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A strong stand for small business.

Who says two-year-olds can't flex their muscles? The fledgling National Grocers Association--in the person of President Tom Zaucha--has taken some strong public stands on a number of issues concerning small business in general and its membership in particular.

More than in any other area, Zaucha and his staff have been extremely vocal about the enforcement and clarification of the antitrust laws pertaining to predatory pricing. It all started back in March 1983, explains a deceptively softspoken Zaucha. He says the then 6-month-old association became concerned with statements from certain government entities, such as the Federal Trade Commission and the Department of Justice.

"Out of the Justice Department came the statement that Robinson-Patman is filled with absurdities, and was the unfair hiding place for small business," Zaucha says. He adds that an appeals court judge also said that "Robinson-Patman had been passed with tongue in cheek," and that "it was not the role of the courts to interpret or enforce tongue-in-check legislation."

Zaucha says these statements, along with the Reagan administration's attitude of deregulation and non-government intervention prompted the associatin's board of directors to take a policy position that uniform and consistent enforcement of the antitrust laws, or a "standard of practice to live by," was needed.

The issue heated up again in the summer of 1983 when the Justice Department terminated a 25-year-old consent decree that had restricted Safeway's pricing activities in Texas and New Mexico. This led to the NGA filing a statement of concern with the Department of Justice. Zaucha says the concern stemmed from two questions: "Was this another indication on the part of the Justice Department of their non-interest in enforcing the laws governing predatory pricing?; and, would the industry interpret the elimination of the consent decree as a kind of carte blanche that you can do anything you want to concerning price?"

Last fall, the words, "predatory pricing," were again on the lips of some NGA members, who alleged that Kroger and Super Valu's Cub Food Stores had engaged in "below cost" pricing in the Indianapolis area. The claims caused the association to request an inquiry.

"In our further research," says Zaucha, "the conclusion that our attorneys came to that the laws governing predatory pricing are so darn ambiguous. That's because there's really no clarification as to what constitutes the cost or the price of products. If we can't define that, then how can we ever prove predation in the marketplace?" This, he says, led NGA this past March to push for legislation, introduced by Rep. Edward Markey, D-Mass. "In essence, its purpose is to clarify what the law is," says Zaucha, adding, "Nobody suggests developing a whole new antitrust law, but rather a standard to live by."

He likens the situation to that of a stretch of highway that is known to be patrolled by police radar. "Let's say that a week, and then a month goes by, and the radar is not there. And then two months go by and you hear from the traffic helicopter that it's not going to be there anymore. What happens is that the drivers decide they don't have to be so careful anymore. "If we're going to have a law that says you go 55 miles an hour, then let's go 55 miles an hour. Small business has the greatest chance of being destroyed at 70 or 75 miles an hour, just like the compact car has the chance of being destroyed by a big truck going 75 miles per hour." Consciousness-Raising

Zaucha admits that the chances of passing the proposed antitrust legislation in the near future are not very strong, but adds, "I'm not so sure that we are so committed to its language. I have always been a proponent of voluntary standards. Nothing would please me more than if, between now and 1985, we could come up with a voluntary standard of performance. I think that the fact that we have raised the issue, that the legislation has taken place, that there has already been some consciousness-raising within the industry, is important. And we're getting reports throughout the country that it has been a stabilizer in some of the marketplaces that had been thought heretofore to be potentially vulnerable."

If NGA has to go the legislative route, it can, says Zaucha. "We have the will and fortitude, and we have the finest grassroots network in strength that exists. This is not NGA by itself beating a drum, but it's the concern of small business throughout this country."

In the meantime, Zaucha says the attitude among independents is hardly one of "gloom and doom." Instead, he says the feeling is: "If there's going to be a battle, then we're going to be prepared." Other Issues

While they haven't received nearly as much publicity as the association's antitrust law activities, there are also a number of other pressing industry issues that NGA has been tackling. "Multi-employer pension reform is desperately needed," says Zaucha, adding, "The independent retail grocer was screwed in 1980, as were the warehouse people, by amendments that were adopted. It's a tough issue to deal with because there's such a diversity of interest right now."

He says that after two years of work on multi-employer pension reform, some legislation has recently been introduced. "But even this legislation just scratches the surface in terms of the withdrawal liability problems that are inherent in the grocery industry. We have a starting point, but there's a long way to go and I hope the industry, as a whole, will walk that entire mile together."

The issue of food stamp bank fees is another area of concern for NGA. "We started to receive some mail from independent grocers complaining about charges, and when we looked into it, we found out that not only was this a growing practice, but that it appeared that there was a kind of 'cavalier' attitude on the part of the banking industry," says Zaucha, who minces few words. So, NGA turned to the USDA, which set up a meeting with the bankers. "The bankers said, 'well, you know, that's the way it's going to be,' and USDA was really quite neutral in terms of trying to do something about it," he says. However, Bill HR-5151, known as the Hunger Relief Act of 1984, which was scheduled to go before Congress at press time, would eliminate bank charges. Signing Up NGAers

NGA is involved in a continuous membership campaign that will run for the next 12 to 18 months, says Zaucha. He puts the latest membership count at 1,700. "When we originally started out, we thought we had about 1,150 or 1,200 members, but we found out, as the result of an audit, that a significant number had gone out of business. Based on that, we think we had of a starting list of 950 members when NGA was formed."

The association does not restrict membership to companies that operate fewer than a specific number of stores. "We have as members, many one-and two-store operators and we also have a company like Food Lion, Ralph Ketner's organization of 200 stores based in Salisbury, N.C. Ralph still views himself as an independent grocer. While he's a rarity, we do have a number of multistore members."

Asked about the increasingly prevalent practice of independent wholesalers servicing large chains, Zaucha says, "It's a question of economic tradeoff, and I think, in each instance, those trafeoffs have got to be weighed. But I don't think it's fair that they be automatically or arbitrarily dispensed. I may give up something at this end in order to gain more on the other end. And I think it's really the role of the progressive management of every wholesaler, whether it be a traditional retailer-owned or corporate voluntary, to weigh those types of decisions in conjunction with how they are going to ultimately effect the basic membership."

As for the implications of large wholesalers operating their own warehouse stores, Zaucha seems to view these moves as necessary facts of retail life. "As I understand it, in the case of Super Valu with Cub, it's really with the intention of developing franchises by independent grocers," he says. "In a very volatile market, it's very crucial that a distribution center has the ability to stick up stores or acquire potential real estate property rather than lose it to a chain store. Secondly, the decision that I think wholesalers are still making--at least at this stage--is that, ideally, they want those stores to be run by independent grocers. Ultimately, the question is raised by the retail grocer, 'Are you a wholesaler or a retailer? That is a question that's got to be decided in the marketplace by that wholesaler and the membership."

Zaucha sounds optimistic about the long-term prospects for the independent grocer. "Nine chances out of 10, a multistore operator started out as a one- or two-store operator. And I think that the prospects of that type of continued growth are going to symbolize the 1980s." He says Roger Dierberg, the seven-store St. Louis operator, best exemplifies the attitude of today's independent. "I asked Roger a year ago, 'When will you stop thinking about your next store?' He said, 'The day I stop thinking about growing is the day I start falling behind.' I think that's the attitude that really symbolizes the independent retail system."
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Title Annotation:independent grocery stores
Author:Linsen, Mary Ann
Publication:Progressive Grocer
Date:Aug 1, 1984
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