Winning In Washington
The political and regulatory landscape in Washington, D.C., is a complex, nuanced and dysfunctional place, where the best of intentions are known to have unintended consequences. It is a combination of challenging factors that are magnified in the aftermath of election-year politics.
Retailers and consumer goods companies anxiously watching the drama unfold in 2017 can take comfort in the fact that their interests—and those of the American consumer—are effectively represented by six powerful trade associations led by influential and vigilant executives:
Pam Bailey, president and CEO of the Grocery Manufacturers Association, is a Washington, D.C., veteran who served in the administrations of three different presidents in the '70s and '80s. She joined GMA in 2008 after previously serving as president and CEO of the Personal Care Products Council and the Advanced Medical Technology Association.
Matt Shay, president and CEO of the National Retail Federation, joined NRF in 2010 and has had a major impact on the organization. Shay, the former president and CEO of the International Franchise Association, has transformed NRF into one of Washington's most powerful voices supporting the retail industry, leading the organization to new levels of effectiveness on policy issues and increasing awareness of the industry's economic impact.
Hank Armour, president and CEO of NACS, the Association for Convenience and Fuel Retailing, is a former convenience store operator and fuel industry veteran with a Ph.D. in economics. After spending two years as NACS chairman, he was tapped in 2005 to serve as the organization's president and CEO. Armour possesses direct knowledge of the business challenges faced by NACS' 2,100 retail and 1,700 supplier member companies, whose annual sales total $575 billion.
Leslie Sarasin, president and CEO of the Food Marketing Institute, joined FMI in 2008 after spending nearly two decades with the American Frozen Food Institute, including nine as president and CEO. Sarasin is a food industry veteran who leads an organization whose members operate nearly 40,000 retail food stores and 25,000 pharmacies, representing a combined annual sales volume of almost $770 billion.
Sandy Kennedy, president of the Retail Industry Leaders Association, joined RILA in 2002 after spending time at Accenture and seven years with NRF. Kennedy led RILA's transformation from the organization formerly known as the International Mass Retail Association, focused on discount retailers, to RILA in 2004, with a membership base comprising the nation's largest retailers and their trading partners. She has served on the White House Advisory Committee for Trade Policy and Negotiations since 2010.
Steve Anderson, president and CEO of the National Association of Chain Drug Stores, will mark his 10th anniversary at NACDS in 2017. He joined the organization after serving eight years as president and CEO of the National Restaurant Association and 20 years with the American Frozen Food Institute. He was named Trade Association CEO of the Year in 2016 by CEO Update magazine. He also served on the board of directors of the U.S. Chamber of Commerce.
In the pages that follow, Bailey, Sarasin, Kennedy, Armour, Shay and Anderson share their unique perspectives, their organizations' legislative priorities, top challenges and member concerns, and key accomplishments that make them and their organizations worthy of being called "DC Difference Makers."
Keeping Food Safe, Making Labels Smart
Pam Bailey serves as president and CEO of the Grocery Manufacturers Association (GMA), an organization founded in 1908 that today includes more than 300 food, beverage and consumer product companies. Bailey joined GMA in 2008 to lead an organization that represents an industry that generates annual sales of $2.1 trillion.
Retail Leader: What are GMA's top three legislative priorities and why?
PB: GMA achieved its top legislative priorities in 2016 with congressional passage of a uniform national standard for GMO disclosure and reforms of chemicals management law, the Toxic Substances Control Act (TSCA). But our work isn't done. Our efforts now are focused on the development of regulations to implement both laws.
An important part of the GMO disclosure law was enabling companies to provide this information digitally through an electronic or digital code on the package. Consumers are increasingly seeking more information about the foods, beverages and [other] products they use and consume, and GMA and our member companies are committed to providing this information to consumers. Our SmartLabel initiative helps make this information more and more readily accessible to the consumer, enabling them to make fully informed decisions no matter where they are. As we head into 2017, there are already more than 2,500 food, beverage and personal care products using SmartLabel, and our estimate is that there will be more than 34,000 products on the shelves providing this detailed information by the end of next year.
RL: What are the biggest challenges GMA faces when representing industry interests to affect the legislative process and regulatory outcomes?
PB: Given the breadth of industry represented by our membership, we best serve our members when we have a strong consensus on an issue. Product safety, for instance, is the highest priority across our food, beverage and consumer products companies. Additionally, our companies are aligned on upholding our commitment to policies based on sound science, being good stewards of the environment, and empowering consumers through tools and information enabling them to make more informed choices. And we have demonstrated through successful passage of the GMO disclosure law that even in an often bitter political environment, common-sense consensus solutions still generate bipartisan support.
RL: Regardless of which party is in the Oval Office or controls Congress, what is the No. 1 challenge you consistently hear voiced by your members?
PB: What is most important is working to ensure that policy decisions are made based on the best and most current sound science and that they have a strong consumer benefit. Sound science is at the foundation of our industry and steers every policy position we take. It is essential in ensuring product safety and maintaining consumer trust. Industry and regulatory agencies need to work together on behalf of consumers to ensure that product safety and policies are fact-based. Effective regulation of food, beverage and consumer products results in a win for everyone: government, industry and, most importantly, consumers.
RL: How does GMA engage with other trade groups to accomplish mutually beneficial goals?
PB: Working closely across the industry and across the broader food sector is important to GMA member companies because it helps us find ways to address common issues. Passage of the national bioengineered food disclosure standard is a testament to the value of these partnerships and the efforts of our farm-to-fork coalition of farm groups, food processors, manufacturers and retailers. We also worked with other trade associations on chemical safety reform. These partnerships continue as we work together on regulation development.
Additionally, our collaboration with retailers has led to the development of important initiatives such as Facts Up Front, SmartLabel and the cross-sector Food Waste Reduction Alliance (FWRA), which also brings in the restaurants and retail sector.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been GMA's greatest accomplishment?
PB: This year has seen strong bipartisan support for passage of two milestone pieces of federal legislation for our industry: the national GMO disclosure law and the chemical safety reform bill. These were the top-priority issues for our food and beverage companies and our consumer products companies, respectively. Passage of the GMO disclosure law is a victory for all American families. It ensures consumers can get more information about the products they use and consume, prevents a patchwork of confusing and costly state labeling mandates, and provides the same labeling rules to shoppers regardless of where they live or shop. Reforming the Toxic Substances Control Act is crucial in the development of a more workable and effective national chemical regulatory program which will further ensure the safe use of chemicals, encourage innovation, and protect American jobs.
Fighting for Food Retail and Consumers
Leslie Sarasin serves as president and CEO of the Food Marketing Institute, a position she assumed in 2008. Sarasin leads an organization whose more than 1,200 food retail and wholesale member companies touch the lives of millions of American consumers daily at roughly 40,000 stores and 25,000 pharmacies with annual sales approaching $800 billion.
Retail Leader: What are FMI's top three legislative priorities and why?
LS: FMI surveys its member companies to compile a list of priority policy issues important to the industry. Over the years, some of the same issues have remained on our list of priorities—swipe fees, food safety, taxes and food labeling—because of the significance of the issue and/or the delayed action in Congress, but we usually expect one or two new issues to emerge that companies express as being of concern.
We will survey our members on 2017 issue priorities soon after the elections, since control of Congress and the White House impacts both the issues and the strategies that may be successful. In the post-election lame duck legislative session we could see legislative action on industry priority issues, such as menu labeling, debit swipe fee reform and overtime pay in this end-of-year session. Many of our legislative priorities will be affected by the control of Congress and how the leadership elections and committee chairmanships play out, but we anticipate many of the same priority issues in 2016 to take the spotlight in 2017.
RL: What are the biggest challenges FMI faces when representing industry interests to affect the legislative process and regulatory outcomes?
LS: FMI represents the supermarket industry, a heavily regulated and complex sector that operates on razor-thin profit margins. Among our main roles in Washington is to educate policymakers on how each new policy or regulation will affect the operations of our member companies and how each of these new requirements could incrementally increase the prices consumers—their constituents—pay for food. The key step is to make sure we are knowledgeable on the impact the policy or regulation will have on the industry and to provide officials with access to the best information on the topic, whether it comes from an FMI expert or an expert at one of our member companies.
FMI's education efforts are always challenged by turnover in Congress. To address this, FMI often invites lawmakers and regulators to visit our members' stores to see firsthand how certain policy decisions will impact the industry.
RL: Regardless of which party is in the Oval Office or controls Congress, what is the No. 1 challenge you consistently hear voiced by your members?
LS: Our members have a great story to tell, and many of them regularly come to Washington to visit in person with lawmakers, but one significant challenge they face is planning for the unexpected. Whether in their tax planning, setting employee work schedules and wages, or designing a new kiosk for selling prepared foods, a new law or regulation might unravel months of planning in order to comply with a new requirement. FMI's primary role is to help our members spend less time worrying about understanding new laws and regulations and more time responding to their customers' needs.
RL: How does FMI engage with other trade groups to accomplish mutually beneficial goals?
LS: The association world mirrors the links in today's food supply chain in that coordination and collaboration are essential for success. We witnessed great strides this year as the food world came together to press for a federal, consistent method of disclosing GMOs. I am proud of the food retail industry's accomplishment in helping get legislation approved on Capitol Hill. I am grateful that it will help avoid further disruption in the interstate commerce of food products. And I'm particularly enthusiastic for how this law offers new dialogue around information technology beyond the traditional label.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been FMI's greatest accomplishment?
LS: While the legislative battle on GMO took much time, treasure and resources, we made great strides in helping our retailer and wholesaler members prepare for the most comprehensive overhaul of food safety laws in 70 years, the Food Safety Modernization Act. FMI supported this act from the beginning and proactively participated in the rulemaking process that offered parameters on how to prepare, handle, and deliver food to customers.
September marked the first compliance date for only one of seven major regulations, so the next few years will bring significant culture and business shifts in how the industry brings food to market. While we've been planning for this, it is still overwhelming to implement regulations of such magnitude, which is why FMI food safety and regulatory experts have been building a FSMA-preparedness portal and offering ongoing counsel as FMI members adapt their businesses to comply with the laws.
FMI is resolute in helping its members protect and maintain the safest, healthiest and most nutritious food supply in the world.
Playing Offense in Debit Card Battle
Sandy Kennedy has served as president of the Retail Industry Leaders Association (RILA) since 2002, growing the organization into the primary association for America's largest retailers and suppliers. RILA's more than 200 members account for more than $1.5 trillion in annual sales and operate more than 100,000 stores, manufacturing facilities and distribution centers.
Retail Leader: What are RILA's top three legislative priorities and why?
SK: RILA members are very large and sophisticated businesses with tens if not hundreds of thousands of employees spread across the United States, and with supply chains that stretch all the way around the world. Given this, the range of issues that affect them is endless. However, three buckets of issues dominate our focus because of their impact on members' ability to provide a great shopping experience and to grow.
First, workforce issues that threaten the advancement and flexibility that employees value, specifically proposals at the state and local level that would dramatically change the way that retail schedules are created and, ultimately, aim to dramatically reduce part-time work.
Second, issues arising from the Visa/MasterCard payments duopoly that increase costs for retailers and consumers and result in inferior card security for cardholders. For example, RILA is focused on pursuing further reforms to credit and debit card swipe fees.
Third, the disparity between online-only retailers and Main Street retailers as it relates to the collection of the sales tax due on purchases made. A sale is a sale, whether it happens in a store or online. However, remote online sellers are able to avoid complying with rules that local retailers comply with every day. That's unfair, and RILA is committed to righting that wrong.
RL: What are the biggest challenges RILA faces when representing industry interests to affect the legislative process and regulatory outcomes?
SK: It is always best to be on offense. However, given the state of legislative policymaking in Washington, the window for advancing business issues offensively is incredibly narrow, and the competition among other interests trying to do so as well is intense. This presents an enormous barrier to getting things done. While it is not insurmountable, it delays our ability to solve problems.
The regulatory process is quite different. There, the challenge isn't inactivity, it's overactivity. The Obama administration's regulatory agenda has been aggressive and largely in conflict with the policy goals of retail. The task of fighting back against countless rulemaking efforts under way at several agencies is tremendously challenging.
RL: Regardless of which party is in the Oval Office or controls Congress, what is the No. 1 challenge you consistently hear voiced by your members?
SK: For the past decade, the most often repeated public policy challenge is the perception that nothing will get done. The sense is that no matter how serious the problem or how obvious the solution, policymakers can't or won't act. While gridlock is real, the perception that nothing is getting done is untrue. Many members, while frustrated with the pace of action, work with us to advance goals where possible.
RL: How does RILA engage with other trade groups to accomplish mutually beneficial goals?
SK: The saying, "the enemy of my enemy is my friend," is trite, but true. Building coalitions among like-minded groups is essential to success in Washington.
Our most frequent allies are our peers among the merchant trade associations. While the members we each represent may differ, our view of the world is often the same. So, working with them is natural and common. The same is often true among the larger business trade associations, where more issues unite us than divide us.
Where collaboration is most interesting, and admittedly fun, is when traditional adversaries work together. At RILA we have done this successfully many times over the past decade, some quietly and some very publicly. In 2014, RILA and our merchant trade association peers shocked many in Washington by partnering with traditional opponents among the banking trade associations to discuss a range of issues related to cybersecurity. To RILA, the partnership made good sense. We all faced a common challenge and it worked. It was a reminder of just how important good partners can be, no matter who they are.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been RILA's greatest accomplishment?
SK: I am proud of the many things we have accomplished with and for our members. But the biggest legislative accomplishment over the past several years was reforming the merchant fees associated with debit cards. The battle was intense and long, and we were outspent by our adversaries by multiples. It brought some fairness and competition to a market that previously had none. It was a defining moment for RILA and the retail industry at large, and I will always be proud of what we accomplished.
C-Store Champion Seeks Consistency
Henry Armour has served as president and CEO of NACS, the Association for Convenience and Fuel Retailing, founded as the National Association of Convenience Stores (NACS), since 2005. Armour is a fuel industry veteran and former NACS chairman who leads an organization whose roughly 3,800 members operate more than 154,000 stores, conduct 160 million daily transactions and sell 80 percent of the fuel purchased in the U.S.
Retail Leader: What are NACS' top three legislative priorities and why?
HA: We continue to hear our members' concern over the escalating cost of labor and the difficulty in recruiting and retaining quality labor. There are many legislative and regulatory fronts on which this is being fought on the federal, state and local levels.
Payments continue to be a huge issue. The cost of EMV compliance at gas pumps alone is staggering, especially since we currently don't have the security of a personal identification number (PIN) to verify that the customer is authorized to use the card. And of course the cost of accepting swipe fees. These fees continue to escalate due to the credit card industry duopoly setting fees that all banks agree to charge. Although the amount we paid in 2015 dipped due to the drop in gasoline prices, these fees still account for our second highest expense.
So many issues affect convenience, food and fuel retailers, but two stand out currently: FDA menu labeling regulations and FNS (Food and Nutrition Service) regulations that would essentially prohibit convenience stores from accepting SNAP benefits. Not only would this have a dramatic impact on the industry, but SNAP customers in rural and urban environments would have few options left for redeeming their benefits.
RL: What are the biggest challenges NACS faces when representing industry interests to affect the legislative process and regulatory outcomes?
HA: We sell over 80 percent of motor vehicle fuel, so we have all the environmental and tax issues associated with fuel. We sell over 80 percent of the tobacco products. We sell lottery tickets. We sell food, so we must comply with all restaurant regulations. We are small businesses with labor and ADA issues. The list goes on and on.
HA: Legislation and regulation at the state and local level. Not only is it difficult to track and influence the outcomes of these initiatives, they create compliance nightmares. If a company operates in five states, they may face multiple different labor laws, zoning ordinances, tax schemes, etc.
Also, many initiatives that failed at the federal level have successfully passed in smaller jurisdictions. Look at menu labeling. Advocates gave up in Washington and began passing laws in cities across the country, and they were all just a bit different. Finally, McDonald's threw up their hands and said they couldn't comply with all the different ordinances and came to Congress asking for a federal law that pre-empted the local laws. And now we have nationwide menu labeling.
RL: How does NACS engage with other trade groups to accomplish mutually beneficial goals?
HA: On nearly every issue in which we are engaged, NACS works with like-minded associations to achieve mutually desired results. This does get interesting when you are in a coalition with one group on issue A, but are working with a coalition opposing that same group on issue B. For example, on swipe fees NACS works with a broad coalition of retailers. On menu labeling we are working with FMI, NGA and the "pizza community," and on SNAP, we are pretty much going it alone.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been NACS' greatest accomplishment?
HA: From a legislative perspective, it would have to be the passage and subsequent defense of the Durbin Amendment on debit card swipe fee reform—a battle that continues today. From a broader industry perspective, our efforts at creating more personal relationships between our members and their members of Congress continues to provide great dividends. We have an initiative called NACS In Store where we bring members of Congress to a convenience store in their home district. They get to know the store owner and employees who show them how the gasoline operation works, how regulations play out in the real world, how we train our employees. They point out how federal initiatives affect the business, and let them work behind the counter. Not only does this create relationships between the retailer, member of Congress and NACS, it gives an opportunity to say things like, "See that 89-cent candy bar this kid just bought with his debit card? That cost me 25 cents in swipe fees." That's when the lightbulbs start going on.
Elevating Retail's Profile in D.C.
Matthew Shay joined the National Retail Federation (NRF) as president and CEO in 2010 after serving in a similar capacity at the International Franchise Association. He leads the world's largest retail trade association, with 18,000 members representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and internet retailers from the United States and more than 45 countries.
Retail Leader: What are NRF's top three legislative priorities and why?
MS: NRF's top three legislative priorities are protecting swipe fee reforms, postponing the changes to the overtime rules and passing corporate tax reform. Protecting swipe reforms is critical because "swipe"—or "payment"—fees are one of retailers' highest costs. Only by making sure banks and payment card companies must compete for retailers' business can we ensure that these costs are kept in line. Since the Durbin amendment was passed for debit card swipe fees, merchants and our customers have saved more than $20 billion in fees.
Postponing the new overtime rules is a top priority because the Labor Department's new overtime mandate goes too far, too fast for many retailers. NRF has been engaged in every step of the regulatory process with thorough research and analysis to educate policymakers and prepare our members for these changes. Still, survey data shows that most employers are not able to implement these new rules under the unattainable timeline imposed by regulators, reinforcing the need for the Department of Labor to slow down and delay implementation until next year.
Finally, passing corporate tax reform has long been a priority for the retail community because U.S. merchants pay one of the highest effective tax rates of any industry in the world. A more competitive U.S. business tax rate will attract investment capital into the U.S., create new jobs and demand for goods, and enable retailers to reinvest in their businesses.
RL: What are the biggest challenges NRF faces when representing industry interests to affect the legislative process and regulatory outcomes?
MS: The biggest challenge NRF faces is the deep cynicism many in government have toward the retail industry's interests. Making the connection between business-friendly policies and greater job growth can be difficult when we are facing preconceived notions about employers' motives. We work to educate lawmakers that economic growth is not a zero-sum game. A strong pro-business climate boosts the greater economy, benefiting all.
MS: In recent years, concern over the costs of excessive regulation has been growing. In the administration, we have seen the imposition of a series of mandates from the Labor Department and the National Labor Relations Board that have tilted the balance in union organizing campaigns against employers and toward organizers. These changes have added costs, complexity and uncertainty to the business of retail.
RL: How does NRF engage with other trade groups to accomplish mutually beneficial goals?
MS: In one word: coalitions. NRF amplifies our voice in Washington by finding allies among like-minded business groups. We also look for non-traditional allies like nonprofits who have seen their social service missions threatened by the new labor regulations, like the revised overtime rules.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been NRF's greatest accomplishment?
MS: In a broad sense, NRF's greatest accomplishment in recent years has been our success in elevating retail's profile in Washington. Starting with the Retail Means Jobs survey, NRF has conducted research to quantify the impact of retail on the economy.
People take retail for granted. It is so ingrained in their daily lives that they don't often stop to think about its impact. That applies to Congress, too. We've worked hard over the last five years to not just show retail's impact with real data, but also with stories that back up the data. If you don't have a seat at the table, you're likely going to be on the menu. I'm proud to say that not only do we have a seat at the table, but we're leading the conversation on some of the top issues facing this country and our industry today.
Champion of Affordable Retail Health Care
Steven Anderson has served as president and CEO of the National Association of Chain Drug Stores (NACDS) since 2007 and prior to that held those positions with the National Restaurant Association. Anderson leads an organization with a mission to advance the chain community pharmacy industry by fostering its growth and promoting its role as a provider of health care services and consumer products.
Retail Leader: What are NACDS' top three legislative priorities and why?
SA: Our priorities flow from the leadership of the NACDS Board of Directors, with recommendations from NACDS' committees and with insights from throughout the membership. The Board crafts what we call our all-levels-of-government and all-branches-of-government approach, including federal and state legislative, regulatory and legal affairs. Every day, NACDS chain members and supplier partners accomplish remarkable results in advancing health care, in improving consumers' well-being, and in contributing positively to our society. NACDS empowers this work by doing two important things: advocating proactively for opportunities for members to do even more in these areas, while preserving the existing business model by preventing policies that would affect the viability of certain services and that would force reductions in patients' access to various services.
RL: What are the biggest challenges NACDS faces when representing industry interests to affect the legislative process and regulatory outcomes?
SA: Ten years ago, our opinion research showed us that legislators and opinion leaders in Washington, D.C., had favorable impressions of pharmacies, but had not begun to think of pharmacies as part of the health care delivery system. By telling NACDS members' story as the face of neighborhood health care, and through active member involvement in the NACDS RxIMPACT grassroots advocacy program, the industry is much better understood, which is helping considerably in our advocacy. A significant obstacle that remains today is the inability of the federal government to take into complete consideration the financial savings that result from the positive health outcomes resulting from pharmacy services.
SA: The challenges can be described as inconsistencies in government policies. One time, we went to see a government official in one area of a federal department, and that individual raved about the tremendous value of pharmacy services and their positive benefits for Americans. Then, on the same day, we went to see another official from another part of the same department and there was a complete lack of understanding that a policy proposal would jeopardize the availability of those services to the public. I think representatives of a number of different industries could relay similar stories from throughout the government.
RL: How does NACDS engage with other trade groups to accomplish mutually beneficial goals?
SA: Effective coalition work is essential in Washington, D.C., as well as in the states. This involves allied trade groups, as well as other organizations such as patient advocacy groups. NACDS worked as part of an industry coalition to provide practical insights to Congress when it wrote the new prescription drug supply chain law in 2013. We are working with the Patient Access to Pharmacists' Care Coalition to urge enactment of legislation to designate pharmacists as health care providers in Medicare—a measure which enjoys the co-sponsorship of two-thirds of the U.S. House of Representatives and half of the U.S. Senate. We are working with patient advocacy groups on issues ranging from the exceptionally challenging issues regarding opioids to efforts to improve access to pharmacy services. There are many examples, and this kind of collaboration will be more and more important in this incredibly contentious environment.
RL: Thinking about all the energy expended on behalf of members in recent years, what would you say has been NACDS' greatest accomplishment?
SA: We were able to prevent the implementation of a proposed new approach to Medicaid pharmacy reimbursement that could have forced the closure of an estimated 11,000 pharmacies, or 20 percent of all stores. We are still working on the implementation of the subsequent version of a new Medicaid pharmacy reimbursement model, to ensure that it is carried out in a manner that is consistent with the law. I still think one of the greatest examples of the ground that pharmacy has gained is the enhancement of pharmacists' vaccination authority. It was not until 2009 that pharmacists were able to administer the flu vaccine in all 50 states—when Maine became the 50th state to take that step. In 2015, Georgia became the 50th state in which pharmacists can provide at least three vaccines. Those two examples—among many others—again show the need for a formidable defense and a forward-thinking offense.