Two interesting examples of supermarket firms bucking traditional political forces

1.  In Texas, the supermarket chain HEB (ranked #1 in the country by some evaluators) challenged an electricity rate increase petition by the state's major utility, because they said it was undeserved given the level of frequent power outages.

Because it is a respected firm and "not some wooly-eyed anti-business advocacy group" they were taken seriously and the rate increase was mostly denied, in turn providing benefits to Texas residents independent of the firm ("How H-E-B helped reduce CenterPoint’s request for electricity price hike," Houston Chronicle).  At the end, the rate increase allowed was less than 10% of what the CenterPoint utility originally asked for.

But the reality is that HEB didn't buck the system that much. It is typical for "industrial" users of electricity to challenge utility rate schemes.  At the end of the day, HEB was just another utility customer challenging rates.

2. What Harmon's Supermarkets, a 19 store independent grocery chain in Greater Salt Lake City that manages to hold its own against one of Kroger Company's strongest divisions, did in December and January was a much greater challenge to good old boy politics.

I was shocked one year to see the Gay Pride flag flying at the City Hall in Salt Lake. While many cities have solid bona fides when it comes to LGBTQ issues, I've never seen the flag flying in front of city facilities, which is a very direct communication.

While Salt Lake City is an increasingly progressive city--even in otherwise conservative states, metropolitan areas tend to vote Democratic--Utah is a very conservative state politically.

The Republican Party has a super majority in the Legislature, Legislators are mostly white men, and 90% of the Legislature members practice the Mormon religion.

Last year, after a special session that wasn't particularly deliberative, the State Legislature passed a tax reduction plan that (1) reduced income taxes, which by law are the sole source of school funding; (2) increased sales taxes on food without overhauling the sales tax revenue stream, which funds other government operations; (3) said that by changing the tax structure of school funding it would force school districts and cities to work together to increase local property taxes to fund schools, with no guarantee that school funding would be maintained.

Utah has certain referendum laws that in some cases, allow for petition campaigns to challenge actions by the Legislature, although petitioners are only provided a very short time, maybe 45 days maximum, and there are complicated requirements for a certain number of signatures from a majority of counties, tabulated by county, etc.

Rarely do such referenda work, and the pundits all said the referendum effort would fail.

Petition table inside a Harmon's Supermarket. Photo:  Ben Winslow, Fox13 SLC.

Then Harmon's Chairman, Bob Harmon, stepped in out of belief that an increased sales tax on groceries would be hardship to its customers and Utahns generally, and in early January let the petition campaign set up tables in each of their stores to gather signatures ("Harmons grocery stores join tax referendum effort," Salt Lake Tribune).  From the article:

“Food is essential and should be affordable,” Bob Harmon, the company’s chairman, said in a prepared statement. “Increasing the tax on food hurts everyone, but especially those in our community who are already struggling.”

In turn, this led their supplier, Associated Food Stores, a grocery business cooperative operating in the Intermountain States, to do the same at their corporately owned stores, and many of the independent store groups supplied by the chain ended up providing similar support.

Harmon's was roundly criticized by elected officials, including the Governor.   From the article:

The Governor’s Office issued a statement saying it was “disappointed in Harmon’s actions.… As a corporate citizen in the state, they have a right to engage in the political process, but they also have the responsibility to do so in a way that elevates the public’s discourse and is based on facts and not emotion."

Herbert’s Office then went on to suggest that Harmons’ opposition, like that of other tax reform critics, was based on lack of understanding.

“Harmon’s has not contacted the governor to express their concerns. If they took the time to meet with the governor and/or legislative leadership, they would understand both the need for tax reform, and the viability of the policy enacted by the Legislature and signed into law by the governor,” the statement said.

But by the end of the month, the petition campaign secured enough signatures ("Tax referendum signature validation rate at 94%, stunning elections officials," Fox13) and in only 3 of Utah's 29 counties were not enough signatures collected to meet statutory requirements ("After Success Of Tax Referendum, Summit and Wasatch Counties Still Lag Behind In Signatures," KCPW/NPR).

Rather than go through the process of a public vote on the referendum, the Governor and the Legislature caved, and repealed the changes ("Utah Legislature repeals tax reform in pair of overwhelming votes," SLT).

Elected officials continue to criticize opponents of the measure, while failing to acknowledge that the process was poorly handled and executed, and the measure incompletely addressed the structural problems within the current tax system.

Conclusion.  Arguably, both firms made "business decisions" not moral-ethical decisions, to take the position that they did on these issues.  But still, both companies deserve recognition for standing up in the face of what they considered to be negative actions by other actors, for acts that would not only affect their businesses, but their customers as well.

But at least for Harmon's, they took heat for not going along, not being a good "corporate citizen" at least according to the definition of the state's leading elected officials.

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As it happens, both companies are market leaders in the supermarket profession.  One interesting thing about this though is that both companies are leaders in their respective markets.

In the very competitive Texas market, HEB is #1 for grocery sales and they are quite innovative ("Why are HEB flour tortillas so dang good?," Bon Appetit) with a supercenter offering, Central Market, an upscale offering, great branding, a focus on selling local products, etc. ("HEB: The Smartest Supermarket You've Just Heard Of," Forbes Magazine).

Harmon's has differentiated the company by shifting away from competing on price and instead offering quality, an emphasis on local products, great branding, differentiated store sizing, offering a wide array of prepared foods, an impressive loyalty program (the rewards are based on how much you buy, not so much focused on providing discounts on purchases), Cooking schools in many of their stores, and supermarket dietitians covering all of their stores and offering programming (see the entry for Harmon's in "Wonder Filled," Progressive Grocer).

There is no real equivalent of Harmon's in the DC area.  And none of the major supermarket chains in the DC area operates with the agility and innovativeness of HEB.