Chicago-based Independent Grocers Alliance (IGA) sees India as one of the largest countries that it operates in within 10 years considering the acess to information through smartphones, says Mark Batenic, CEO, IGA. The company has opened a 1,500 sq.ft. grocery store, first in the country, at Kalkaji, New Delhi with its licensing partner Banaras House.
Talking about the future plans, Batenic mentions that getting the store off-the-ground is a primary objective as of now. “Hopefully, we will see more independent and family owned businesses stop by to see what we are trying to offer. IGA is a business platform, an entire business process that is not just selling the product. It is a philosophy as to how to do business in a community. At the end of the day, the stores that we operate, which are a part of our licensing system, around the world generate a community sense where people gather not only to buy food but also to meet neighbours and the store owners. Our business platform is built around community, entrepreneurial family ownership, and giving back to the community.”
He further adds that IGA is not just about selling the product. “It’s been the hardest challenge we have faced in India, for not only the store owners but also the licensees to understand that it’s a total business process and not just selling the product. IGA stands for an alliance of retailers, licensees, distributors, and the vendors.”
Batenic points out that other unique aspect of IGA is that unlike other multinationals, the business profits stay in the country. “Our licensing fee is very reasonable, roughly USD 30 dollars a month. In return, store owners get complete access to all the marketing material we have. They also get access to IGA Coca Cola Institute, an online training program offering courses in seven languages. The institute teaches store personnel how to do a better job, customer service tips, and product handling while upper-level courses help store directors in people management, hiring, etc,” he shares.
According to him, for store owners, IGA business platform brings an access to worldwide consumer goods from major companies like Coca-Cola, P&G, Nestle, Unilever, Colgate, Hersheys, Mondelez, and Cadbury’s which otherwise they would not have as an individual. So, proactively under IGA brand they get that.
“We have been working on this for 1.5 years with Binay Kumar, Chairman, Banaras House. Kumar, an IGA licensee now, decided to open the first store to set an example for others to follow. India has tremendous potential. Most of Indian retail falls under traditional format. Our researsch says traditional retail will still consume easily 80 percent and we don’t see any of that changing in the near future.”
Batenic confirms that Kumar holds the IGA license for the Northern part of the country where most of the expansion will happen as of now. Adding to Batenic’s remarks, Kumar admits that in the South, 40 stores of Nilgiris have already been roped in. IGA has also initiated talks with retailers in Lucknow, Udaipur, and Chandigarh where most of the retailers said they would like to see a model store, its operations and revenue and then join the program.
Stressing on the beneficial aspects of IGA, Batenic states: “IGA does not replace the name of the store owner but makes a small neighbourhood store a apart of a worldwide organisation. Shoppers told us during our surveys that we would like to shop from grocers who think local but have a global focus. Since the taste and preferences change from one block to another, local grocers can respond to the needs of the people much faster.”
He also points out that the advancement of the smart phone and the access to information has had a significant impact on the way consumers shop across the world. As India has one of the highest penetration of smartphone users in the world, the shop owners need to be really smart here, Batenic opines.
Commenting on the product portfolio, Batenic adds: “Kumar is importing some products from the US but we are also sourcing products locally. Some of the IGA products will be developed and produced in India. The quality products made here cant be made anywhere else in the world because they are “made for Indians,” so we are relying on our licensee Banaras House along with others to identify products that are most relevant and appeal to most of the Indians. For the first time in our history, we are also doing co-branding with a national brand in India, which is a very popular way of introducing new brands. The manufacture will still have to meet the quality standards we have in US. Costco in US has done a wonderful job in co-branding and we are kind of following that model. The co-branded products have the labels of both the IGA and the local manufacturer. Two co-branded products, mix pickle and vinegar, have already been launched at the Kalkaji outlet.” Kumar confirms that he has outsourced the manufacturing.
Highlighting some other challenges of operating in India as compared to other countries, Batenic admits that India presents a lot of challenges. “The Indian retailers want to know how much money they can make out of IGA platform and what will be the investment, however, I think they have a bigger responsibility to the community which they operate in apart from selling quality products. We have had a hard time getting that point across, but it will work. It took us 10 years to get working in China, 12 years in Australia, and we are still working on it in the US, we will keep working on it everyday. After all, IGA is not just about selling the products. Logistics seems to be an enormous issue here, one of the reasons why Walmart left, they still have a cash-and-carry format where they are doing well. In India, the distribution network poses yet another challenge as distributors have a certain profit margin they want in all circumstances,” he adds in a concerned manner.
Batenic feels home delivery is thriving in India so the outlet at Kalkaji also offers home delivery.
Sharing details of the expansion plans, Kumar says IGA is targeting 1,000 stores in next 5 years. For the current fiscal, he plans 100 franchised stores. The company already has 12 franchisees selling IGA products in South Delhi for the last one year. A minimum of 1,000 sq.ft. is required for an IGA franchisee.
“Ten years ago we had 11 stores in China, today we have over 1,400. This year China will become our largest country in terms of business as it has a strong infrastructure. Almost 15 years ago, Australia had 6 outlets in comparison to the current count of 1,600. US has 1,200 IGA stores. India lacks infrastructure as compared to the rest of the world, but I know we can still overcome that,” he concludes.
