Unpleasant Surprises in the Northeast

The rapid rise in gas prices is having an adverse effect on the supply chain in New York, reports Andrea Baker, board chair of the New York Association of Convenience Stores (NYACS) and general manager of the six-store Taylor's Mini Mart chain based in Cooperstown, N.Y.

"Suppliers are beginning to reduce deliveries," said Baker. "Some are either coming every other week when they used to come weekly, or they're asking for minimum orders before coming at all. This is especially hard on the moms-and-pops who can't place orders that are large enough.

"And in the case of produce and deli," Baker adds, "it gets even trickier. If a produce/deli supplier decides to come only every other week, it boosts the chances that we're going to end up with stale product on our hands if we don't sell out. Lettuce won't stay fresh for two weeks, you know. It also requires us to stock larger inventories, which is another way it's costing us money. This gas price thing is having a domino effect on everyone; it's costing more than just the price at the pump."

Also in New York: If you think bottle laws have been a pain in the neck, get ready to rub liniment on every other part of your body, if the New York State legislature has its way.

"Right now," said Michael Rosen, vice president of the Food Industry Alliance, representing approximately 10,000 retail food outlets in New York State, "the legislature is considering an expansion of the bottle law to include not only carbonated beverages, but all beverages under a gallon in size, except dairy products and infant formula. That will expand the present 25 or so container sizes that food stores handle to over 125 -- which is impossible because reverse vending machines (RVM) can't accept the different shapes and sizes that will come in. That means shoppers will have to get in four different lines to get their nickels back -- for the glass RVM, the plastic RVM, the aluminum RVM and then to a clerk for a hand-sort of the containers that do not fit in the RVM machines. You can guess how that will go over.

"Then there's the storage problem," added Rosen. "Without reverse vendors to crush and store the containers, where will store owners put the uncrushed containers? Especially the smaller stores with limited space. And what about the sanitation problem? You and I may rinse our bottles, but not everyone does. The empty containers become breeding grounds for infestation, which compromises store sanitation.

"The only solution is to set up redemption centers," said Rosen, "but with all the costs of labor, equipment and real estate involved, that's really no solution at all."

Still, it looks as if the legislature will debate the bill in this session and may actually vote on it.

In New Hampshire, the legislature is mounting a two-pronged assault on the state's 1,300 grocery retailers. The first is a 28-cent increase in cigarette taxes, which will be hitched to the present 52-cent tax.

The second sortie is a boost in the minimum wage, increasing it from $5.15 to $5.65 on January 1, 2006, then to $6.15 on January 1, 2007.

"We're opposed to both," said John Dumais, president of the 700-member New Hampshire Grocers Association (NHGA). "A pack of cigarettes is already up to $3 on average in New Hampshire. It seems as if the governor and the legislature want to find out just how much they can tax one segment of the population. It's not fair, no matter how much you're against smoking.

"And the increased minimum wage will hurt not only us by raising our expenses, but it will hurt entry-level people, who it's supposed to help, because there will be fewer openings for them. Not only that, but it will trigger demands for higher wages all along the line, and you know the result of that: higher prices. So the public gets hurt too."

Nevertheless, the House could pass both measures, said Dumais, although the minimum wage bill will probably have a harder time in the Senate than the cigarette tax. The legislative session is scheduled to end sometime in June.

Finally, attention all gas station operators facing unfair competition from the Bentonville behemoth and others who sell gasoline below cost: Keep an eye on Massachusetts. It may have a solution.

As reported by the Independent Oil Marketers Association of New England (IOMANE), a bill has been filed in the Massachusetts state legislature that carries a fine of $5,000 per day against anyone who sells motor fuel at a price that is below cost, plus a to-be-determined operating expense covering overhead.

The proposal also enables any "retail dealer" with a legitimate case to lodge a complaint in superior court, which can then take any action "it determines necessary" to remedy the situation.

Said Peter Romano, president of IOMANE: "There is a clear difference between competition and predatory conduct, and selling gasoline below cost is both anti-competitive and predatory. While it provides lower prices over the short term, its sole purpose is to drive competitors out of the market. Local independent dealers can't compete, not because they're less efficient, but because they're less wealthy. They just can't stand up to an 800-pound gorilla. When they're driven away, they take good-paying local jobs with them, often in family-run businesses. Massachusetts House Bill 1420 simply levels the playing field and restricts the sale of gasoline at below cost. We wholeheartedly support it."