Wednesday, July 27, 2011

'Son of Tesco Fresh & Easy Law' Moving Through State Senate: Will California Determine Fresh & Easy Neighborhood Market's Checkout Scheme?

Self-service or "assisted" checkout at Fresh & Easy Neighborhood Market.

Assembly Bill 183 (AB 183), which passed in the California State Assembly earlier this year by a large majority, is making its way though the committee process in the California State Senate and could be voted on by the full body as early as late this summer or early fall.

AB 183, which we've nicknamed the "Son of Tesco Fresh & Easy Law" law for reasons you'll soon learn, will if passed by the California State Senate and signed into law by Governor Jerry Brown (Democrat), ban the sale of all alcoholic beverages at self-service checkouts in grocery and other format retail stores where adult beverages are sold.

The reason we gave AB 183 the "Son of Tesco Fresh & Easy Law" moniker is two-fold: (1) It's a successor bill to two previous pieces of legislation, first in 2008 and again in 2010, designed to prohibit the sale of alcohol at self service checkouts; and (2) Tesco's Fresh & Easy Neighborhood Market would be the only major retailer in California the bill would have a major operational affect on because its stores offer self-service checkout only, which it calls "assisted checkout" because store employees will assist customers with checkout if asked.

If AB 183 becomes law in California, where Tesco has 127 of its 176 Fresh & Easy grocery markets - there are 28 stores in metropolitan Phoenix, Arizona and 21 units in metro Las Vegas, Nevada - the grocer will at a minimum most likely have to add at least one full-service checkout in each of its stores in the Golden State, which is something it does not want to do because it believes - in our analysis incorrectly - the cost savings from having self-service checkout only outweighs the benefits of offering shoppers the choice between self and full service checkout, which is something all of its competitors that offer self-service do.

The two previous bills, both authored by Assemblyman Hector De La Torre (Democrat-Southgate, Southern California), failed to become law. In 2008 De La Torre's failed to pass by a majority in both houses in Sacramento. His second bill in 2010, , passed in both the California State Assembly and California State Senate but was vetoed by then Governor Arnold Schwarzenegger, who is a Republican, albeit a moderate one.

AB 183, which is authored by Assemblywoman Fiona Ma, a Democrat from San Francisco's Richmond District, the neighborhood where Tesco recently opened its first Fresh & Easy store in the city at 32nd Avenue and Clement Street on June 22, is virtually identical to the previous two bills in that it amends California's alcohol beverage license law to include as a provision of holding an off-sale wine and beer permit and/or a liquor license that the holder will not sell alcohol at self-service checkout stand in its stores. A violation of the law by a retailer would be a misdemeanor, according to the bill's current legislative language.

None of California's major retailers, including stores operated by national giants Safeway Stores, Inc., Kroger Co, Supervalu, Inc., Walmart Stores, Inc., 7-Eleven, Target or Costco, nor any regional chains and independents we're aware of, offer self-service checkout only like Tesco's Fresh & Easy does. Instead, the retailers that do offer self-service checkout in the Golden State do so along with offering full-service checkout in their respective stores.

Therefore, although the state's trade group for grocers, the California Grocers Association (CGA), which United Kingdom-based Tesco's Fresh & Easy and most of the other grocers with stores in California are members of, is working to defeat AB 183, the fact is none of its other members will be materially affected if the legislation becomes law because unlike Fresh & Easy Neighborhood Market those retailers offer both full and self-service checkout lanes or full-service only in their stores.

AB 183 moving through senate committee process

AB 183, which was passed in the California State Assembly by a 48 (in favor) to 26 (against) vote on May 26, is now headed to the Senate Appropriations Committee, following recent passage in the Senate Governmental Organization Committee, and is set for an August 15 hearing in appropriations.

Because the California State Senate is controlled by Democrats, who have a 25 to 15 member margin over Republicans, the Appropriations Committee like all others has a Democrat majority. Therefore we expect AB 183 to pass out of the committee with a majority vote in favor, just as AB 1060 did in 2010.

It's also our analysis, as we've been saying in our coverage of the legislation all year, that AB 183 will pass in the California State Senate like it did in the state assembly in May, and as AB 1060 did last year in both legislative bodies.

Democrats have a 10-member advantage in the California State Senate. Therefore even if a number of Democrats were to vote against AB 183 (we think no more than three or four will at the most) the bill would still pass in the senate. Additionally, it's possible a few Senate Republicans will vote for AB 183 because it's supported by numerous law enforcement organizations, clergy groups and Mothers Against Drunk Driving (MADD), all of which are important interest groups for some Republicans in California. (Here's a list of the major supporters and opponents of AB 183.)

Jerry Brown: Man on the white horse for AB 183 opponents?

If our analysis is correct, and we believe it is, Fresh& Easy Neighborhood Market, CGA and the other groups working to defeat AB 183, such as the California Chamber of Commerce and the California Hispanic Chamber of Commerce, will have just one way to stop the "Son of Tesco Fresh & Easy Law" from becoming just that - law. That one opportunity to kill the bill will be to appeal to Governor Jerry Brown directly as well as through a public relations campaign to veto the legislation. [Suggested reading: Jerry Brown, The Man on the White Horse. J. D. Lorenze, 1978.]

Prior to this month our analysis was that Brown would in very high probability sign AB 183 if it passes both legislative bodies. To attach a metric to our previous analysis, our confidence rating was about 80%  in the positive the Governor would sign the bill if it passes.

However, a couple recent developments, including the passage of the state budget and Brown's veto of the so called California "Card Check" legislation this month, which passed in both the California State Assembly and Senate and would have allowed farm workers to join a union by simply filling out a card rather than voting in a secret ballot election, have lead us to reduce that confidence rating somewhat.

Jerry Brown, who marched with Cesar Chavez in the 1960's and 70's and pushed and signed groundbreaking pro-farm worker legislation during his previous incarnation as Governor in the 1980's, is a longtime supporter of the United Farm Workers Union, founded by Chavez, which was behind getting the "Card Check" bill passed.

It remains our analysis at present that AB 183, if passed later this year by the California State Senate, will be signed by Governor Brown, although our current confidence rating he will sign the bill into law is about 70% for to 30% that he would veto it.

However, that's our current assessment. And things can change between now and the next few months in California politics. For example, opponents' of AB 183 have ratcheted up there lobbying and PR campaign to defeat the legislation, getting a umber of major California newspapers to come out with editorials against the bill, for example, although how influential this will be is questionable in today's climate where newspaper editorial boards have far less influence over politicians and voters than they once had.

Supporters of AB 183 recently told us they're planning soon to invigorate their campaign in favor of the legislation in response to the added efforts by opponent groups.

But despite the lobbying and PR campaign, it's difficult to see, based on our reporting, how AB 183 can be defeated once it's voted on by members of the California State Senate.

Therefore the endgame for the bill's opponents, chief among them Tesco's Fresh & Easy Neighborhood Market which is doing most of its work through the CGA and a couple Sacramento-based lobbying and public relations firms, remains with the Governor, in our analysis. Stay tuned.

Related Stories: Follow the Legislative History in Fresh & Easy Buzz

June 4, 2011: 'Son of Tesco Fresh Easy Law': Self-Checkout Booze Ban Bill AB 183 Sails Through California State Assembly; State Senate Next Stop

May 11, 2011: Son of Tesco Fresh & Easy Law' - California Assembly Appropriations Committee Passes Self-Checkout Ban Bill AB 183 By 12-4 Margin

May 6, 2011: 'Son of Tesco Fresh & Easy Law': California State Assembly Appropriations Committee Hearing For AB 183 Cancelled

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

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


Anonymous said...

I have a question for you. Would this bill be going forward if Fresh and Easy was union? Come on... honest answer.

Anonymous said...

I guess honest answers take time.

David Coursey said...

Perhaps a really disagreeable amendment could stop this bill? I am not sure it needs stopping and doubtless F&E will add a "alcohol only" register if it passes.

Matthew Brannigan said...

I would say it was very unlikely. Also convincing MADD to be on board makes it a dead cert to go through. Whether there is any evidence that it will make a difference (there isn't) seems to be irrelevant - but that's politics for you! :)

Fresh & Easy Buzz said...

Anonymous July 27, 2011 9:35 PM

It's impossible to know with any certainty whether or not AB 183 would have come about were Fresh & Easy Neighborhood Market a union grocer, unless you have access to what's in the mind of the bill's author. We don't. Therefore, it's all a matter of opinion in terms of your question.

In our view, the previous two bills to ban alcohol sales at self-service checkouts, in 2008 and again in 2010, might not have come about were it not the case that Tesco's Fresh & Easy has (1) all self-service checkouts only and (2) is non-union.

After all, it is a unique combination. All other non-union grocers - Whole Foods, Trader Joe's, Walmart, Target, on and on all either have full-service checkout only or offer both self and full service in their respective stores.

The two bills in 2008 and 2010 were mainly driven and supported by the UFCW union.

However, in the case of AB 183 (the current bill), which is also supported by the UFCW, a certain amount of momentum has been picked up since the last two bills failed to become law.

In other words, there are numerous other interest groups, MADD and other alcohol beverage control advocay groups in California, law enforcement agencies and some others, that are strongly backing the legislation.

Some of these groups backed th prevous two bills but not with the sam level of effort they're now putting into AB 183.

To the best of our knowledge, none of these groups have any vested interest in Fresh & Easy's union or non-union status.

Fresh & Easy Buzz said...


Therefore, in our view, at least in the eyes of those groups and supporters, AB 183 has gone far beyond any notion of Fresh & Easy only.

AB 183 is also (for many of the bill's supporers weve talked with) legislation deigned so that any retailers that might be thinking about going to an all self-service model in the future won't be able to sell alcohol without a set up in which there's a face-to-face interaction with a store worker.

Regardless of ones opinion on the legislation, we do think it is a fair question for citizens to ask as to whether or not alcoholic beverages should be allowed to be sold without a face-to-face interaction with an employee, even though the self-service checkouts do have safegards built in that shut the machine down when an alcoholic beverage package is scanned by a customer, which then requires a clerk to be present to complete the transaction.

We are directly aware of instances when this mechanism has been defeated by teenagers, for example, as our some grocers in California, who when they've discovered such things have made adjusments to their self-service systems.

An example of why this is a legitimate issue for citizens to debate is that it's illegal for retailers in California to sell tobacco products at self-service checkout stands, even though the same self-service checkout system lock mechanism could be employed for those products as well.

Not only that but cigaretts must be kept either behind a full-service checkout counter or in a locked display case in California grocery stores and all other formats where they're offered for sale. A customer isn't even allowed to select the products in a store. A clerk must do it for them.

The food and grocery retail industry in California agree on this legislation and has not objected to the law.

So it is a reasonable argument in terms of logic for supporters of AB 138 to ask 'why not the same,' a least when it comes to checkout (they aren't proposing putting alcohol behind locked cases this time around), for booze as it is for tobacco products.

Based on our experience and research and reporting to date we have not found that the purchase of alcoholic beverages at self-service checkouts by under age people is widespread in California. The most prevelent thing, as has been the case since the dawn of time, is the buying of alcohol for teens by adults, many who get paid by the teens to do so.

But it's also important to note that the use of self-service checkout in general by retailers that sell alcoholic beverages is miniscule in California. Therefore the baseline from which to judge the prevelance of he practice is rather low.

PS: Now anon can you show our readers you are able to contribute something more to the debate than your one and two sentence honest answers mantra? And do feel free to offer your analysis and opinion on AB 183.


Fresh & Easy Buzz said...

Thanks for your comment David: How do you think Fresh & Easy would handle it then if AB 183 passes and is signed into law by the Governor?

Anonymous said...

Huh? Shopped at Fresh and Easy? You can't purchase alcohol without face to face interaction with a clerk. Fiona Ma is a very liberal legislator... from San Francisco. No one gets elected in SF without union backing. True there is much more interest in Ma's bill. A liberal democrat as opposed to a moderate republican in the governer's seat is the obvious reason why... we think.

Anonymous said...

There are about 14 states where alcoholic beverages like wine can't even be sold in grocery stores. So I guess it all depends on your perspective. About the union and more jobs, I doubt Fresh & Easy will hire more employees if they have to have some full-service checkout. Instead they will just change assignments of existing employees around. Most stores I've been in the employees seem to have extra time on their hands anyway.

Anonymous said...

True. Those 14 states want to control the PRICE of alcohol. Age is a secondary thing. If F&E is required to have a full-time monitored checkout for beer/wine, are you gonna stand in a line 6,7,10 people deep to buy a bottle of wine?