by Kristen Cloud/staff writer
Alabama has more to celebrate than the Crimson Tide’s recent BCS National Championship. While the tough times are certainly not over for the state or the country, forecasts indicate that the Alabama economy will continue to experience modest improvement in 2013.
The state’s unemployment rate of 7.5 is below the 7.8 percent national rate and far improved from a year prior when Alabama’s unemployment rate rested at 8.3 percent.[gn_pullquote align=”right”]Our association is committed to getting our members as much information as we can on the healthcare issue. At the convention, our seminar will include a benefits company, an attorney and an accountant to help our members find the best healthcare option for their company. Attendees will also have time to talk one on one with them on that direction and options they should take for their unique company situation.”
– Ellie Smotherman Taylor, President, Alabama Grocers Association[/gn_pullquote]David Bullard, president and CEO of Bessemer-based Piggly Wiggly Alabama Distributing Co., sees the economy slowly turning around. In fact, the wholesaler began supplying 21 additional stores last year and plans to gain another 23 stores in 2013.
“We are all energized and looking forward to taking our warehouse to new levels of performance,” Bullard tells The Shelby Report.
“We will always be aggressive in marketing and we will do things the right way,” he says. “We are not about overselling or under-delivering. I encourage prospective operators to talk to our current operators. We are not perfect, and no wholesaler is. However, we are going to be a company that does what we say we are going to do.
“We feel if we focus on the right things, work harder than the next guy and make integrity our watchword, we will be successful. We expect steady growth and, as larger opportunities arise, we want to be well positioned to take advantage of them.”
Bullard adds that his company is “very optimistic” about the future.
Alabama Grocers Association (AGA) President Ellie Smotherman Taylor appears optimistic for 2013 as well. Her group boasts 350 members that represent more than 1,000 retail locations.
“We have had some great economic incentives that the state put together and passed in last year’s legislature, and there are several (companies), both chains and independents, expanding in the state,” says Taylor, mentioning Alabama also recently received a contract with Airbus.
She tells The Shelby Report that the partnership with the aircraft manufacturer “should definitely help Alabama’s recovery.”
Positive changes ahead for industry regarding SNAP, disaster preparedness
The year ahead will undoubtedly bring change for Alabama’s food retailers, at least when it comes to the Supplemental Nutrition Assistance Program (SNAP) and disaster preparedness.
Currently, the state’s SNAP distribution spans from the fourth day of the month through the 18th, but the state is expected to expand distribution through the 23rd. The measure likely will be approved and implemented by the spring, according to Taylor, who notes that the number of SNAP recipients in the state has increased 37 percent since 2009, from 664,282 to 912,152. In September 2012, $116,767,155 in benefits was issued.
“It will be a huge improvement for our retailers as well as an improvement to the level of service we can offer our customers,” she says. “Overall it’s going to be a much better customer experience with those days expanded.”
Taylor’s organization also has been working hard on a disaster preparedness project alongside the University of Alabama.
“We are developing an interactive map that will plot every retail food location in the state, whether it be grocery, convenience, pharmacy…anyone who sells food within the state will be plotted on this interactive map,” she says.
The collaborative effort, which also is relying on the cooperation of the state’s retailers and manufacturers, as well as the Alabama Emergency Management Agency, comes in response to the deadly weather systems that have struck The Cotton State over the past couple of years, most specifically the deadly outbreak of tornadoes in April 2011 that killed more than 250 people across Alabama and resulted in 43 of the state’s 67 counties being designated FEMA disaster areas.
“We really saw a need for this—to know exactly where these retail locations were—and also where the hospitals were, where the community centers were,” Taylor says.
“All of this is going to be plotted together,” she adds, “so that we can figure out where the different shelters are, what areas need food, what areas need water, how we can work with Alabama’s power providers to get different retailers up and running, which retailers have access to generators, which don’t; all those types of issues so we can put together a big picture for the state and really help things get moving faster after a disaster.”
The project is scheduled to be complete by June, before the 2013 hurricane season begins.
Healthcare remains a top concern
The details of Obamacare and the impact it will have on the industry, at this point, is anyone’s guess.
Bullard believes government healthcare will drive the cost of insurance up 30 percent for both his company and its operators’ companies.
“We will have to develop effective strategies to try and deal with it … cost of goods is going to be very important going forward.”
Stan Alexander, president and CEO of
Associated Grocers of the South in Birmingham, shares Bullard’s worries.
“I think everybody obviously is concerned,” Alexander tells The Shelby Report. “None of us know yet where this healthcare thing’s going to take us. You hear all kinds of things, and we’ve studied it, but it’s still hard to decipher it all and know where it’s going to take us.”
Taylor admits it will be a challenge for the industry in the upcoming year. But, she says, at least now there’s no more uncertainty as to whether government-run healthcare will, in fact, take hold.
“It’s happening, so now is the time to start planning and move forward and figure out implementation…”
AGA plans to host a healthcare seminar during its annual convention in July.
“Our association is committed to getting our members as much information as we can on the healthcare issue,” Taylor says. “At the convention, our seminar will include a benefits company, an attorney and an accountant to help our members find the best healthcare option for their company. Attendees will also have time to talk one on one with them on that direction and options they should take for their unique company situation.
“I think now that we all know Obamacare is happening, retailers are starting to get a clearer picture of their options.”
State’s food retailers face stiff competition
In addition to concerns about the impending healthcare reform, food retailers across Alabama share more in common: competition.
“Alabama’s a very strong independent market,” Alexander says. “But, with that being said, you’ve got Walmart taking 48 cents out of every dollar spent for food in this market. On the high end you’ve got a very formidable competitor for the food dollar in Publix. So you’ve got Walmart on the low end and Publix on the high end and then all in between. It’s very competitive retail-wise.”
Another threat for the food dollar: the dollar store.
“I think competition from the dollar stores is a tremendous challenge,” Bullard says. “That is why cost of goods is so important. We have to position our retailers where they can compete in their markets against the onslaught of competition. Price is and will continue to be of the utmost importance.”
Consumers also, as they have been doing, continue to buy private label to save money.
“It is very important to the customer that they use (their money) wisely and get more in that food basket, or as much as they had before,” Alexander says. “And, in order to do that, they’re probably going to have to come off of that top brand to a private label.”
The move to private label will continue as it has in years past, Alexander says.
“We’ve been talking about this in this industry for 15 years—about how they’re trading down and buying more private label. That’s not news to me. Every year you see that happening.”
Piggly Wiggly Alabama has made its private label offerings a priority, according to Bullard.
“We have always had the Piggly Wiggly private label product, and it has served our Piggly Wiggly operators well,” he says. “We are moving to the Hy-Top label for our non-Piggly Wiggly stores.
“We are bringing those items into our warehouse now, and we are excited about what adding the Hy-Top label is going to do for us in terms of growth opportunities. It is the private label answer we have been looking for.”