Last updated on February 15th, 2018
by Lorrie Griffith/editor–Southeast
Alabama’s economy is on the upswing, according to Ellie Taylor, president of the Alabama Grocers Association AGA), located in Birmingham. In fact, the state’s unemployment rate is now 3.5 percent—the lowest in its history.
The good times look to be continuing, as two major plants were announced in January. One is a $1.6 billion Toyota-Mazda facility in Huntsville that will add more than 4,000 jobs; the other is a $38 million Kimber Manufacturing facility in Troy that will add 366 jobs. Kimber is a firearms manufacturer.
Taylor cited findings from the Center for Business and Economic Research at the Culverhouse College of Commerce at the University of Alabama, which forecasted that Alabama’s economy grew by 1.9 percent in 2017, up from 1.3 percent in 2016. For fiscal 2018, the research center projects that state tax revenues will increase by about 3.5 percent.
With President Donald Trump signing sweeping tax reform into law in December, there is cautious optimism about what that will mean for AGA members, Taylor indicated.
“We expect our members to benefit greatly from the newly passed tax reforms which will help them expand their operations, hire more workers and invest in their local communities,” Taylor said.
Among its provisions:
- The corporate tax rate dropped from 35 percent to a flat 21 percent and pass-through rates will be 20 percent for the first $315,000 of eligible joint income or $157,000 for single filers. Individual rates dropped as well on all seven brackets, and the standard deductions more than doubled from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.
- It eliminated the tax on active foreign income.
- It gives the ability to fully and immediately expense 100 percent of the cost of qualified property acquired and place in service after Sept. 27, 2017, with phase-out periods to 2027.
- It preserved the Work Opportunity Tax Credit, New Market Tax Credits and Last in First Out Accounting Method.
“Perhaps the most beneficial to our family-owned businesses is the 40 percent estate tax remained, with exemption thresholds doubled from $5.49 million to $11 million for single filers and $10.98 million to $22 million for joint filers,” Taylor said, adding, however, that “unfortunately, these will expire after 2025. Companies need to see their accountants for a full list of tax opportunities for their businesses.”
This is where the caution comes in: “There must be a way to pay for these tax breaks,” Taylor points out. “If the president and Congress give businesses tax reform but do so at the expense of entitlement programs like SNAP, WIC, Medicare, Social Security, etc., then that will be extremely detrimental to the grocery industry.”
Online shopping gaining traction
The state’s grocers are squarely into online grocery shopping, according to Taylor.
“Most retailers, both independent and chain, in Alabama have already implemented some form of online grocery shopping or are in the process of finding solutions for their business,” she said.
Some are going the click-and-collect route, where customers order online and pick up at the store; some are offering online ordering and delivery, on their own or through a third party service like Shipt (which is based in Birmingham) or Instacart; and some are doing a combination of both programs.
Shipt began online order delivery for Kroger in the Huntsville market in early October. The service also delivers from Piggly Wiggly stores in Birmingham as well as Western Market stores, also in the Birmingham area.
Last July, Instacart launched delivery service in Birmingham, from retailers like Whole Foods Market, Publix, Costco, CVS and Petco. In September, it added service in Tuscaloosa.
Taylor pointed out that Alabama is the only state in the Southeast to have an online Supplemental Nutrition Assistance Program (SNAP) pilot. That pilot is at Wright’s Market in Opelika.
“Once SNAP makes this transition, it will be more important than ever that retailers give their customers options when it comes to online grocery shopping,” she said.
The Women, Infants and Children (WIC) benefits program in Alabama also is going digital.
“e-WIC is coming to Alabama in 2018 and is entering the implementation phase,” Taylor said, noting that the pilot will include Montgomery, Elmore and Autauga counties.
Following a three-month pilot, projected to begin this fall, a statewide rollout will ensue in phases based on Alabama Public Health Districts.
According to Taylor, “There are many benefits to transitioning to eWIC–a smoother transaction at the register, automatic electronic claim payments and reduced time in checkout lanes.”
To gear up for this implementation, AGA will be meeting with the Alabama WIC Task Force and the Alabama State WIC Department and plans to hold statewide regional meetings.
Legislative session may be shorter, sweeter
2018 is an election year in Alabama. The governor as well as members of the House and Senate and the Commissioner of Agriculture and Industries are all up for election this year, so “most political analysts are predicting a shorter and less contentious session than normal,” Taylor said.
She said the General Fund Budget looks to be in good shape even with the uncertainty of the federal funding of the Children’s Health Insurance Program, but infrastructure “continues to be an issue that is garnering a great deal of attention in the business community.”
The consensus is that Alabama’s roads and bridges are in major need of upgrades and repairs, Taylor said. These kinds of improvements are funded, at least in part, by fuel taxes.
“It has been since 1992 since there has been an increase in the gas tax,” Taylor said. “However, it seems unlikely that legislators will want to tackle any type of tax increase during an election year.”
AGA also is working to again increase funding through the Alabama Department of Economic and Community Affairs for its Healthy Food Financing Initiative (HFFI). The initiative was launched in 2010 as a way to bring grocery stores and other healthy food retailers to underserved urban and rural communities across America. HFFI expands access to nutritious food in these communities through efforts such as developing and equipping grocery stores, small retailers, corner stores and farmers markets selling healthy food.
“The first grants were available this year and 19 applications were submitted,” Taylor said. “We hope to get these projects off the ground as soon as possible and secure further funding for those in underserved areas of urban and rural Alabama.”
Grocer additions
Lidl is in the early stages of planning stores in Alabama; no official timelines have been set for the state at this time, Taylor says. But “according to Decatur Mayor Tab Bowling, the chain’s first Alabama store will be located in Decatur in Morgan County,” she related.
According to a Jan. 7 post on al.com, Publix, which currently has 65 stores and a distribution center in Alabama (McCalla), will open a 45,600-s.f. store in Saraland, at Alabama 158 and I-65. No date for the opening was provided.
The Ledger-Enquirer reported Jan. 8 that a new grocery store is planned for the Phenix City market, noting that it’s a project that has been six years in the making. Montgomery-based Renfroe’s Market, which operates two stores in Montgomery and one in Dadeville, will construct a 40,000-s.f. store in The Village at Crosswinds shopping center, located near the intersection of U.S. 431 and Alabama Highway 165. Renfroe’s will be the anchor tenant of the center, which could open in late 2018 or early 2019.
Piggly Wiggly Alabama Seeing ‘Good Organic Growth’
David Bullard has been at the helm of Piggly Wiggly Alabama Distributing Co. in Bessemer for about five and a half years. He recently sat down with Shelby Publishing President and Publisher Ron Johnston to update us on some company developments. Following are excerpts from their conversation.
Q: Tell us about what has taken place this past year, and then what’s ahead in the new year.
Things are going well. We have some operators with our warehouse who are doing really well and pursuing opportunities. We have some good organic growth with operators opening large and high-volume stores. We are excited about bringing some of these stores on board. The added volume will be good for all of our operators.
Q: Politics has been interesting in the state this season. Is that affecting business in any way?
Alabama politics is never boring, but I am not sure it has had a big impact on retail sales. Our holiday sales have been good, both Thanksgiving and Christmas. There are some indications that the economy is getting stronger.
Q: Any recent personnel changes or promotions?
We are adding resources to our store development group in our retail department. We recently added both Jeff Brown and Tim Chaffin. They are both industry veterans with outstanding reputations. We are excited about what they are bringing to our company.
Q: Going back to legislative issues, are there any bills in the state legislature that are pending that you are keeping a close eye on that will impact your members?
We have certainly been affected by a reduction in SNAP benefits and will keep our finger on the pulse of any changes in that area going forward.
Q: We saw one another at the ROFDA Fall Conference in November. What was the takeaway from the conference that resonated with everybody?
ROFDA gives the leadership of the grocery wholesale cooperatives from across the country a chance to get together and share information and ideas. What we find is that we are all fighting so many of the same problems. Service levels from suppliers are far below what they have been historically and that is a problem we are all facing. The industry is facing a shortage of truck drivers, and that is affecting service levels at both wholesale and retail.
At the last ROFDA meeting, we brought together our procurement professionals and they talked about ways of combating these types of issues. I am looking forward to what we learned and how we can apply it.
Q: It’s always been unique at ROFDA that this is the only market in the group that has two cooperatives in the same area (Associated Grocers of the South in Birmingham). Have you two ever thought about any kind of synergies?
We are somewhat unique in the southeastern part of the country in that we have a lot of grocery wholesalers. We joke that you can throw a rock and hit a competing warehouse. We all have our strengths and weaknesses, and I do wish we could find ways to work together and build on our collective strengths for the benefit of our independent retailers. I am certainly open to those discussions.
Q: This question has to do with something that is part of the national conversation now—the issues with sexual harassment in the workplace, whether it’s in Congress, the celebrity world, sports, wherever. Do you have policies that protect your business, your people?
Internally at our company, we have had strong policies in regard to harassment, all types of harassment, and I feel our efforts have served our company and our employees well. As to what is going on nationally, I welcome it. There is no place for harassment in the workplace, and we should be well beyond that now.
Obviously, this has been a problem for a long time, and I hope with such a light being shined on it, that it will be good for everyone.
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