Key developments: Raised awareness of interchange fees; formed natural disaster and pandemic preparedness programs.
What's next: Reform estate tax and employer pension rules; push for voluntary country-of-origin labeling.
Many retailers will actually pay more for credit and debit card transactions this year than they'll make in profit.
"Everyone pays for interchange fees, even consumers who use cash and checks," said Hammonds, president and chief executive officer of the Food Marketing Institute, Washington. "It's a $30 billion subsidy each year designed for the [credit card] companies to run advertising and marketing programs and fund lucrative, expensive rewards programs for their highest-income cardholders. Credit card companies prohibit retailers from disclosing the fees on receipts, monthly statements or monthly records."
Hammonds contends interchange fees are anti-competitive and set in secret by Visa, MasterCard and the banks that issue their credit cards. Merchants are forced to build the cost of these fees - which average about 2% of the plastic-paying shopper's total grocery bill - into the cost of all transactions because credit card associations prohibit surcharges on plastic payments and prevent retailers from offering discounts to consumers who pay by cash or check.
"We're running drive-time radio spots in key senatorial districts and print advertisements in Washington to raise awareness on the Hill," Hammonds said. "We've been able to get the Senate Judiciary Committee to schedule hearings on the antitrust issue."
Hammonds was optimistic the hearing, scheduled for earlier this month, would effectively raise consumer awareness of the fee that goes largely undetected by shoppers.
Hammonds also hopes to use FMI's influence to reform estate tax and employer pension rules, and make country-of-origin labeling for fresh produce voluntary.
"We're also doing a great deal to help our members build their businesses by increasing sales," Hammonds said.
That's one of the objectives of FMI's recent Family Day partnership with The National Center on Addiction and Substance Abuse at Columbia University, New York.
"Eating with kids at home is the single most important thing that a family can do to help kids stay away from drugs and to increase their performance at school," he said. "Although Sept. 25 is 'Family Day,' we're not just focusing on this for one day; it's an ongoing commitment."
"We've successfully formed a Grocery Manufacturers Association partnership and have a system in place for natural disasters whether it be a fire, hurricane or flood," he said. "We've established contact numbers at GMA and FMI that retailers can call at any time for information on disasters, where to donate cash and how the industry is organizing a network to collect and distribute food donations."
FMI also has produced what Hammonds describes as the industry's most detailed set of guidelines for grocers to follow in preparing their own bird flu business continuity plans.
"We're starting a series of Webcasts and we may even do some face-to-face seminars if our members are interested in getting together and discussing their strategies," he said. "It's our opinion that these aren't really competitive issues but part of an industrywide responsibility to keep customers calm and well informed in the face of what would be a frightening health crisis."
With respect to FMI's annual trade show, Hammonds is optimistic the proposal to stage the exhibit portion of the show every other year, beginning in 2008, in different cities will be approved by the board.
"This is a great contribution made by the board committees after listening very carefully to exhibitors and members about how the industry is changing and so the forum must change also to reflect that," he said. "There will be a final vote on the plan in October but we're confident that they'll give final approval to that then."
Whether the issue is food safety or obesity, packaged food makers have found themselves at the center of front-burner issues this past year.
C. Manly Molpus, who retires at the end of this year after being their chief lobbyist for 16 years, has been instrumental in shaping the debates surrounding these issues. Through the Grocery Manufacturers Association in Washington, Molpus has advocated for the Uniformity for Food Act, which would establish national labeling standards. A uniformity bill passed the House of Representatives and now awaits Senate approval.
The GMA's president and chief executive officer also called for initiatives to lower the obesity rate by improving nutrition and promoting healthy lifestyles, while proposing tighter self-regulation of advertising by GMA members.
Hershey Co. Chairman, President and CEO Richard Lenny, who is the current GMA board chairman, credited Molpus with broadening the obesity debate by shifting the focus beyond manufacturers to lifestyles, consumer choices and retailers' stake in the debate.
"I think anytime you take a stand publicly on an issue you think is publicly charged and could pit suppliers against customers, that's a risky proposition," Lenny said.
Lenny also credits Molpus with helping advance the GMA's planned merger with the Food Products Association, which is expected to take effect Jan. 1.
"I think the fact Manly could eloquently state why this was beneficial carried a lot of weight with everybody on our board," Lenny said.
Molpus also pointed to two, perhaps less obvious, GMA accomplishments. Its ongoing communication with other trade groups has helped reduce tensions over unsaleables and strengthened agreement on data synchronization, he said.
"I think the level of industry dialogue has reached a higher level than ever before," he said. "When there are tensions that mount, we have the maturity and capacity to deal with these on a fact basis."
For his remaining time there, Molpus will work on keeping GMA focused on its priorities and ensuring the efficient completion of the merger with FPA.
"It's a major milestone, and in the history of food associations, not since the merger of the [Super Market Institute] and [National Association of Food Chains] has there been one of this scope," he said of the 1977 union that created the Food Marketing Institute.
It is hard not to conjure up David/Goliath, tortoise/hare images when thinking of the National Grocers Association's role in the supermarket industry. As the president and chief executive officer of the NGA, Arlington, Va., Thomas Zaucha has devoted more than 30 years to ensuring that independent retailers can still exist and prosper in an industry full of large chain mergers and proliferation.
Zaucha is firm in his belief that independents benefit the industry, manufacturer, consumer and community. Additionally, he thinks such a message resonates more strongly now than ever. "A diversified marketplace is much more preferable than an environment that is controlled by a few companies."
NGA defines independent retailers as privately owned or controlled food retail companies operating in a variety of formats. The organization has over 1,500 company members, totaling over 25,000 stores. This year, the association grew by over 200 companies. Annual convention attendance increased by 10% and over the past five years attendance has increased by over 30%.
Two years ago, the NGA's board of directors updated the association's strategic plan. "An association is only as viable as its mission and philosophy and strategic objectives," Zaucha stressed. Therefore, as an organization that represents a variety of retailers, it is important that all factions have a voice. Several new councils have been established and are currently in place such as the single-store council, the university council and the service supplier council.
"There is a correlation between NGA's success and the success of the independent sector of our industry; we've seen the independent sector alive and doing quite well," noted Frank DiPasquale, NGA's senior vice president.
In this era "where the big have gotten bigger," Zaucha encourages the independent retailers to broaden their outlook in terms of whom they compete against. "You don't have to be No. 1. Avis makes a lot of money; so does Enterprise and Budget. You don't have to be Hertz."
Even with NGA's positive growth, the challenges are still mounting. Recent efforts to weaken or repeal the Robinson-Patman Act, which prohibits chain stores from purchasing goods at lower prices than other retailers, have the NGA concerned. "For those of us who have been advocates for a level playing field," Zaucha said, "the threat in front of us is quite real and significant." He said fighting against the repeal and other such pro-monopoly initiatives is a No. 1 priority for the NGA.
Another big issue facing the NGA is the interchange fees mandated by credit card companies. As a founding member of the Merchants Payments Coalition, Washington, the NGA wants to eliminate any discrimination in interchange rates since there is "absolutely no justification" for a discrepancy in rates based on the number of transactions a retailer may have, Zaucha said.
In defense of family-owned businesses, Zaucha and the NGA also have been working to repeal the estate tax. The tax occurs upon the transfer of property of the estate of a deceased person left to a living person or organization.
For Zaucha, advocacy is not only his career but also his passion. "When things need to be changed, I like to be on the cutting edge of that change," he said.