RELATIONSHIP COUNSELING 1998

GREG GATTUSO

RESTON, Va. -- The National Grocers Association here expects this week's annual convention in Las Vegas to be its largest ever. But more importantly, it will be "more interactive than ever before," said Thomas K. Zaucha, president of NGA. Speaking to SN editors in a preconvention interview, Zaucha explained that the entire conference is intended to showcase the relationship between the independent retailer and the wholesaler.

By bringing together these symbiotic entities, NGA hopes to accomplish three goals this week:

To promote dialogue and understanding among the partners in the independent sector of the food industry: retailers, wholesalers, manufacturers and vendors;

To develop a national agenda -- including a new definition of the independent operator -- that will reflect the true size and strength of the independent sector; and

To provide education and research tools to help NGA members compete with chains, supercenters and other food retailing formats.

Zaucha said a key component in addressing these goals will be a first-of-its-kind summit, designed to bring together independent retailers, wholesalers, brand marketers and other manufacturers and vendors this week.

At the summit, to be held tomorrow, NGA will assemble more than 40 North American retailers with industry experts, including marketing consultant Murray Raphel and home-meal-replacement authority Howard Solganik, to elicit real-world experience and knowledge from attendees. Other topics will include labor law compliance and the use of the Internet. Although the topics are serious, the atmosphere will be relaxed, Zaucha said. "The focal point will be on gathering information," Zaucha said. "That's really what we will

be looking to accomplish. The summit will be have an informal approach and be communication friendly. I don't want this to sound like a meeting of the United Nations."

The conference -- "America's Supermarket Showcase '98," runs Feb. 9 through 12. This year, the association is expecting a new form of participation -- more delegations of wholesalers with their retail customers, Zaucha said.

Several wholesale companies -- from regional entities to global players -- will have hospitality areas on the exhibition floor where retailers can interact with their suppliers, he added.

"The purpose is to look at the team-building partnership between retail and wholesale," Zaucha explained. "The more we do this, the more enhanced the relationship, and it shows you the importance of interdependence."

"The idea is to create a dialogue for the purpose of sharing information about the common issues, the common challenges affecting the future growth and competitiveness of this side of the business."

One of the most difficult challenges NGA is working to overcome is the perception that the independent sector is losing market share to self-supplied supermarket chains and supercenters.

Not so, Zaucha charges.

"What we've heard over the years is that the independent market share is going down," he said. "And we dramatically disagree."

The source of the discrepancy, Zaucha said, is the definition of an independent operator. Conventional wisdom has long defined an independent operator as a privately held company that runs 10 stores or fewer.

That definition, which NGA calls "The Rule of 10," is "misleading, inaccurate, and certainly understates the viability of this side of the business," Zaucha said. "The Rule of 10 has got to be changed."

Under NGA's proposal, any company whose stores are supplied by a voluntary wholesaler would be labelled an independent, regardless of the number of units operated.

Companies which are family-controlled and self-supplied should also be considered independents, Zaucha said.

Under NGA's proposed definition, such privately held and self-supplied companies as Brookshire Bros., Lufkin, Texas, (74 stores); and K-VA-T Food Stores, Abingdon, Va., (66 stores), would be considered independents.

"By the standard definition, independents' market share is down," Zaucha said. "But by our definition, we're up to 50% [of market share]. That is were we should focus our discussion."

In addition to educating the outside world, NGA also has a continuous mission to educate its own members and provide them with the research needed to make them more competitive. The convention will use general sessions, workshop presentations, breakfast discussions and the exposition hall to accomplish this task.

The convention will offer more than 40 workshops and idea-exchange sessions in six tracks that cover a variety of topics, including store design and development, meal solutions, human resources, marketing, operations and technology. The exhibit floor will include "Brand Central Station," a new pavilion devoted to demonstrations and exhibits by some of the country's largest brand marketers. In all, the floor will house 350 exhibits.

The brand connection was a natural extension to the show, Zaucha said, because many of the retailers attending have developed their own branded identities within their communities.

Independent retailers -- many of whom have been in businesses for 50 years or more -- are also largely responsible for building the recognition and sales of America's leading brands.

This year, the convention's expanded format contains two conferences within the convention, the NGA Human Resources Conference, and the NGA/Food Distributors International Joint Marketing Conference, which includes the Annual Creative Choice Awards for Excellence in Supermarket Advertising and Merchandising.