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Utah ‘Exceptional’ State For Independent Grocers

Utah
Dave Davis

Utah was named the No. 1 state for economic outlook for the 16th year in a row by Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. 

According to a statement from the office of Gov. Spencer Cox, this is attributed to “strategic policies, smart fiscal decisions and forward-thinking reserve funds, combined with the hard work of Utahns across the state.”

The state’s unemployment rate remains among the lowest in the nation, signaling tight labor market conditions, according to the Salt Lake Chamber of Commerce. Home prices in the state increased slightly after falling seven of the past eight months. Demand has slowed recently, but Utah’s housing market remains tight.

Dave Davis, president and chief legal officer for the Utah Food Industry Association, also noted the strength of the state’s economy. He said one of the flip sides of having a hot economy is that it creates some staffing issues.

“Labor shortages and getting adequate labor to be able to staff stores continues to be an issue here in Utah,” Davis said.

The state has a strong technology sector and has been dubbed the second “Silicon Slopes,” he said. Many technology companies have turned to Utah after finding the business environment in California to be “less than hospitable.”

The Beehive State also is a “hidden gem,” Davis said, noting it is a great place to live for outdoor enthusiasts. Utah’s population also is young, with its median age the lowest in the country.

Another issue in the state is housing. “The cost of housing continues to rise at an unsustainable rate. That is something that needs to be dealt with, and it’s something that the legislature, policymakers – both local and state – are looking at.”

Davis said the health of the state’s grocery industry tends to track the health of the overall economy. He noted that there was a reset in 2020, when the COVID-19 pandemic forced consumers out of restaurants.

“When that happened, I think that there was a rediscovery of the joys of cooking and eating at home. You saw the grocery business flourish during that time. I think that people have continued on that path, and they have recognized there are some real benefits to eating at home.”

According to Davis, the grocery industry in Utah is “exceptional as it relates to independents.”

“Utah has always had a very, very robust independent market. Many of the chains like Safeway and Albertsons don’t even operate here. We have had a really strong independent market that has been supported by a very strong and healthy wholesaler as well, in Associated Food Stores.”

The independents in the state are working to address the supply chain issue of an unlevel playing field with larger chains by lobbying to have the federal government enforce the Robinson-Patman Act.

As for inflation, Davis said it is an area where the Intermountain West has trended ahead of the national average. “I think we’re still over 3 percent, which is still too high, but more in the normal range rather than seeing 8, 9, 10 percent inflation, which felt like it was unsustainable for the long term.”

While organized retail crime has been plaguing grocers across the U.S., Davis said Utah was the first state to put together an ORC task force attached to the attorney general’s office. He added, “We saw the writing on the wall” as far as occurrences in San Francisco and Portland, where people were walking into retail stores and “just taking things with impunity.”

The Crimes Against State Economy Task Force has been working well, Davis said, not only for the grocery industry and general retail but also to deter catalytic converter theft, which was a problem for trucks delivering to retailers.

“We’ve just made it a really inhospitable environment here in Utah for these organized retail crime groups to come and to operate. I think that they’re finding more fertile fields in other places. I think that that was our objective all along.”

In this year’s legislative session, Davis said there were about 75 bills the association was tracking. One was changing a law that addressed the alcohol content of beverages in grocery and convenience stores.

The law allowed stores to stock drinks with an alcohol content of up to 5 percent. However, those that used an ethyl-based or alcohol-based flavoring could not go into the general market but instead went into the state control system.

“By [changing] that, we allowed about another $14 million worth of product back into the system. That was a big win for us,” Davis said. “The other big win that we had was we created a path for the removal of the state portion of sales tax on groceries.”

If a ballot initiative on the matter passes this fall, the state portion would be removed from groceries, effective Jan. 1.

“We’re hoping that will happen. It’ll be a real blessing for consumers. It’ll be about $165 million that will go back into the pockets of consumers that our retailers can then compete to grab.”

The UFIA recently held its Best Bagger competition at its annual convention. Madison Ireland from Harmons in Draper was named champion and will compete in March at NGA’s nationwide event. Utah is looking for back-to-back national titles after its contestant won last year.

Read more market profiles from The Shelby Report.

About the author

Treva Bennett

Senior Content Creator

After 32 years in the newspaper industry, she is enjoying her new career exploring the world of groceries at The Shelby Report.

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