August 2007 - Retail Association of Nevada

AUGUST 2007
What’s Brewing for 2008 & 2009?
EXPECT TO SEE TAX INCREASES AND TAX CAPS ON THE
BALLOT NEXT FALL
J
uly 5th, 2007 may have seemed like any
other day, but in the world of politics it
marked the beginning of Nevada’s 2008
election cycle. The 2007 Legislative session
was just the calm before the storm, or more
closer to reality, the calm eerie silence before
a war in an epic story. In fact the march to
war already presented itself in the form of a
commercial by gaming claiming that taxes
from gaming account for over 1/3 of the state’s
education budget. For those of you who don’t
speak Politicalese, Gaming just threw down the
gauntlet. The real message? Nevada business
doesn’t pay its fair share so don’t come looking
for gaming to solve the state’s education and
transportation problems
The battle for tax increases is shaping
up to be a three-way war: Teachers vs. Gaming
vs. Business. The teachers are threatening a
ballot initiative to increase gaming taxes for
education, with the gaming ads mentioned
above running in response. You may also see
ads soon, again sponsored by gaming, saying
how the business community should be paying
more to build roads (since a chunk of change
was allocated during the 2007 legislative
session to fund road construction using the
room tax in Vegas – room tax money that
normally goes to the Convention Authority.)
In Washoe County, school board officials
are putting together a tax package for the 2008
ballot that is likely to seek an increase in fees
on developers and taxes on real estate.
We also hear that The Sands Corp. is
considering underwriting the cost of a ballot
initiative for 2008 to take “new” room tax
revenues and put it into building roads,
expanding on the room tax funds that were
diverted from the Convention Authority this
past session. With so many new high-end
rooms opening or planned, expansions at The
Venetian and Wynn and new construction with
Echelon Place and MGM Mirage’s CityCenter,
some estimate “new” room taxes might raise as
much as $200 million a year for transportation
needs. To make this more “saleable,” they may
toss some of the money at education.
Meanwhile, there are individuals with
their own agenda. University Chancellor
Jim Rogers is personally paying for a study
to determine the feasibility (and potential
acceptance) of a personal income tax.
This action would require amending the
constitution, and for decades Nevadans have
said “no way” to an income tax.
Former Assemblywoman Sharron Angle
is still on the path for a Prop 13 style tax relief
for home owners. She claims than individual
has written a $200, 000.00 check for the cause
and puts her organization half way to its
September 1 fundraising goal. She claims that
the property tax cap that was passed in 2008 is
unconstitutional since it set a different cap for
residential and commercial property.
RAN will remain as vigilant as ever in the
proceeding months and will fight continuously
with the resources that are provided to us
in the best way possible. Business will be
dragged into the coming war. Legislators were
looking forward to their $800 million surplus in
the 2007 session only to have it taken away in
May. Nobody expects it to get taken away next
time and if we’re not careful, business just may
be the ones cutting the check. ■
Page 2
Retail Association of Nevada
Smoking Ban Has
Some Testing the Law
T
he voter-approved anti-smoking
law went into effect in January,
but many bar operators ignored it while the local Health
Departments decided how to enforce
it. But after a time, some bartenders
noticed they had nervous smokers as
customers.
When someone new walked in,
smokers would cup their cigarettes in
their hands and shift their eyes back
and forth – just like a teenager afraid
of getting caught.
To relieve their angst, many bars
have installed glass walls between
the dining area and the bar. More
than 100 Las Vegas bars have been
approved by the Southern Nevada
Health District for such modifications
to comply with the Nevada Clean
Indoor Air Act, as have many others
around the state.
The law prohibits smoking in
places that serve food, including bars,
grocery stores and convenience
stores, but many tavern owners continue to ignore the law. Although they
may have gotten rid of ashtrays and
match books, they still wink and provide cups of water for their smoking
customers’ ashes, and then look away.
Major casinos are exempt from
the smoking ban, as are some bars
that have unrestricted gaming licenses. Smoking is permitted in bars that
do not have food or have done away
with food service.
Southern Nevada Health District
attorney Steve Minagil says he’s not
happy with the enforcement progress.
Seven months after the law went into
effect they are still running down complaints, writing letters, and filing
lawsuits. People are slowly complying, but it has come after a lot of work
Minagil says.
The district allows bar owners to
separate their restaurants from their
bars, essentially turning the bars into
smoking-friendly, stand-alone struc-
tures while maintaining a smoke-free
environment in adjacent restaurants.
For some establishments, spending thousands of dollars for glass
partitions to keep their food service
was not cost-effective, so they just
closed their kitchen.
Many bars now offer customers
menus from fast-food restaurants that
deliver, which apparently does not violate the new law.
But there is a loophole in the law
that allows patrons to order food in the
restaurant, bring it back to the bar a
few feet away on the other side of the
glass partition, eat, smoke and gamble
and still be in compliance.
As one owner claimed the law
prohibits food service in the bar. But if
a patron picks it up and takes it to the
bar, it becomes a take-out order. The
law does not ban smoking and food
eating, just smoking and food serving.
Some businessmen have even
tried to get around the law merely
by giving their restaurants different
names than their adjacent bars. Nice
try, the health district says. Minagil
said he has written them letters telling
them they can’t do that.
Many bar owners said that after
the law went into effect business
dropped by as much as 25%. Some note
that while bar revenues have increased
in recent months, restaurant business
remains slow despite glass walls keeping out the smoke.
While a number of bar operators
predicted that when the law went into
effect many small businesses would go
under, the Vegas health district statistics show that the number of small local bars actually has increased slightly.
The health district said there were
1,957 permits in August 2006 for what
the agency classifies as “drinking establishments.” As of this month, that
number is 2,029. But some owners
will tell you that they are just barely
hanging on, thanks to this law. ■
August 2007
Supermarket
Pharmacy
Leaders Warn
Congress
AMP-Based
Medicaid
Formula Could
Hurt Industry
A
chorus of pharmacy
organization leaders warned
the House of Representatives
Small Business Committee
that some food-store pharmacies
could succumb to new gross margin
pressures following implementation
of the new prescription drug
reimbursement model for Medicaid.
The leaders told panel members
that the formula for reimbursing
pharmacies for dispensing generic
drugs to Medicaid patients would
force some pharmacies to operate at
a loss.
The Centers for Medicare &
Medicaid Services issued the new
payment guidelines July 6, sending
tremors throughout the retail
pharmacy industry. Under the new
payment model, reimbursement for
generic prescriptions for Medicaid
beneficiaries will be based on the
“average manufacturer price” of
the drug, as determined by CMS.
Pharmacy leaders fear the new
AMP-based formula will distort
the true acquisition costs retail
pharmacies pay for multi-source
medications because they’ll be based
on a broad interpretation of those
drugs’ real market prices, including
low prices and some rebates not
available to wholesalers supplying
retail pharmacies. ■
www.RANNV.org
August 2007
Retail Association of Nevada
Page 3
Prosperity Project Comes to Nevada
By Stephanie Herrera — Director, Nevada Prosperity Project
A
s many of you know the last
legislative session tried to
increase taxes on business,
especially the trucking
industry. Due to the hard work of
the staff of the Retail Association
of Nevada and the Nevada Motor
Transport, they were able to avoid any
increase in trucking taxes that would
have hurt all industry. (It also helped
to have a Republican majority in the
Senate and a governor committed to
keeping a campaign promise of no new
taxes!) However, this does not mean
business is out of the woods. To the
contrary — we continue to be on the
chopping block in one way or another.
Enter the Nevada Prosperity
Project, or P2. Created by BIPAC (the
Business and Industry Political Action
Committee in Washington DC), P2
was designed to fill a significant gap
in the business community. Research
shows that private sector employees
who vote consider their employer
among their most trusted source of
information for voting purposes. The
problem is that many employers do
not have the time to research issues
to present to employees, or simply
do not know how to discuss issues
without appearing to dictate how
those individuals should vote. The
Nevada Prosperity Project consists
of a website that contains the voting
records of all representatives from
the President down to our legislators.
We know that voting records do not
lie, and armed with this information,
voters can easily educate themselves
on the issues, leaders and potential
leaders, and elect business friendly
candidates.
BIPAC’s and the Nevada
Prosperity Project’s goals are very
simple: elect business friendly
legislators to public office who
are going to maintain a business
friendly environment. In addition
to voting records employees can
access voter registration forms if
they are not currently registered to
vote, download absentee ballots and
easily send emails and letters to their
representatives when the occasion
calls for action.
In the coming months you are
going to hear a lot about P2, how you
can get involved, and how we can
galvanize the business community to
ensure that we elect business-friendly
legislators.
The P2 project is experiencing
phenomenal success across the
country. States are holding their
legislators accountable, educating
the business community about who
is friendly to business and who is not,
and empowering voters to take action
not only during an election season,
but during the “off season” as well.
Nevada already has a significant cost
of living when it comes to housing.
We can not allow the Legislature to
continue to grow government on the
backs of the business community
We have a small window of
opportunity over the next 16 months
to affect positive change in the state
of Nevada, and I look forward to
working with the business community
to ensure Nevada stays business
friendly! ■
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NACS Show • November 6-9, 2007 • Atlanta, GA
Experience it all at the NACS Show – the ultimate annual education, networking and expo event for the convenience and petroleum
retailing industry. Visit nacsonline.com for more information.
Planning and Visual Education Partnership (PAVE) is introducing the Rising Star Award
Retailers and retail design firms are invited to nominate an individual (under 35 years of age) who works in retail design, visual
presentation, or contract design who is a proven innovator and leader among his or her peers and has demonstrated talent, vision, and
implementation in the retail environment. Any retail organization or design firm can nominate up to two individuals by completing a
nomination form and submitting it to PAVE no later than October 15, 2007. There is no charge to enter. Nominees must be 35 years
of age or younger. Nomination forms and more information are available online at www.paveinfo.org or call 954-893-7225, ext.
4834, for questions.
Hazardous Waste Management 101
The Nevada Small Business Development Center is presenting a three-hour seminar on hazardous waste management. Retail operations,
auto repair, property managers, and others have the potential to generate hazardous waste that needs to be disposed properly. Items like
fluorescent lamps, paints, oil, and electronics are just a few examples that may require special disposal.
The seminars are free and available around the state during September. Visit www.nsbdc.org/calendar for more details.
Sept. 5 – Ely and Las Vegas • Sept. 6 – Elko • Sept. 7 – Winnemucca • Sept. 11 – Reno • Sept. 12 – Fallon • Sept. 18 - Carson City
www.RANNV.org
Page 4
Retail Association of Nevada
August 2007
As Term Limits Deadline Looms, Will Any
Legislator Question its Constitutionality?
I
s there a Nevada lawmaker
who will put his or her career
on the line and challenge the
constitutional amendment limiting
their term in office?
Several legislators have said
publicly that term limits violate their
constitutional right to run for office,
but will anyone step forward to go
against the
two-thirds of
Nevadans who
say they favor
term limits?
Over 70% of
voters approved
the constitutional
amendment in
1994 & 1996
that limits the
number of terms
someone can
run for the same
office. The law
took effect with the 1998 election.
The law allows legislators to
serve 12 years in each house of
the Legislature. A legislator could
conceivably serve 24 years: 12 in the
state Senate and 12 in the Assembly.
Nevada’s term limits are the most
liberal in the nation.
In 2005, then-Assemblywoman
Chris Giunchigliani proposed a bill
that would have asked the voters to
repeal the term limit amendment in
the 2008 election, but fear of voter
backlash led Assembly leaders to not
hold a formal vote on the bill.
Because that proposal died,
legislators must turn to the courts if
they want the amendment overturned
before it takes effect.
Whoever ends up challenging
term limits probably won’t step
forward with a legal challenge until
the last possible moment: the 2010
election filing period, which begins in
May of that year.
In 2010, the secretary of state will
be obligated to block lawmakers who
have served 12 or more years in their
particular house of the Legislature
from seeking re-election. Seven state
senators and 12 members of the
Assembly, including Speaker Barbara
Buckley (D-LV), wouldn’t be able to
seek re-election that fall.
In 2012, the secretary of state
made that decision by passing the
amendment.
“Term limits deny the public the
right to choose, but the public voted
to deny themselves that choice,” said
Herzik.
In the 1990’s, 21 states passed
term limit legislation. But since then,
state legislatures in Utah and Idaho
have repealed
their term limit
laws, and high
courts in four
other states have
declared them
unconstitutional.
California is
voting on its
repeal in a
special election
this coming
February.
Some claim
the amendment
itself is unconstitutional.
The state constitution requires
constitutional amendments be
passed “in the same manner” in two
consecutive general elections.
The amendment, as passed by
voters in 1994, called for a 12-year
limit on legislators and also on District
Court judges and Supreme Court
justices. However, judges fought their
inclusion in the proposed amendment
and won, so the 1996 question did not
include them. Thus the 1994 and
1996 ballot questions were not “in the
same manner.”
But Herzik believes that argument
will be a tough sell to the voters.
“When you want to repeal term
limits, you are basically saying the
public was wrong and legislators know
what is best,” Herzik said.
Lorne Malkiewich, administrator
of the Legislative Counsel Bureau,
said lawmakers might be able to skip
a court challenge. They could instead
“Term limits deny the public
the right to choose, but the public voted
to deny themselves that choice.”
ERIC HERZIK,
POLITICAL SCIENCE PROFESSOR
UNIVERSITY OF NEVADA, RENO
would be required to reject re-election
filings from two current Assembly
members and six additional state
senators, including state Senate
Majority Leader Bill Raggio, R-Reno,
who has held his seat since 1972.
Veteran lawmakers say this action
will mean that the Legislature will
be run by inexperienced lawmakers
unable to stand up to veteran state
officials and lobbyists. Many also say
that State staff and lobbyists would run
everything.
The primary argument in favor
of term limits is it brings fresh faces
and people with new perspectives
into the Legislature. While others
say it will take power away from a few
long-serving legislators and spread it
among the rest of the officials.
But some say that voters are being
denied a voice in the election by not
allowing incumbents to run again. Eric
Herzik, a political science professor
at the University of Nevada, Reno,
pointed out it was Nevada voters who
www.RANNV.org
Continued on next page
August 2007
Term
Limits
Retail Association of Nevada
(Continued)
seek a “declaratory opinion” from the
courts letting incumbent legislators
know before 2010 whether they are
eligible to seek re-election.
“They would need to get a
court to rule on it and then get it to
the Supreme Court,” he said. “It is
something I know a lot of legislators
are looking at. They want to know in
advance what they can do.” ■
LEGISLATORS WHO
CAN NOT RUN
AGAIN IN 2010:
SENATORS:
Mark Amodei, R-Carson City
Terry Care, D-Las Vegas
Maggie Carlton, D-Las Vegas
Bob Coffin, D-Las Vegas
Bernice Mathews, D-Reno
Randolph Townsend, R-Reno
Maurice Washington, R-Sparks
ASSEMBLYMEN:
Bernie Anderson, D-Sparks
Morse Arberry, D-Las Vegas
Barbara Buckley, D-Las Vegas
John Carpenter, R-Elko
Jerry Claborn, D-Las Vegas
Ellen Koivisto, D-Las Vegas
Sheila Leslie, D-Reno
Mark Manendo, D-Las Vegas
John Marvel, R-Battle Mountain
Kathy McClain, D-Las Vegas
Harry Mortenson, D-Las Vegas
David Parks, D-Las Vegas
LEGISLATORS WHO
CAN NOT SEEK
REELECTION IN 2012:
SENATORS:
Mike McGinness, R-Fallon
Bill Raggio, R-Reno
Dean Rhoads, R-Tuscarora
Mike Schneider, D-Las Vegas
Dina Titus, D-Las Vegas
Valerie Wiener, D-Las Vegas
ASSEMBLYMEN:
John Oceguera, D-Las Vegas
Bonnie Parnell, D-Carson City
Page 5
Governors Appoint Fire
Commission Members
A
fter the devastating Angora Fire at Lake Tahoe that burned 3100 acres and
destroyed 254 homes, Gov. Schwarzenegger and Gov. Gibbons announced
their intent to create a California-Nevada Tahoe Basin Fire Commission that
will look at the management practices in the basin to see how they can be
changed to prevent future disasters. The Governors announced their members to
the commission in late July. They include the following:
CALIFORNIA VOTING MEMBERS:
Kate Dargan, California State Fire Marshal (co-chair)
Ruben Grijalva, director, California Department of Forestry and Fire Protection
Cindy Tuck, undersecretary, California Environmental Protection Agency
Patrick Wright, executive director, California Tahoe Conservancy
Jeff Michael, chief, Lake Valley Fire Protection District
John Pickett, coordinator, Nevada Fire Safe Council Tahoe Basin
Ron McIntyre, member, North Lake Tahoe Resort Association Board of Directors
John Upton, Angora fire victim
CALIFORNIA NON-VOTING MEMBERS:
Julie Motamedi, chair, Tahoe Regional Planning Agency
Amy Horne, chair, Regional Water Quality Control Board
NEVADA VOTING MEMBERS:
Sig Rogich, former U.S. Ambassador and government affairs specialist (co-chair)
James Wright, chief, Nevada Fire Marshal
Pete Anderson, Nevada Division of Forestry
Michael Brown, chief, North Tahoe Fire/Nevada Fire Safe Council
Jim Santini, former Nevada congressman
John Koster, president, Northern Nevada Region of Harrah’s Entertainment, Inc.
Bud Hicks, president, Glenbrook Homeowners Association
Bob Davidson, Lake Tahoe Basin homeowner
NEVADA NON-VOTING MEMBERS:
Allen Biaggi, director, Nevada Division of Conservation and Natural Resources/
member, Tahoe Regional Planning Agency Governing Board
Leo Drozdoff, administrator, Nevada Division of Environmental Protection
“For every sale you miss because
you’re too enthusiastic, you
will miss a hundred because you’re
not enthusiastic enough.”
ZIG ZIGLAR
www.RANNV.org
Page 6
Retail Association of Nevada
August 2007
The Perfect Predictor
RESEARCHER EXPLORES THE LIMITS OF ATTENTION BLOCKING
by James Larsen
How does a business owner
gain a reputation for high
quality for his product or
service? How does he keep
that reputation?
Owners will be quick to reply that
they earn this reputation by hard work
and attention to detail, but competitors
may disagree. Competitors often enter a
market confident that their innovations
clearly improve upon existing offerings,
but they are also often disappointed
by the response of their market. Even
though their product is clearly higher
in quality, they cannot wrestle sufficient
market share from the existing brand,
and they quietly disappear.
Consider the case of June Todd
and her husband Allan.
Allan was June’s high school
sweetheart, but graduation separated
them. They rekindled their romance
at their 25th high school reunion, and
soon, June found herself relocating
to California. California had many
wonderful advantages, but she missed
her Val’s pizza. Val’s was the best,
and nothing available in her adopted
city came close, so one day, Ms. Todd
bought a Val’s franchise and opened
a little pizza take-out on main street.
After a year, she closed, deep in debt
and bewildered by her experience.
The people didn’t come. The pizza
was better, but that didn’t matter. Her
husband, Allan, was sympathetic, but
he was also sympathetic to the small
eateries in town who had held onto their
customers. He was the owner of a 100year old bank that had been started by
his great grandfather, and every time a
new bank opened in town, he held his
breath hoping his customers wouldn’t
notice the advantages they offered. So
far, so good.
June and Allan have close, firsthand experience with a psychological
process that is well known to business
researchers. It’s called attention
blocking, and it’s largely responsible for
both June’s failure and Allan’s success.
Here’s how it works.
When consumers make purchasing
decisions in a competitive marketplace,
they have to make judgments about relative quality, that is, they have to form
opinions about the quality of the alternatives available to them. A grocery shopper, for example, facing a display of peas
must form a judgment about the quality
of the various brands. This judgment is
an integral part of making a selection,
any selection, but it’s a lot of work.
Consumers don’t have enough
time or interest to make well-informed
relative quality judgments every time
they make a purchase, so they take
mental shortcuts. Attention blocking is
one of them.
With attention blocking, a consumer
attaches a “good quality” tag to a specific
brand or business, and then he blocks
out any further quality information
about the entire category of products,
including new competitors. Their
purchasing decisions reflect it. June
couldn’t get people to consider a new
place to buy pizza. Allan continued
to make a living offering an inferior
banking service.
Robert Oxoby, from the University
of Calgary, is interested in attention
blocking, and he recently completed a
series of experiments exploring how
it works. Interestingly, he was able to
turn it on and turn it off. He was even
able to employ it with brand extensions,
i.e. unrelated products carrying the
same brand name. Business owners
interested in taking advantage of
attention blocking, like Allan, will be
interested in how he did it. Business
owners like June, who want to defeat it,
will probably be discouraged.
People attach “good quality” tags
to products and services when they
encounter a perfect predictor about quality. Perfect predictors can come with
personal experience, word-of-mouth,
expert opinions of others, advertising,
or a combination of all four, but the key
is that they all agree. At a critical point,
a decision is made about quality, and a
?
Y
IT
L
A
U
Q
mental shortcut is established. Many
times, this is a permanent decision, and
purchasing behavior will reflect it for
many years to come.
Oxoby found that the order in
which information is presented to
consumers is crucial in forming a
perfect predictor. He did it merely by
repeating a statement about quality a few
times in a pre-learning phase, and the
statement didn’t even mention a physical
attribute relating to quality, only brand
name or price. Later in his experiment,
when he introduced a second perfect
predictor that did describe a physical
product feature, his subjects ignored it.
But subjects who had not encountered
a perfect predictor in the pre-learning
phase did notice the perfect predictor
relating to product quality, and they used
it to judge quality.
For business owners like Allan,
Oxoby’s findings display the advantage
they have in protecting their markets
and the opportunities they enjoy
extending their brands into new
products and services. They must lead
with their brand name, and it will block
attention to true quality attributes.
For business owners like June,
Oxoby’s findings reveal the challenges
they face and offer a way to proceed.
They must find a way to introduce
their offerings as new, so they don’t
immediately fall into an existing
product category, and they must lead
with product attributes that genuinely
reflect quality. For example, June could
have differentiated her pizza with a
place name like Chicago style pizza,
and she could have led with a genuine
comparison of a product feature like the
ounces of meat or cheese on her pizza.
Attention blocking is a barrier for
some and a blessing for others. Thanks
to Robert Oxoby, we now know a little
more about it. ■
Reference: Oxoby, Robert J. and Hugh Finnigan (2007)
Developing Heuristic-Based Quality Judgments:
Blocking in Consumer Choice. Psychology & Marketing,
24(4), 295-313.
www.businesspsych.org.
C 2007 Management Resources
www.RANNV.org
August 2007
Retail Association of Nevada
Page 7
NACS Urges Congress to Reconsider
FDA’s Retail Tobacco-Regulating Ability
I
n a hearing in July before the
House Energy and Commerce
Committee, Congressmen
determined that the U.S. Food and
Drug Administration was ill-equipped
to regulate food safety. After this
declaration, NACS asked lawmakers
to keep these findings in mind as
Congress examines giving FDA the
power to regulate tobacco.
FDA criticism came from both
sides of the aisle, with Committee
Chairman John Dingell (D-MI) calling
FDA a “sorry mess.” Yet this same
committee will soon be considering
legislation (H.R. 1108) that would
put the additional requirement of
regulating over 300,000 tobacco
retailers in the lap of an agency
already struggling to meet its
current mission. The Senate
Committee on Health, Education,
Labor and Pensions is also looking at
identical legislation (S.625).
“The federal government in
general, and FDA in particular, is the
wrong entity to regulate retail sales of
tobacco. With Congress clearly saying
that FDA does not have the ability
to effectively regulate food safety,
we urge Congress to also consider
how this ‘sorry mess’ is capable of
regulating the 300,000 retailer outlets
in the United States that sell cigarettes
and other tobacco products,” said
NACS Senior Vice President Lyle
Beckwith. “By making FDA regulate
tobacco retailing, Congress would
stunt the effectiveness and innovation
of 50 well-functioning state programs.”
“If Congress feels compelled to
get involved in regulating tobacco
retailing, the most effective way
would be to set a federal standard
with which the states must comply
-- similar to the way Congress acted
to raise the national smoking age
to at least 18 years old. Regulation
would still remain with the states
-- where it belongs -- but a set of
national tobacco retailing standards
could be established,” said Beckwith.
“The members of Congress who cosponsored the FDA tobacco legislation
should seriously re-think their support
in light of the facts made public in the
July 17 hearing.” ■
FMI and LifeLock Announce New
Strategic Partnership to Protect Employees
and Customers from Identity Theft
SERVICE SO SECURE IDENTITIES ARE PROTECTED WITH A $1 MILLION GUARANTEE
L
ast month we reported how
identity theft is on the rise
in Nevada. Well the Food
Marketing Institute (FMI)
has formed a strategic partnership
with LifeLock, the industry leader
in identity theft protection, to offer
services for FMI members, their
employees and their customers.
How serious is the identity theft
problem? The identities of as many
as nine million Americans are stolen
each year, costing Americans $1.1
billion, according to the Federal Trade
Commission. Even taxpayer records
are not safe. The IRS reported the
loss or theft of at least 490 computers
from 2003-2006, according to the
U.S. Treasury Department inspector
general.
“When even the federal
government has trouble maintaining
the security of our personal data,
it is time to take action to protect
ourselves, our members and their
customers from hackers and identity
thieves,” said FMI President and CEO
Tim Hammonds. “LifeLock takes a
proactive approach to prevent identity
theft. If a customer is victimized,
LifeLock will take all the actions
necessary to restore the person’s
identity and compensate them for
financial losses and legal expenses.”
For example, the service:
• Stops pre-approved credit card
and loan offers through the mail (a
popular way for identity thieves to steal
personal information).
• Reduces the volume of junk mail into
people’s homes.
• Places automatic fraud alerts on
customer credit reports with the three
major credit bureaus — TransUnion,
Experian and Equifax — ensuring
that participants are called to verify
applications for new credit, checking
accounts, insurance and utility service
prior to any approvals.
• Provides identity theft protection for
children, the nation’s only service to
offer this protection.
• Covers losses up to $1 million for
customers whose identities are stolen.
By aggregating the volume of FMI
membership, FMI enables members to
provide this service to their employees
and customers for purchase at
discounted prices lower than they
can obtain on their own. Under the
LifeLock program, FMI members
are also eligible for revenue-sharing
opportunities based on customer
subscriptions. ■
www.RANNV.org
Page 8
Retail Association of Nevada
August 2007
Nevada News
NEW LAW IMPACTS
TOBACCO SALES
Effective October 1, 2007, retailers
that sell tobacco must have a sign prominently displayed at the point of purchase
that explains that the sale of tobacco is prohibited to any minor, and that the retailer
will ask for proof of age to comply with this
prohibition. While most retailers already
have these signs, the law was meant to
codify in state law the provisions of the
Master Tobacco Settlement Agreement. It
also establishes a fine of $100 for anyone
that violates this provision.
The law also criminalizes the possession, distribution, and sale of contraband
and counterfeit tobacco products, and
bans the sale of tobacco through any type
of self-service display, excluding vending
machines that are in compliance with NRS
202.2494. Violation of this provision carries a fine of $500.
GOVERNOR ANNOUNCES FIRST
AWARD EVER FOR DESIGN/BUILD
HIGHWAY CONTRACT
The Governor announced in July that
CH2M Hill and Las Vegas Paving Corp. are
teaming up as North Corridor Constructors to simultaneously design and build the
widening of I-15 in Las Vegas.
“I promised Nevadans when I took
office that I would make widening I-15 a
priority,” said Governor Gibbons. “I set
aside surplus money in my budget, and
the legislature agreed on the project’s importance. Now southern Nevadans will get
traffic relief up to two years faster, thanks
to the design/build concept.”
“We’re speeding up the process,”
agreed NDOT Director Susan Martinovich. “Traditional highway projects require
the design to be finished first, then the
bidding, before construction can begin.
The design/build system allows actual
construction to start while the designing is
still taking place.”
The building will begin in nine months
and will include the following:
• Widening of I-15 from six lanes to 10
lanes from the Spaghetti Bowl to Lake
Mead Boulevard
• Widening of I-15 from four and five lanes
to eight lanes from Lake Mead Boulevard
to Craig Road
• Reconfiguration of the Lake Mead Boulevard interchange
• Auxiliary lanes between interchanges to
facilitate merging
• Intelligent Transportation System (ITS)
improvements such as dynamic message
signs, ramp metering and closed-circuit
television cameras.
MAYOR GOODMAN TOSSES
OUT PLAN FOR DAY LABORER
CENTER — THEN PULLS IT IN
Around the country, city and county
leaders are hearing more and more complaints from home improvement and nursery store owners whose parking lots are
being used as pick up points for day laborers who are generally illegal aliens.
Las Vegas Mayor Oscar Goodman
threw out an idea to require those who
pick up “day laborers” to first acquire a
permit or face a fine. But less than a week
after he first floated the plan -- the mayor
pulled it back.
He said he had just “tossed out the
idea” to start a dialogue on how to handle
day laborers, who hang out in parking
lots and on street corners in various areas
of the city and county trying to hook
up with those looking for cheap, shortterm workers.
The mayor was hoping that the threat
of a fine might discourage people from
seeking out such workers in the first
place, thus drying up the demand for their
services. After facing criticism for the
plan -— the ACLU called it unconstitutional
— Mr. Goodman has apparently put it on
the back burner.
In the meantime, though, city and
county officials are also still exploring the
creation of a center at which day laborers
could congregate while waiting for potential employers to pick them up. The theory
is that this would encourage the workers
to move to a single location, away from the
home improvement stores and nurseries
that now complain about their presence.
But as cities around the country are
seeing, setting up a central area for undocumented workers is not working, given
their immigration status and their fear of
being deported. In fact, the state already
has such a place -- the Casual Labor office
on North A Street near downtown Las
Vegas. But its existence has done little to
mitigate the problem.
No doubt the Mayor and his staff
will continue to throw out ideas on how to
handle the expanding problem of illegal
workers, just like so many mayors in other
U.S. cities.
GREEN TAX NARROWED TO
INCLUDE ONLY BUILDINGS
A proposed regulation implementing
sales tax breaks for “green” construction
projects has been more narrowly crafted
to ensure only buildings, and not construction equipment, are included in any
financial windfall.
Equipment used to construct a
building, whether it be a crane or saw,
would not be eligible for the break from
the local portion of the sales tax under the
regulation proposed by the state Department of Taxation.
Construction items such as steel and
wallboard are included. So are permanent
fixtures to a building, such as elevators
and furnaces. But construction equipment
used to construct the building is not
covered by the tax break under the
proposed regulation.
Lawmakers, alarmed at the estimates
of tax revenue that would be lost under
the 2005 legislation implementing the tax
breaks for green construction, revised the
measure this session. The partial sales
tax abatement was eliminated for all but
a handful of projects. Property tax breaks
were also revised for all projects.
HEARINGS HELD ON PROPOSED
HEALTH CARE MERGER
The American Medical Association
says a proposed $2.6 billion takeover of
Sierra Health Systems in Las Vegas by a
national insurance company would hurt
patients and doctors.
The only ones who would benefit if
UnitedHealth Group’s acquisition of Sierra
Health were approved, the AMA said,
would be UnitedHealth’s shareholders.
UnitedHealth, a national health insurance company that covers 70 million
people, wants to take over Sierra Health,
one of the most successful insurance firms
in Nevada. The deal needs the approval of
state Insurance Commissioner Alice Molasky-Arman and the federal government.
The AMA said the acquisition would
give UnitedHealth staggering market
power, with a 56 percent share of the Las
Vegas area and 43 percent statewide. That,
in turn, could raise health care prices, the
AMA warned.
But Jim Wadhams, the attorney for
Sierra Health and United Health, said the
deal would create efficiencies that could
reduce health care costs.
www.RANNV.org
August 2007
Retail Association of Nevada
Page 9
National News
OREGON CONVENIENCE
STORE OWNERS TAKE TAX
FIGHT TO COURT
Convenience store operators in
Eugene, Ore., are fighting to make sure
the city’s nickel-a-gallon gasoline tax – the
highest in Oregon – doesn’t grow, reports
the The Register-Guard.
The operators are headed to Lane
County Circuit Court on Friday, hoping a
judge will help their effort to repeal a 3cent increase that’s set to take effect Aug.
1. Convenience store operators say that
City Recorder Mary Feldman erred when
she determined that the owners failed to
collect enough signatures to put a repeal of
the tax increase on the November ballot.
The legal dispute centers on the
formula used to calculate how many
valid signatures the station owners needed
to gather. The formula is a percentage
of votes cast in the most recent mayoral
election, and it will come down to Judge
Gregory Foote’s opinion of whether a vote
cast for a write-in candidate should count
the same as a vote for a declared candidate.
CELL PHONE SERVICE LETS
CONSUMERS TAP INTO IN-STORE
MARKETING
In a new spin on the old restaurant
jukebox, start-up company Akoo
International has developed a cell phone
version that restaurants, retailers, theaters
and other venues can tap to market and
promote products and services in stores,
reports Marketing Daily.
The service, dubbed m-Venue, will
officially launch later this year in the U.S.
Now compatible with the Apple iPhone,
Safari browser and Microsoft Windows
Mobile, the service lets consumers use
their cellular phones as a wireless remote
control to activate in-store entertainment.
Consumers will be able to browse and
buy music and videos while dining out or
shopping. More than two million pieces of
music, videos, sports clips, trivia questions,
and pre-approved user-generated content
will support the service. “We needed to
customize the application for the Safari
browser, so consumers who have an
iPhone can use their finger to select
the music or video choice rather than a
button,” said Akoo CEO Niko Drakoulis to
Marketing Daily.
Through Wi-Fi access or text
messaging, the consumer can search,
select and cue audio and video content
on big screens installed at participating
venues. Consumers view the free content
over standard audio and video systems
at subscribing locations. For example,
McDonald’s might send a mobile coupon
for $1 off a cup of its new premium coffees
– a thank-you for interacting with the
system.
NACDS SUPPORTS CHANGE TO
HEALTH INSURANCE PROGRAM
The National Association of Chain
Drug Stores (NACDS) offered support
for an amendment to the State Children’s
Health Insurance Program (SCHIP)
reauthorization bill to help ensure that low
income Americans will continue to enjoy
access to retail community pharmacies in
the Medicaid program.
In a letter sent to Senators Blanche
Lincoln (D-AR), Ken Salazar (D-CO) and
Pat Roberts (R-KS), NACDS outlined
support for an amendment to the SCHIP
bill that would eliminate a portion of
the devastating Medicaid generic drug
reimbursement cuts imposed under the
controversial “average manufacturer’s
price” (AMP) reimbursement policy.
“We appreciate the hard work and
support of Senators Lincoln, Salazar
and Roberts on behalf of community
pharmacies to put forth this thoughtful
bipartisan amendment,” said Association
President and CEO Steven C. Anderson,
IOM, CAE. “Pharmacy is a cornerstone
of the health care system in every
community, and federal reimbursement
policies should support, not undermine,
these highly efficient and accessible health
care providers. These cuts would strike a
major blow to community pharmacies and
the patients they serve.”
Currently, the Medicaid policy
would cut over $8 billion from community
pharmacies over the next five years, a
devastating reduction of 30%. In fact, both
the Government Accountability Office
and the HHS Inspector General have
found that under the AMP reimbursement
rules, pharmacies will be paid less than
their acquisition costs for many of the
generic medications most commonly
prescribed. If Congress does not act, these
damaging cuts will be imposed starting
January 1, 2008.
“Unless Congress reverses the
Medicaid ‘AMP’ cuts that threaten the
pharmacy industry, many low-income
Americans served by SCHIP and Medicaid
may lose access to pharmacies in their
communities,” said Anderson.
“Although due to procedural reasons
the amendment to the SCHIP legislation
may have to be withdrawn for the time
being, the efforts of Senators Lincoln,
Salazar and Roberts to include this
provision will continue to raise awareness
of the issue and to lay the groundwork
for future advancement of this legislative
language,” said Anderson.
CONGRESS INTRODUCES
LABELING LAW FOR CARBON
MONOXIDE-TREATED MEAT
Legislators have introduced a bill
that would require fresh meat, seafood
and poultry that has been treated with
carbon monoxide to be labeled as such, in
addition to a label saying that consumers
shouldn’t consider the color of the meat.
Carbon monoxide treatment often renders
packaged meat redder and fresher-looking
than it is, lawmakers said.
GMA/FPA SmartBrief
REPORT: BIOFUEL PRODUCTION
SPREADING AROUND WORLD
A German grain trading company
says biofuel production is spreading
beyond the U.S., Brazil and the European
Union and could change trading patterns
worldwide. Toepfer International, a unit
of Archer Daniels Midland Co., says it
expects demand for human and animal
foods to continue to be strong as well and
predicts a “long phase of relatively high
prices for agricultural commodities.
GMA/FPA Smart Brief
AMAZON SALES RISE WITH
SHIPPING “MEMBERSHIP”
Amazon’s sales surpassed year-earlier
numbers by 35% during the April-June
quarter, dampening criticism by those who
have questioned the company’s focus on
offering free shipping for Amazon Prime,
which provides unlimited free two-day
shipping for an annual fee of $79. “Wall
Street hates it when we lower prices, give
away free shipping, and offer Amazon
Prime,” said company founder and CEO
Jeff Bezos in an e-mail interview. “But
we know in our bones that siding with
the customer pays off for everyone in
the end.”
NRF SmartBrief
www.RANNV.org
Page 10
Retail Association of Nevada
August 2007
Important Information for
SIG Members
The NRS governing self insured groups requires notifying members
of all new members to the Nevada Retail Network Self Insured
Group. New members for NRNSIG from July 1, 2007 to
July 31, 2007 are listed below.
Affordable Personal Care
CNA Destinations
Family Care Home Health
H2O Backflow
Image Sun Tanning Centers
Internal Medicine Specialists
Masterset
MedAccess
Rockin Baja Lobster
Shannon’s Personalized Home Cleaning
The UPS Store 3246
NRNSIG members who wish to register a negative vote on a new
group member, please write NRNSIG at 575 S. Saliman Road,
Carson City, NV 89701, indicating which member and the reason(s)
for the negative vote. ■
TAKE CONTROL OF YOUR WORKERS’ COMP COST
Be Part of…
The Nevada Retail Network
Certificate #5004
● Greater management control that cuts overhead costs
● Pre-employment screening at a small co-pay for NRN members only
● Team Safety/Loss Control Program for all members
● Investigation and defense of claims
● Direct savings that give members greater incentive to control losses
Take Control Today…
Call Mike Olson
800-859-3177
• Self Insured Group •
• Membership in RAN Required •
Sponsored by:
The Retail Association of Nevada
410 South Minnesota Street
Carson City, NV 89703-4272
MEMBERSHIP INFORMATION: Find out more about RAN’s self insured group.
Call Mike Olson, 800-859-3177,
or the RAN office at 775-882-1700 (toll free in Nevada 800-690-5959).
Don’t forget to check out our website, www.RANNV.org.
www.RANNV.org
August 2007
Retail Association of Nevada
Page 11
2007 Sales Surge for National Chains,
Many Other Retailers Challenged
RISING HEALTHCARE COSTS, COMPETITION, CREDIT CARD INTERCHANGE
FEES TOP STRATEGIC ISSUES
S
upermarket industry sales
increased 5.3 percent in 2006,
and same-store sales rose 4.0
percent, the highest mark for this
performance measure in more than a
decade, according to the Food Retailing
Industry Speaks: Annual State of the
Industry Review 2007 released by the
Food Marketing Institute (FMI).
These figures were up from 4.6
percent and 2.4 percent, respectively,
in 2005. The national chains reported a
banner year in sales and profit growth,
but the picture was far less rosy for
many other retailers. In fact, same-store
sales decreased for nearly one-quarter
(23.5 percent) of food retailers. All
together, nearly half (47.1 percent)
lost ground in same-store sales when
factoring in inflation. Net income before
taxes and extraordinary items decreased
to 1.8 percent, from 2.1 percent.
Retailers with more than 100 stores
reported the highest income numbers at
a median of 3.2 percent.
“These results are impressive in
view of all the rising costs the industry
must bear, including energy, healthcare,
credit card interchange fees and the
imperative to keep improving products
and services in today’s extraordinarily
competitive marketplace,” said FMI
Senior Vice President Michael Sansolo.
“However, it is also clear that many
retailers are struggling to solve the
puzzle of cutting costs as much as
possible while continually improving
customer service.”
MEAL SOLUTIONS
PROLIFERATE AND
NICHE-MARKETING
REMAINS STRONG
Retailers are responding
aggressively to diverse and changing
customer demands, delivering fresh,
healthful and convenient products
storewide.
They are offering meal solutions in
multiple forms, including:
• Hot-service counters, 89.2 percent.
• Self-service refrigerated cases,
83.8 percent.
• Made-to-order sandwiches,
71.6 percent.
• Soup bars, 67.6 percent.
• Catering, 62.2 percent.
• Separate checkouts for prepared
foods, 58.1 percent.
• Salad bars, 56.8 percent.
• Sushi stations, 52.9 percent.
• Snack/juice/coffee bars, 50.0 percent.
Prepared foods departments have
grown large with the median number
of items offered at 62. The menu items
range from traditional chicken to madeto-order pasta dishes, paninis and
burritos. Chicken remains the most
popular item. The industry continues to
reach out to fast-growing market niches.
As many as 83.9 retailers offer ethnic
foods and 72.4 percent feature a natural/
organic food aisle or section. Nearly half
of the retailers surveyed (46.0 percent)
are branding their own organic foods,
selling private label versions of these
products.
ANXIETY HIGH OVER A
RECORD HOST OF
STRATEGIC ISSUES
Looking at the future, the report
found increased concern over a growing
host of strategic issues. In fact, the level
of concern, measured on a scale on 1 to
10 with 10 being the highest, increased
for nearly every issue, comparing the
expected impact in 2006 with that in
2007-2008. Further, more issues had an
anxiety rating of 6 or higher than ever
before in this report:
• Healthcare costs, 7.9 in 2007-2008,
up from 7.6 in 2006.
• Competition from other retailers,
7.7, up from 7.5.
• Credit/debit card interchange costs,
7.5, up from 7.2.
• Energy costs, 7.4, down slightly
from 7.5.
• Staffing, hiring, retention, 6.9,
up from 6.5.
• Technology investments, 6.5,
up from 6.0.
• Food safety scares, 6.0, up from 5.7.
The frustration over some of the
issues stems from the industry’s inability
to control them. The most significant
example is interchange fees, averaging
nearly 2 percent, which credit card
companies and banks extract from
every plastic transaction. Interchange
fees are fixed by Visa, MasterCard and
the banks that issue their cards. The
cost is rising fast for three reasons: the
fees themselves keep increasing, more
consumers are using rewards cards with
higher interchange rates and plastic is
becoming the predominant way that
consumers pay for goods and services.
Interchange costs for all retailers totaled
$30.7 billion in 2005 and $36.3 billion in
2006 — an 18 percent increase in just
one year. The cost of interchange has
more than doubled since 2001. In the
long run, consumers pay these costs as
retailers are forced to build them into
the price of all goods and services.
HOW RETAILERS ARE
RISING TO MEET
COMPETITIVE CHALLENGES
Nearly all retailers (98.8 percent)
are addressing competition issues by
emphasizing perishable products such
as meat, produce, prepared foods and
deli and bakery items. This strategy is
yielding success with an effectiveness
rating of 8.6 with 10 being the highest.
Companies are also competing by
developing store brands (87.8 percent);
focusing on natural and organic products
(84.1 percent); providing a unique
shopping experience, store design
and product selection (74.4 percent);
emphasizing consumer wellness and
family health (73.2 percent); and
featuring low prices (72.0 percent). ■
www.RANNV.org
“In the business world,
the rearview mirror is always
clearer than the windshield.”
WARREN BUFFETT
C A P I T O L WAT C H
N
Hearing Held on Credit Card
Interchange Fees
said Tim Hammonds, FMI president
oting that the convenience
system,” said Smith.
and petroleum retailing
Visa and MasterCard control
and CEO.
industry in 2006 paid more in
80 percent of credit card purchase
Americans are paying the highest
credit card fees that it earned
volume. Each company works with
interchange fees in the world, which
in overall profits, NACS President and
their member banks to collectively set
have risen 117 percent since 2001,
CEO Hank Armour told the House
the price of interchange fees. Because
reaping more than $36 billion for
Judiciary Committee’s Antitrust Task
banks benefit from higher interchange
credit card companies. These fees are
Force in written testimony that the
fees, Visa and MasterCard compete to
hidden charges on merchants every
“rapid increase in fees is unjustifiable
charge the highest rate.
time a credit or debit card is used to
and unsustainable.”
pay for a purchase. Credit card
“Americans are paying the highest
Also testifying were
company rules make it practically
representatives from NRF,
impossible for merchants to tell
interchange fees in the world, which
NACDS, and Steven C. Smith,
customers how much they are
chairman of the board of Food
have risen 117 percent since 2001...” really paying.
Marketing Institute (FMI).
Investigations by both
“Conventional wisdom tells us
Judiciary Committees in Congress,
“This hearing shows that a
that as volume grows prices should
along with future hearings expected
broken market exempt from normal
fall, but instead credit card companies
competitive checks and balances
in this Congress, could very well lead
have created much greater volume
hurts retailers and consumers. Visa’s
to a push for legislation to provide
and raised fees and costs substantially.
and MasterCard’s current practice of
significant relief to consumers and
This is contrary to the basic concepts
forcing these exorbitant hidden fees
retailers. ■
of the American free enterprise
on Americans is no longer defensible,”
Nevada News
Serving the Retail Community Since 1969
Nevada News is published by the
Retail Association of Nevada,
a nonpartisan, nonprofit corporation
founded in 1969 representing the Retail
Community, the Chain Drug Council
and the Grocery Industry Council.
Mary F. Lau
President/CEO
Tracey Woods
Vice President of Government Affairs
Elizabeth MacMenamin
Director of Government Affairs
Lea Lipscomb
Lobbyist / Legislative Analyst
Mike Olson
Account Executive / Workers’ Comp
Randi Thompson
Newsletter Editor
Sue Arzillo
Newsletter Design & Layout
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