Tom Zaucha takes the side of independent grocers
As Thomas K. Zaucha, a founder of the National Grocers Association, takes his bow as the silver-haired statesman of NGA this week, it's time to reflect on his legacy and his impact on independent food retailers and their wholesaler partners.
This marks Zaucha's final NGA convention after a remarkable 28-year career as the organization's president and chief executive officer. He officially retires on June 30 at age 66.
The convention, which runs Feb. 9-12 at the Paris Las Vegas Hotel, is Zaucha's signature showcase. No. 43 — President George W. Bush — will deliver the keynote address, retired Gen. Peter Pace will reveal his moral compass and legendary singer Paul Anka — performing “This Is It,” a song he co-wrote with the late Michael Jackson — will entertain Zaucha and his wife, Bernadette, during a gala dinner honoring Zaucha's long career.
The convention venue also will host the Supermarket Synergy Showcase, the annual bagger's contest, a slew of informative workshops and numerous award winners, including Kraft Foods-sponsored new Entrepreneurial Award named in honor of Zaucha.
NGA's convention is part of Zaucha's legacy as he developed it to give retailers a balanced view of major events shaping their world by gathering some of the top political leaders and commentators of the day to keynote the annual event (see “Political Clout”).
For associate manufacturer members, he elevated the exhibit floor by adding education, information and marketing components so suppliers could better deliver their message to retailers.
Among his many accomplishments at NGA, Zaucha will be most remembered as the defender of the independent sector.
“Tom has always understood the important role independent operators have in our industry and their dedication to customers,” said Leslie G. Sarasin, president and CEO of Food Marketing Institute. “Under his leadership, NGA has become a champion and guardian of independent food retailers. His support for the entrepreneurs who innovate and help set the standard for customer service is a significant accomplishment.”
“As leader of NGA, Tom's steadfast support of the independent grocer most defines his career,” said Dean Janeway, president and chief operating officer of Wakefern Food Corp., Keasbey, N.J. “He has always recognized the need for keeping the independent strong — their importance in maintaining a competitive environment for consumers, for ensuring a diversity of products in the marketplace and the impact independents have on the community.”
“He is tenacious,” said Tom Wenning, who helped establish NGA, and is now executive vice president of the Arlington, Va.-based organization.
“When there is a policy issue he thinks is in the best interests, or is most important, to the independent retailer and wholesaler, he is tenacious in being their advocate. He has been the independents' advocate for the last 28 years.”
Zaucha's longevity as the only leader of NGA, whose 1,535 members comprise both small and large family-controlled retailers and their wholesalers, is quite a milestone given the industry's consolidation, including food-related associations, over the last 30 years.
What follows is an examination of how one man's career helped shape the identity and destiny of a distinct segment of the food distribution industry as it confronted fierce marketplace competition, and still does today.
Zaucha's story reveals how he was able to hold onto the reins of NGA as its top executive for nearly three decades. His tale hints at the leadership qualities needed by Zaucha's successor, who is expected to be named sometime after the convention.
Then again, some wonder if Zaucha and his determination, oratory skills and eagle-eye vigilance on regulatory issues can ever be replaced — especially after Mike Jackson, former COO of Supervalu, agreed to be the new NGA leader, but later declined the position for personal reasons.
As Jere Lawrence, president of Lawrence Brothers, Sweetwater, Texas, said, “Anyone can be replaced, but it is going to be hard to find someone who has Tom's dedication.”
SN interviewed Zaucha on how he got his start in the food industry; those who most helped and influenced him along the way; the challenges he faced in forming NGA; and the myriad of regulatory issues he tackled that could negatively impact the livelihoods of NGA members.
UNDER ONE CHURCH
Zaucha presided over the consolidation of two independent organizations with long acronyms — National Association of Retail Grocers of the United States (NARGUS), representing independent retailers and small chains, and Cooperative Food Distributors of America (CFDA), representing cooperative wholesalers. The merger of the two organizations, which took place on Oct. 1, 1982, was described as the first-time union of retailers and wholesalers under one organization.
Zaucha, who was CFDA president at the time, likened the merger of seemingly disparate groups of retailers and wholesalers to bringing different religions together under one church to pray.
“It was very difficult. Both CFDA and NARGUS had long histories in serving just their segments of the industry,” said Jim Stoll, who was NARGUS chairman at the time and worked with Zaucha and others in forming the basis for NGA.
Funding a national organization presented a problem given the funding structure of NARGUS, which received its funding through local and state retail affiliates. “The funding as it went down from local, state and national got spread pretty thin in order for a national organization to financially maintain its services and provide what the retailers wanted,” Stoll explained.
Consequently, state retail associations were asked to join NGA and retailers were asked to directly fund the new organization.
Then there was the voluntary group of wholesalers, represented by the National-American Wholesale Grocers Association (NAWGA), which also considered merging with CFDA prior to NGA's formation, but talks were abandoned. NAWGA eventually merged with the U.S. Wholesale Grocers Association in 1996, and later changed its name to Food Distributors International, which eventually merged with FMI in 2003, after courting a possible merger with NGA.
“The idea that co-ops were a form of distribution that differed structurally from the way voluntaries were developed and both had the same objective of getting retailers as customers to ensure their success presented a challenge,” Zaucha admitted.
NGA, regardless, incorporated voluntary wholesalers as members into its bylaws and aggressively pursued them to join NGA.
Economics and political reality won out in helping NGA build its membership base. “You had real-time visionaries who said, ‘Together we are stronger. We have the same mission and philosophy so why not come together and be stronger,’” Zaucha commented.
Five years earlier in 1977, the National Association of Food Chains, where Zaucha had served as director of public affairs under the association's president, Clancy Adamy, merged with the Super Market Institute to form Food Marketing Institute. FMI was dedicated to becoming the umbrella arm for the entire food industry.
Some in the food industry were betting NGA would not survive as a stand-alone organization given FMI's objectives. However, Zaucha's bull-dog tenacity that a separate organization was needed to represent the often diverse interests of independents, which often were different than the agenda of large chains, was to prove the nay-sayers wrong.
Zaucha grew up with his older brother in a coal patch, a company-run town for miners, outside of Pittsburgh in southwest Pennsylvania. By the early 1950s, coal mines and steel mills were being shut down due to dwindling demand and Zaucha's father was struggling to keep his job. The plan was for the family to eventually move to Warren, Ohio, to help Zaucha's grandmother run a neighborhood grocery store. That never happened, but Zaucha did spend time in Warren, living with his grandmother, working in her store and delivering newspapers.
Zaucha, who is from hardy Polish decent, said: “Everything was ethnically driven. The Jewish baker brought in baked goods; the Greek meat distributor brought in meats. My grandmother knew all her customers by name and she knew what they wanted and ordered regularly. Sometimes she'd even have things prepared for them because she knew when they would be in the store.” His grandmother was a “community-focused retailer,” said Zaucha.
The “little lady from Warren” had a big influence on Zaucha in later years, as did his blue-collar upbringing. Little did Zaucha know what the future held for him when it came to the grocery business. After briefly teaching at George Washington University, his first entry into the food industry was as assistant director of government/industry relations for the National Canners Association (1970-1973), now National Food Processors Association, where he worked with the late Bob Heiney, who was senior vice president. From Heiney, Zaucha learned the importance of trust, coalitions and being knowledgeable on issues. Heiney told Zaucha, “If you don't have anything important to say, then don't say it.”
Zaucha then went to NAFC where he was slated to become senior vice president of the new FMI until destiny called. A&P wanted him for a government relations position.
At NAFC, Zaucha worked with the late Clancy Adamy, who was association president and CEO. Zaucha said Adamy taught him intellectual integrity and the ability to stand on principle and fight for what you believe in. “If you have to take a hit for the members, then take a hit for the members. That is your role,” Adamy once told Zaucha.
From 1976-1978, he served as national director of government affairs for A&P, under the late Grant C. Gentry, A&P president, and Jonathan L. Scott, A&P chairman. They were brought in to turn around a struggling chain whose earnings were flagging partly due to competitive pressures and high inflation.
That experience was “a defining part of my life” as far as the role of government relations, said Zaucha. At A&P, he learned the operations side of the grocery business and what he had to do to hold down operating costs or increase sales opportunities in the name of government relations. “That was a real litmus test and I have used it from that time going forward in the association business.”
His work at A&P taught him to always ask: “What are we doing to control costs and help the membership increase sales?”
In 1964, a very boyish-looking Zaucha was sitting in a University of Pittsburgh classroom with another student, Martin Engels, about to debate a resolution. From high school days onward, Zaucha took to the art of debate with the passion of a Lincoln-Douglas. Debate won Zaucha a scholarship to Pittsburgh and a teaching position at George Washington University. It also won him the first lady of his life, Bernadette Connelly. They have been married for 43 years.
He met Bernadette, also an avid debater, in intercollegiate debate in the spring of 1966. Bernadette told SN Zaucha proposed to her on the steps of the Lincoln Memorial during their first date, an appropriate place for debater courtship. They were married the following year. Neither one, however, would reveal who won their first debate.
Mike Needler, chairman and CEO, Fresh Encounter, Findlay, Ohio, said debate should be Zaucha's middle name. “Tom is a great one to debate the issues of the day. He also is an amazing wit with a sense of humor. To be quick with wit, one has to be truly intelligent. That is Tom: intelligent and witty,” he said.
Another former collegiate debater, Tom Haggai, non-executive chairman of IGA and CEO of IGA Global, who resides in High Point, N.C., explained that debate points are won by how well you understand your opponent and your ability to turn your opponent into an ally.
Zaucha put his debate talents to good advantage at NGA and won many allies and formed important alliances along the way. Haggai became an NGA ally.
Zaucha credits debate as the most significant influence on his career. “It teaches you that there are two sides to every issue. Unless you appreciate and respect both sides of an issue, you can never really posture yourself, or ultimately arrive at an advocate position that allows you to be on the winning side,” he said.
At the time NGA was created, the country was emerging from a severe recession. Interest rates, inflation and unemployment were high. Ronald Reagan was president of the United States. The Iran-Iraq War had begun.
Among independent grocers' concerns was the rapid growth of super warehouse stores, merger and acquisition activity among chains and predatory pricing. A price war was raging in Indianapolis, which drew Federal Trade Commission interest. The Justice Department was getting ready to overturn a 25-year decent decree that restricted Safeway pricing activities in Texas and New Mexico. This was just the start of a long list of issues that Zaucha would have to grapple with in order to keep the playing field level for independents (see “Balancing Act”). For Zaucha, leveling the playing field issues never go away.
“Why should there be a difference in terms of price, promotion, packaging, product availability and payment terms if you run a grocery store, supercenter, drug store or warehouse club store? Why should there be differentiation that gives one class of trade a competitive advantage over another class? These have always been questions for us and are questions now,” he said.
To fight issues such as labor laws, taxes, antitrust concerns, food safety, interchange fees and others, Zaucha often relied on NGA's mission and philosophy statement and used it like a bible. He often cites NGA's 10 keys to its working agenda, which has become independents' road map for growth.
Through Zaucha's successes, not only has the membership benefited but so has the NGA. He leaves the organization financially viable. In 2009, NGA had over $7 million in reserves out of an annual operating budget of $5.5 million to $6 million. The association has averaged over the last decade net revenues of $400,000 to $500,000 each year. This has all been achieved without NGA having to increase membership dues or fees for meetings, Zaucha said.
The health of NGA has been sustained by the broad scope of services, including meetings, research and supplier services, that NGA has packaged together for its members — all designed to help independents grow their businesses.
“You have to run it as a business,” said Zaucha, who earned his bachelor's degree in economics.
As he exits center stage, Zaucha looks forward to spending more time with Bernadette and their daughter, Rachel, who is involved in the medical industry. He plans to resume his golf game and try to lower his handicap. He'll read more books rather than trade journals and policy reports. He'll travel with Bernadette, and they'll do some charitable work together.
Most important, he'll take to heart advice given to him last year by the late Bill Grize, former president and CEO of Stop & Shop and Ahold USA, who heard he was retiring. “Bill told me to go out and feel the space before I fill it,” said Zaucha. This will be the first time since 1966 that he has gotten a breather and not felt time pressures after years of traveling on the road and spending many weekends strategizing NGA's next move on regulatory issues.
Grize also told him to make new friends outside the industry. “I'll take Bill's heed and feel the space and go out and make some friends.” The friends part should be easy.