Wednesday, May 4, 2011

'Son of Tesco Fresh & Easy Law': Strong Chance California Legislation to Prohibit Alcohol Sales at Self-Service Checkouts Could Pass This Year

Self-service/assisted checkout at a Fresh & Easy Neighborhood Market store

It's back.

Legislation in the California State Assembly that if passed and signed by Governor Jerry Brown would prohibit the sale of alcoholic beverages at self-service checkout stands in California grocery and other retail format stores is rapidly making its way through the various key legislative committees, on it's likely way to being voted on soon by the full legislative body.

The bill, AB 183, was introduced on January 25, 2011 by Assemblywomen Fiona Ma, who represents Assembly District 12, which spans most of the western portion of San Francisco and the northern edge of nearby San Mateo County.

AB 183 is virtually identical to AB 1060, which was passed by a majority of members of the California State Assembly and California State Senate in 2010, but was vetoed by then Governor Arnold Schwarzenegger, right before the midnight deadline, on September 30, 2010.

AB 1060 was authored by Assemblyman Hector De La Torre (D-South Gate, Southern California), who also authored what was the first piece of legislation in California to ban alcohol sales at self-service checkout stands, AB 523, in 2008.

The 2008 bill, AB 523, unlike AB 1060 last year, didn't pass.

In a July 14, 2008 story about AB 523 - July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages - we nicknamed the legislation the "Tesco  Fresh & Easy Law" because Tesco's Fresh & Easy Neighborhood Market, which has 126 of its current 175 grocery markets in California, is the only grocery chain of note that offers only self-service checkout, and not the full-service/self-service option, in its stores.

Assemblyman De La Torre's AB 1060 in 2010 was virtually identical to his AB 523 in 2008.

And, Assemblywoman Ma's current bill, AB 183, is virtually identical to De La Torre's AB 1060, which last year passed both houses of the California State Legislature, but was vetoed by then Governor Schwarzenegger.

In a series of reports and stories on AB 1060 last year, we said the legislation would be back this year, either authored by Assemblyman De La Torre's or another Democratic member of the Assembly. (The stories are linked above and at the end of this piece.)

It is.

And we're calling AB 183 the "Son of Tesco Fresh & Easy Law."

Del La Torre, who supports AB 183, took a pass on authoring another bill this year.

But Assemblywoman Ma, who also happens to be Speaker Pro Tempore of the California State Assembly, the number two leadership position after Assembly Speaker John Perez, introduced virtually identical AB 183 in January.

Ma, who is a CPA by profession, is using her added status and clout as Speaker Pro Tempore to speed the bill to prohibit the sale of alcoholic beverages at self-service checkout stands through the key committees in the California State Assembly.

On Wednesday, April 13, AB 183 achieved its first key committee milestone, passing in the Assembly Committee on Governmental Organization by a big majority - 11 committee members in favor of the bill and only three against it.

Today (May 4), just a few weeks later, AB 183 is being heard by the powerful and important Assembly Committee on Appropriations. A vote by the committee could come as early as later today or tomorrow.

The appropriations committee passed AB 1060 last year. The odds Assemblywoman Ma's AB 183 will pass in the committee after today's hearing are extremely high.

Democrats control a significant majority in the California State Assembly, which also means they have majority control of all the committees.

Assemblywoman Ma has put together a strong grass roots coalition in support of her legislation to ban alcohol sales at self-service checkout stands in grocery and other format stores.

Among the key supporters of AB 183 include: Mothers Against Drunk Driving (MADD); alcohol industry watchdog organization the Marin Institute; the San Francisco Fire Department; San Francisco Police Officers, the San Francisco District Attorney's Office, Metro United Methodist Ministries and others.

Supporters of the legislation have also recruited high school students, who are speaking out in a variety of venues  in favor of passage of AB 183.

The United Food & Commercial Workers (UFCW) union also supports AB 183. The retail grocery clerks' union was a major supporter of AB 1060 in 2010. But so far the UFCW hasn't been anywhere near as involved with Ma's legislation as it was with Assemblyman De La Torre's self-service checkout booze ban bill last year. But it's still early.

California State Assembly Speaker John Perez, who picked Assemblywoman Fiona Ma to be his deputy, is a former organizer and executive with the UFCW union. Therefore, the political ties are close among all the players mentioned above.

Like was the case last year, the California Grocer's Association (CGA) opposes any legislation, including AB 183, that would ban grocers from selling alcoholic beverages at self-service checkout stands, even though virtually all of its grocer-members, which include Safeway Stores and other big chains, as well as smaller chains and independents, offer both full-service checkout and self-service in their respective stores.

In fact, only a small percentage of grocers in California offer self-service checkout as an option, along with full-service, although that's changing as more add self-service lanes to their stores. Fresh & Easy Neighborhood Market is the only CGA member-grocer we're aware of that offers self-service checkout only in its stores.

The CGA and others argue there are sufficient safeguards in place to prevent minors from buying alcohol at the self-service checkouts, which is the primary argument Ma, De La Torre and other supporters of the legislation site as the chief reason for a ban.

Self-service checkout stands in California have a locking device that's designed to prevent people under 21-years of age from buying alcoholic beverages using the checkouts.

The retail industry and others argue the system works fine.

Conversely, supporters of AB 183 argue the opposite, siting studies done at UCLA and by others in which minors were able to buy alcohol at grocery store self-service checkouts.

In the 2009 study at UCLA, for example, researchers said 20% of minor adults, out of the total number (100%) of underage subjects used in the study, were able to override a self-service checkout by scanning other items and/or swiping credit cards. (You can read details about the system and the opposing arguments about its efficacy in past stories we've done here.)

Assemblywoman Ma says, in explaining her reasoning for authoring AB 183: "Underage drinking costs California taxpayers an estimated $8.1 billion annually. AB 183 seeks to prevent alcohol from getting in the wrong hands and protects the public and our youth. It’s better to be safe than sorry."

She also argues allowing alcohol to be sold at self-service checkout stands is no different than allowing cigarettes to be sold in vending machines or in stores without the assistance of store employees.

In 1995, California passed legislation that restricted the use of  vending machines. In 2001, the state banned the self-service sales of cigarettes in retail stores without the assistance of the retailer or an employee of the retailer. This is why grocery and other retail stores in California either keep cigarettes behind the counter or merchandise them in display cabinets with locking, clear plastic doors.

Tesco's Fresh & Easy Neighborhood Market calls its self-service checkout program "assisted checkout" because store workers are instructed by the grocer's senior management to assist customers with checkout anytime they ask. And store clerks do so gladly, based on our observations of nearly four years.

Such a system won't get by though if AB 183 passes and becomes law because the legislation requires a store clerk to be present at any checkout stand where alcoholic beverages are being sold. As such, Fresh & Easy would likely have to, at a minimum, have at least one dedicated full-service checkout stand in each of its stores in California. [See - 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.]

Ironically, since 2008 we've said it's our analysis that Tesco, which lost $300 million-plus on Fresh & Easy in its most recent fiscal year ended February 2011, is making a major mistake by not offering shoppers an option of both full-service and self-service checkout in its stores, not just in California but also in Nevada and Arizona, which is something all of its competitors offer. [For example, see this March 2009 piece: Analysis & Commentary: The Seven Retail Operations Changes Tesco's Fresh & Easy Neighborhood Market Needs to Make to Help it Get On the Success Track.]

Therefore, as we suggested in the August 15, 2010 story linked above, at least in our analysis, the state of California would be doing Tesco's Fresh & Easy a favor if its passes AB 183 and bans the sales of alcoholic beverages at self-service checkout stands, since the grocer would then have to have at least one full-service checkout stand in each of its California stores. We suspect, based on experience, the full-service checkout stand would be a popular one.

Like it has since the first piece of legislation designed to ban alcohol sales was introduced by Assemblyman De La Torre in 2008, Tesco's Fresh & Easy Neighborhood Market is taking an extremely low profile regarding AB 183.

For example, so far this year neither Fresh & Easy Neighborhood Market CEO Tim Mason or any of the members of his senior executive team have to date spoken out publicly in a statement or press release in opposition to AB 183 - just as was the case in 2010 and 2008-2009. Instead, Tesco's Fresh & Easy is letting the grocers' association and its own public relations/lobbying firm in Sacramento deal with the legislation and issue behind the scenes.

We do know that Tim Mason, who in addition to being CEO of El Segundo, California-based Fresh & Easy is the deputy group CEO of United Kingdom-based Tesco, met with California Assembly Speaker John Perez, who collects plastic ducks and displays them in his Assembly office, on February 18 of this year. But we don't know if AB 183 was one of the things they discussed during Mason's brief visit to the Speaker's office at the State Capital in Sacramento.

Tesco's Fresh & Easy should start preparing for the possible passage of the self-service checkout alcohol sales ban bill this year for a couple reasons.

First, the Democrats have a majority in both the California State Assembly and California State Senate this legislative year equal to the majority they had last year, when AB 1060 passed in both bodies. It seems unlikely - although never say never either way when it comes to California politics - that, given this consideration, along with a couple others, AB 183 will fail to pass both legislative bodies this year, just as Ab 1060 did in 2010.

But even more significant - the big potential game changer this year, compared to 2010 - is there's a new Governor in the house - Democrat Jerry Brown.

Even though Governor Schwarzenegger was and is a liberal-to-moderate Republican, when it came to legislation regulating or banning existing business practices, like being able to sell alcohol at self-service checkouts, which is currently legal, he was pretty absolute, tending more often then not to veto bills that put new regulations on businesses or banned existing practices outright.

Governor Brown, however, who's doing his second tour as chief executive of the Golden State, is more prone to favor legislation like AB 183.

Brown's also a Democrat, who as Governor needs all the support he can get from the Democratic leaders of the California State Assembly and California State Senate, in order to pass a budget this year that also reduces a potion of California's massive budget deficit.

He's also fairly close to Speaker Pro Tempore Fiona Ma. Brown, like Ma, is from the Bay Area. The Governor was Mayor Oakland for two terms and lives in the city. Before that he lived in San Francisco for many years, as well as having a home in Southern California. He's also the former chairman of the California Democratic Party.

Although Brown hasn't publicly offered his views on AB 183, that we're aware of - we did ask an aide in his office who said 's the case, we would be rather surprised if he vetoed AB 183 if it is passed by both Democrat-controlled state legislative bodies

We will be following AB 183 closely as the bill to ban the sales of alcoholic beverages at self-service checkout stands makes its way through the legislative process in Sacramento, which some compare to watching sausage being made.

Related Stories

September 30, 2010: Self-Service-Only Checkout Safe at California Fresh & Easy Neighborhood Market Stores Thanks to Governor's Veto Pen

September 30, 2010: Fresh & Easy Neighborhood Market Hopes Governor Schwarzenegger Can Find His Veto Pen Before Midnight Tonight

September 28, 2010: Fresh & Easy Neighborhood Market Hoping Governor Schwarzenegger Prefers His Veto Pen When it Comes to AB 1060

September 25, 2010: Future of Fresh & Easy Neighborhood Market's Self-Service-Only Checkout in California Up to Governor Schwarzenegger

August 24, 2010: California State Senate Sends Bill to Governor That Could End Self-Service-Only Checkout at Fresh & Easy Neighborhood Market

August 15, 2010 : Bill to Ban Alcoholic Beverage Sales at Self-Service Checkouts Would End
'Self-Service Only' at California Fresh & Easy Neighborhood Market Stores

July 14, 2008: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages.

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

May 20, 2008: Take One Dose of 'Internal Research', Add An 'Independent' Survey From An Unnamed Source, and You Get A Consumer Preference For Self-Service Checkout.


Anonymous said...

I totally agree that having one or two staffed checkouts will help Fresh and Easy. I live in the UK and have stopped shopping at Walmart's Asda and ironically shop at Tesco (despite being slightly more expensive) since Asda has gone over to 90% self-checkout.

Nigel said...

Looks like this research analyst Mike Dennis took your reporting and information from the story and made it his own for this story in Reuters UK: