retail and wholesale grocers that make up the independent sector of food distribution, was quick to argue against Wal-Mart Stores' attempt to trademark “EDLP,” an abbreviation for “everyday low price,” a pricing policy used by many retailers. NGA said the granting of the trademark would unfairly restrict everyone's ability to market and advertise their goods and services; therefore, it would be unfair for a single company to be given the exclusive right to use the term to the exclusion of others.
NGA is also vigorously fighting to end soaring interchange fees charged by MasterCard and Visa on electronic fund transfers, and is calling for a level playing field when it comes to the reduced transaction fee costs that have reportedly been negotiated with some larger companies.
The organization also opposes granting Wal-Mart a Utah charter as an industrial loan company, which would have the potential of enabling Wal-Mart to begin operating interstate branch banks in its stores.
“I have always argued that every industry segment deserves and will demand full representation and full service, including the chains and Wal-Mart. Most certainly, it includes independent, privately held community-based companies that make up a significant segment of this industry,” said Thomas K. Zaucha, an NGA founder and the association's president and chief executive officer.
In looking back over the last quarter-century, Zaucha said NGA's biggest accomplishment has been “being a very consistent, informative and credible organization in terms of making policy-makers understand and appreciate issues that affect the fairness of the marketplace.”
NGA has been a staunch supporter of the federal Robinson-Patman Act, which prohibits anticompetitive practices — specifically price discrimination — by producers. The law and its enforcement have undergone challenges over the years, but it nonetheless provides some leverage in maintaining a level playing field for independents.
Zaucha believes the principles of Robinson-Patman have as much application to the largest manufacturer as they do to the smallest one-store operator in protecting each of them against the pressures of power buyers.
NGA has also been diligent in monitoring tax bills that may favor public companies over private ones.
Hallmark issues for NGA have included obtaining fair tax policies, maintaining a level playing field and preserving a diversified marketplace, Zaucha said.
NGA was formed in October 1982, six years before the first Wal-Mart supercenter opened and five years after the formation of the Food Marketing Institute. The association was formed by a merger of the National Association of Retail Grocers, representing mostly 1,200 independent retail members, and the Cooperative Food Distributors of America, representing 65 co-op wholesale members. The National American Wholesale Grocers Association, representing some 1,200 voluntary wholesalers, took part in the initial merger talks, but decided to opt out.
At the time, Zaucha said, the attempt to bring the organizations under one umbrella was viewed as an “unholy alliance” by some. “It was like trying to get three different religions to sit down in the same pew together,” he said.
NGA would prove the naysayers wrong 25 years later. “What was an unholy experiment has proved there is more need to partner today than ever before,” Zaucha noted.
The association came into being during an era of pre-consolidation, when there were many more retail distribution companies, and before the big discounters — namely Wal-Mart — and alternative formats began selling food.
There was a need then, Zaucha said, for independents to have a much stronger voice, especially when it came to public policy, and to have an organization that could offer more services and education. “The challenge was: How do you maximize your strengths and service while preserving the individual needs of an industry segment?”
Zaucha said the organization has stayed true to its mission and strategic objectives without making compromises. “Lots of good forethought went into making sure we had full representation for various constituencies that were interdependent upon one another. Our intent was to make that relationship more compatible,” he added.
While NGA has witnessed major industry consolidation over the years through mergers and acquisitions, in more recent times it has seen the unraveling of many unions, with Albertsons, Winn-Dixie, Southern Family Markets and Ahold's Tops Markets, to mention a few examples, selling off their store base. This has opened up opportunities for independents to take advantage of new real estate at significant cost savings.
In 1999, NGA broadened its definition of an independent to include the retailer's go-to-market philosophy and ownership structure, rather than a definition that just included the number, type and format of store or stores. Since its inception, the organization has grown from 800 to about 1,800 members, Zaucha said.
In 2004, NGA also redefined and updated its mission statement to emphasize diversity of competition as a better option than market concentration. The new mission also reflected “10 keys to retail success,” which included reinventing the supermarket as a lifestyle destination and creating various synergies to be more competitive.
Besides redefining itself, NGA several years ago revamped its annual convention and trade show by changing the format into a concept show that it calls Supermarket Synergies Showcase, or S3, which integrates concepts being shown on the trade show floor with the convention program.
Since the change in show format, NGA has enjoyed an 8% to 10% increase in show attendance over the last four years.
This year's show, scheduled for Jan. 26-Feb. 1 at Caesars Palace, Las Vegas, is expected to draw some 2,000 attendees; keynote speakers include former Secretary of State and Chairman of the Joint Chiefs of Staff Gen. Colin Powell; Phil Lempert, NBC's food critic; and Richard H. Lenny, president and CEO of Hershey Co., as well as chairman of the Grocery Manufacturers of America.
NGA has held its convention in Las Vegas for the past half-dozen years and has no immediate plans to change location. Zaucha was asked about the potential impact of FMI moving its convention to Las Vegas in 2008. “I think our audience and our program speak for themselves. Like the retailers, it's how do you differentiate. It's how do you service your members.”
A Grocer at Heart
If any one personality has come to be identified with the independent sector, it is Tom Zaucha, who was one of the original founders of the National Grocers Association, and has remained the head of the association since its inception.
Now, at age 62, the question remains: What happens to the NGA leadership when Zaucha departs?
Any new leadership will be determined by the executive committee and board, or a special committee may be appointed to conduct a search for a new president, Zaucha told SN.
However, with grocery retailing in his blood — his grandmother, a Polish immigrant, ran a grocery store in Warren, Ohio, where Zaucha lived for several years — Zaucha said he has no immediate plans to retire.
“I can't think of another business that reflects my personal philosophy than grocers,” said Zaucha, who said he highly respects the entrepreneurship of independents. “In business there needs to be balance between business success that is parallel to social responsibility, to your associates and the community.”
Zaucha said he would find it hard to work for other special interest groups. “I still have a passion and enjoyment in making sure entrepreneurs can be as successful as they can.”
— C.V.
