Saturday, September 25, 2010

Future of Fresh & Easy Neighborhood Market's Self-Service-Only Checkout in California Up to Governor Schwarzenegger

The AB 1060 Countdown - Five Days to Go

California Governor Arnold Schwarzenegger, who doesn't need an introduction, has only five days - until before midnight on Thursday, September 30 - to veto (or sign) AB 1060, the bill, approved by both houses of the California Legislature and sent to the Governor at the end of August, that would make it illegal for grocery stores to sell alcoholic beverages at self-service checkout stands. If the Governor doesn't veto the legislative bill by the deadline, it automatically becomes law. Obviously, if he chooses to sign it, the result is the same.

We call AB 1060, which is authored by Assemblyman Hector De La Torre (D-South Gate, Southern California), the "Tesco Fresh & Easy Law," not because the legislation was authored to directly target Tesco's Fresh & Easy Neighborhood Market (although labor union encouragement and support of the bill plays does involve Fresh & Easy directly) but rather because if passed it will require the fresh food and grocery chain to change the policy at its 107 California stores , from self-service checkout only to having at least one full-service checkout lane, since the legislation requires all purchases of alcoholic beverages to be handled face-to-face by a store clerk at checkout.

[Read our August 24, 2010 story - California State Senate Sends Bill to Governor That Could End Self-Service-Only Checkout at Fresh & Easy Neighborhood Market - and our August 15, 2010 piece - Bill to Ban Alcoholic Beverage Sales at Self-Service Checkouts Would End 'Self-Service Only' at California Fresh & Easy Neighborhood Market Stores - for complete details about the bill and related issues.]

A number of grocery chains in California offer self-service checkout lanes as an option in their respective stores, but none offer just self-service, like is the case with Tesco's Fresh & Easy.

Fresh & Easy Neighborhood Market calls its system "assisted checkout," meaning if a customer asks, a store clerk will gladly help with the checkout and bagging process. However, such a scheme wouldn't be allowed if AB 1060 becomes law. Rather, anytime an alcoholic beverage item is purchased, the customer must be waited on in a full-service way by a store employee.

On Friday, the Governor announced he has so far signed 76 and vetoed 43 of the 765 bills sent to his desk when the legislative session ended on August 31. [Click here to view the signed and vetoed bills.]

With 546 more bills to either sign or veto (or do nothing with and let automatically become law) in just five days, the chief executive of the Golden State still has his work cut out for him, real-life action figure or not. Something tells us Governor Schwarzenegger's home reading list is pretty full this weekend. And action thriller novels likely aren't part of the list.

If AB 1060 becomes law, Tesco's Fresh & Easy is going to have to go back to the drawing board in terms of its self-service checkout only policy and operational practice. However, Fresh & Easy Buzz has suggested, in those types of stories in which we offer analysis and/or commentary, that the legislation is actually an unintended favor by the state legislature - and perhaps also by the Governor - to Fresh & Easy Neighborhood Market.

If the bill becomes law, it will essentially force Fresh & Easy Neighborhood Market to operate at least one checkout as full-service in each of its California stores.

Since 2008, we've suggested in the blog that Fresh & Easy Neighborhood Market is making a serious mistake by not offering both self-service and full-service checkouts in its stores. For example, in this 2009 piece - March 7, 2009: Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track - we suggested seven operational changes Tesco needs to make at Fresh & Easy in order to help improve its sales and profits. One of those operational changes is to offer a full-service checkout option. [We go into further detail in the August 24 and August 15 stories linked above.]

Therefore, from our analytical perspective, the passage of AB 1060 into law, either by the Governor's pen or his allowing it to automatically become law by not exercising a veto, would be a favor, albeit unintended, to Tesco's Fresh & Easy.

We don't think having state legislators make retail operations policy for grocers is the greatest idea. But, ironically, if AB 1060 becomes law, leading to Fresh & Easy Neighborhood Market's creating at least one dedicated full-service checkout lane in each of its California stores, the term the "Tesco Fresh & Easy Law" will probably end up meaning the State of California passed a law which actually forced Tesco to make a change - adding the full-service checkout lanes - that resulted in more satisfied customers and an increase in business at its 100-plus California Fresh & Easy stores.

Beginning today, Fresh & Easy Buzz will countdown the days until September 30 - 'The California AB 1060 Countdown' - on our Twitter feed here (and at the top right hand of the blog) until the Governor either signs or vetoes the bill. If he doesn't veto AB 1060 before midnight, September 30, it will become law without the need of his signature.

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