Thursday, December 8, 2011

Bad Timing With New Law Effective January 1, 2012: Fontana, California Fresh & Easy Store Cited For Allegedly Selling Alcohol to Minors

News & Analysis

The Fresh & Easy Neighborhood Market store at 16049 Baseline Boulevard in Fontana, California is one of 20 retail stores in Southern California's San Bernardino County that were issued citations by the California Alcohol Beverage Control Board (ABC) this past week for allegedly selling alcoholic beverages to minors.

The citation issued to the Fresh & Easy store in Fontana was the result of a regional sweep conducted by the state's alcoholic beverage sales regulatory agency and the San Bernardino County Probation Department, according to a spokesperson for the ABC.

The 19 other retail stores are in the cities of Ontario, Upland, Redlands, Montclair, San Bernardino and Rancho Cucamonga, according to the ABC and the San Bernardino County authorities.

Self or assisted service checkout at Fresh & Easy.
The citation comes at a particularly bad time for Tesco's Southern California-based Fresh & Easy grocery chain because AB 183, which bans the sale of alcoholic beverages at self-service checkouts in retail stores, goes into effect January 1, 2012.

We nicknamed the self-service checkout booze ban bill the "Tesco Fresh & Easy Law" because Fresh & Easy Neighborhood Market is the only grocery chain in California that offers self-service checkout only in its stores.

All the other chains and independent grocers in the Golden State either offer full-service checkout only or offer a mix of full and self-service.

El Segundo, California-based Fresh & Easy Neighborhood Market has been struggling to figure out a way to comply with the law without having to add some sort of full-service checkout component to what it calls its "assisted checkout" system in its 135 stores in California, according to our sources who are familiar with the discussions.

There are 184 Fresh & Easy stores in the Golden State. The remaining 49 stores are in metropolitan Las Vegas, Nevada (21 units) and metro Phoenix, Arizona (29 units).

Fresh & Easy calls its self-service checkout system "assisted checkout" because if asked, store workers will assist customers with the checkout process. The employees also regularly assist customers when problems occur with the self-checkout process.

Additionally, the self-service checkouts at Fresh & Easy don't allow customers to fully self-scan alcoholic beverage items.

Instead, the product UPC code numbers are programmed into the computer, so when a customer scans an item the system flags it, stopping the self-checkout process. A store worker must then come to the checkout and check the customer's identification card, which the grocer does for those a clerk believes to be 40-years-old or younger. If all is well, the clerk then punches a special code in the register, which then allows the customer to complete his or her self-checkout.

The intent of AB 183 however is that the new law will require a store worker to handle any and all checkout transactions involving alcohol from start to finish, in a face-to-face manner with the customer.

Fresh & Easy has two types or versions of self or assisted service checkout lanes in its stores.

The first type, which has shorter checkstands, isn't monitored regularly by store workers.

The second version though, which features longer checkout stands with conveyor belts, is monitored regularly by one or more store clerks, who linger in the area to assist customers.

It's this second system that Tesco's Fresh & Easy has considered tweaking a bit so that it might meet the requirements of the self-service alcohol beverage self-checkout ban law when it goes into effect less than a month from now, according to our sources.

For example, at the larger conveyor belt-equipped checkouts where store employees are always present and monitor the checkout process, Fresh & Easy could have the employees conduct any and all customer transactions that involve the purchase of alcoholic beverages.

It's possible, although not fully-clear, that if the grocer had a store worker conduct the entire transaction from start to finish, it might meet the legal language of AB 183, although it wouldn't likely meet the intent of the legislation's author, Assemblywomen Fiona Ma (Democrat-San Francisco), and the various supporters of the law.

Her intent behind the legislation, if not spelled out explicitly in the bill's language, is that retail stores would need to offer both full and self-service checkout under the new law.

However, the definition of full-service checkout isn't without some ambiguity in AB 183, based on our close reading of the legislation. Therefore it is possible, in our analysis, that a version of Fresh & Easy's monitored self/assisted checkout could qualify under the law, if not based on the intent of the legislation, perhaps on the actual language of the bill.

The other alternative for Fresh & Easy would be to offer at least one full-service checkout in each of its stores in California, which is something we suggested in early 2008 it do for reasons having nothing to do with any legislation in California, which wasn't yet introduced at the time, designed to ban alcohol sales at self-service checkouts in retail stores.

We stress we're not saying Fresh & Easy Neighborhood Market has decided to go with the option we are reporting on. Rather, based on our reporting, it's one scenario the grocery chain is considering because if possible it wants to retain its self/assisted checkout system, even if doing so requires some modifications, rather than add fell-service checkouts to the California stores, according to our sources.

Meanwhile, although a retailer being issued a citation for allegedly selling alcohol to minors isn't a capital offense, it is a serious one, albeit not completely uncommon.

However, receiving such a citation from authorities coming so close to the self-service checkout alcohol sales ban law going into effect is particularly bad timing for Tesco's Fresh & Easy.

The California ABC is aware the grocer offers self-service checkout only in its stores, and it plans to monitor Fresh & Easy closely once the law goes into effect.

In addition, numerous California law enforcement agencies were supporters of AB 183, and as a result plan to step-up monitoring of the checkouts once the law goes into effect in January 2012.

The law has fines attached to it for retailers that are caught allowing alcoholic beverage sales at self-service checkouts in their stores.

We've talked to staff members of the author and co-authors of AB 183, who all say the intent behind the law is to require face-to-face transactions between customers and store workers whenever alcohol is purchase in a retail store.

With January 1, 2012 coming fast, Tesco's Fresh & Easy will soon need to announce how it's going to comply with the new law.

Waiting until the last minute to do so - and the last minute is pretty much here - is a mistake because if what the grocer does to comply with AB 183 runs counter to the intent of Ma and her supporters, it could become a major public relations disaster for the grocery chain, which is the last thing it needs as it attempts to break-even (Tesco lost $112 million on Fresh & Easy for the first half of its fiscal year ended in August) by the end of 2012.

Related Stories

October 10, 2011: Gov. Signs AB 183: End of Self-Service Checkout Only in California For Fresh & Easy Neighborhood Market if Stores to Still Sell Alcohol

September 9, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill Passes California State Senate; Headed to Governor's Desk For Action

September 7, 2011: Self-Service Checkout Booze Ban Bill Fails in California Senate First Time Around; 'Missing Seven' Dems Hold Key to Passage By Friday

September 6, 2011: California State Senate Set to Vote on Self-Service Checkout Booze Ban Bill This Week

August 20, 2011: 'Son of Tesco Fresh & Easy Law': Self-Service Checkout Booze Ban Bill AB 183 Passes Out of California Senate Appropriations Committee; Headed For Senate Floor

July 27, 2011: 'Son of Tesco Fresh & Easy Law' Moving Through State Senate: Will California Determine Fresh & Easy Neighborhood Market's Checkout Scheme?

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: 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 piece : 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.


James Sinclair said...

Fresh and easy could turn what you say might become a "a major public relations disaster" into the opposite, and use the public's very low support of the legislature to their advantage.

But as far as Ive seen, they havent done anything to inform the public of the real reason the law exists, which obviously has nothing to do with protecting minors from booze, but to protect competition and unions.

There are plenty of people, especially in the conservative parts of their market, that would go out of their way to shop at F&E if they were informed about what really was behind this law.

Anonymous said...

Isn't it too late to do anything about AB 183 since the Governor has signed it into law already?

What about filing a lawsuit?

Matthew Brannigan said...

With just two weeks in the year left I haven't noticed anything different at Fresh and Easy which is very surprising. Anyone reviewing the hard data will agree that the existing safeguards for their semi-automated checkouts are as good as what any fully manned checkouts would have, however according to the new law this is simply not good enough. Have they already found a loophole? Are they going to fight it? If they choose to fight then I think they are heading for very dangerous waters next year.