The economy in Indiana is good and probably one of the best, at least in the Midwest, according to Joe Lackey, president of the Indiana Grocery & Convenience Store Association.
“It’s better than almost anything when you go east,” he said.
According to Lackey, one reason for that is that every taxpayer will be receiving $125 from the state. “The checks are in the mail,” he added.
The funds are coming from the state surplus. “In Indiana, it’s against the law for the state to be in debt so they have a surplus that they build up to keep it like a rainy day fund,” he said of the state legislature. “When it gets to a certain point, they refund it.
“[It’s a] fiscally responsible program to have where you’re not grossly overspending.”
But while the economy is healthy, things are not looking as well for the state’s grocers.
“Last year, frankly, was better for the grocers,” Lackey said. “This year, supplies have gotten tighter and tighter and tighter. And costs have gone up and now it’s a matter of finding supplies” for independent grocers to keep their shelves stocked.
Labor shortage, which was a major challenge from the beginning of the COVID-19 pandemic, remains a problem for the state’s independent grocers, as it is nationwide.
“Finding employees, good employees, has always been a challenge,” Lackey said.
He noted the additional competition from online sellers, which put them “way ahead” when COVID-19 hit because they weren’t faced with many of the problems that brick-and-mortar retailers were experiencing. He said it appears they are still gaining more share of the market.
“On the one side, you’ve got the positive side of inflation that’s creating more revenue for government. But that can be returned if you’ve got a responsible government like we do in Indiana,” Lackey said.
“But on the other side, we’ve got the same problems everybody else has in the country – supply economics. I mean, we’re the smallest state west of the Alleghenies, so we don’t have a lot of production here that offsets it. We’re not blessed with a lot of meatpacking plants and that kind of thing to be able to supply ourselves.”
Issues with supplies not improving.
“There’s just more demand than there is product,” Lackey said.
He added that inflation is “awful for everyone.” Independent grocers are feeling the effects as people are “cutting down on higher end items in our stores because they have less disposable income.”
Lackey added that he is counting on some things changing after the November elections. “But I’m not sure it’ll be fast enough to save some of the folks,” he said.
According to Lackey, it is becoming more difficult for independent operators who are trying to handle everything themselves versus the big conglomerate retailers. However, there are some independents who are “fantastic business people who juggle more balls in a given day…who are successful at it, but there’s getting to be a lot less.
“You look around these different states – they’re going away. It’s a dying breed. I never thought when I started doing this…that I’d ever get to the point where we wouldn’t need grocery stores. But there are people out there that think maybe we really don’t need them anymore.”
He mentioned that some national chains put out letters a few years ago stating that they are not grocery stores, but discount or department stores. They don’t belong to grocers’ associations because they maintain they’re not grocery stores.
“If you build a 200,000-square-foot store and 50,000 of it is food, maybe it’s a valid argument,” Lackey said.
Regardless of what they call themselves, “They’re knocking the heck out of the independent operators because they’re taking away 10, 15, 20 percent of the business of the independent and the independent can’t stay open.”
Tobacco tops legislative agenda
Lackey said the Indiana State Legislature recently concluded a short session, since it is an election year. Required to adjourn by March 15, the session ended earlier due to the Big 10 basketball tournament and legislators having to give up their hotel rooms, he said, “which was not a bad thing.”
Next year, which will be a long session, is a budget year, Lackey said.
This year, there were several tobacco issues that came up. The biggest one was a proposed new tax on vape and e-cigarettes.
“Our interest was mainly to try to keep it where we were equitable and comparable to the surrounding states,” Lackey said. “Our tobacco tax in Indiana is lower than any of the surrounding states. And because of that, Indiana makes a lot of money off of the surrounding states.”
He said many convenience stores are becoming bigger than typical convenience stores because there are not as many supermarkets in some areas.
“I’ve got convenience store members like Casey’s that are really small grocery stores and less concerned with fuel,” Lackey said. “They do an important job but they also do a lot of business in tobacco. Supermarkets don’t typically handle that much anymore. So we watch that closely.”
As an example, he said a pack of cigarettes in Chicago is about $10.50; a pack in Gary, Indiana, right across the state line, costs $5. He noted the fact that people are crossing the state line to buy tobacco, and paying that tax, saves money for Indiana residents.
Indiana legislators passed a law stating businesses were not responsible for COVID-19 transmission, which was “somewhat controversial,” Lackey admitted.
“But it worked out very well, frankly,” he said. “If somebody goes to work and gets sick and they want to sue their employers, that’s not a good thing. So we supported that legislation and we’re able to get that through. The governor has been very good for us.”
Focused on governmental affairs
When Lackey started with IGCSA in January 1973, it began building up the organization. At one time, the group hosted a large trade show.
“Our trade show vied with NGA, size wise,” he said. “It was the Midwest Grocers Trade Show and was very, very successful. But then along came the Walmarts of the world and the Cubs and that kind of thing and everything went away. We have very few independents left.”
While the IGCSA once offered several services, it is focused today on governmental affairs.
“We take care of the State House and that’s pretty much it. We offer individual assistance to members if they have a problem. I’m just like a member of their staff, and I will try to solve the problem for them,” he said.
“Usually, I can because we have enough contacts at the State House and in state government to be able to solve the problems that they have. We’ve pretty much done away with all the other stuff. Because the government’s where they can lose their profitability overnight, if it’s not handled right.”
Looking ahead
Lackey said he likes The Shelby Report’s Market Profiles as they cover associations and independent grocers across the country.
“I think it’s important for people to look around and look at the other states and see what’s happening there,” he said. “I really, really would like to see the grocery industry come back to where it was, but I don’t think that’s realistic. I think it’s going to continue to evolve and change.”
For more information, visit igcsa.net.
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