act appropriately

ver the decades, IGA's "Hometown Proud" slogan has become the battle cry for more than 4,000 retailers. But today that hometown might just as well be in Singapore or Sao Paulo as in Seattle or Sweetwater, Texas.

Although IGA has been part of the Canadian retail scene since 1950, the company's global development began in 1988, when the Chicago-based alliance picked up members in Japan and Australia. Now, 13 years later, IGA may indeed be the only truly global supermarket company based in the United States, as Chairman and CEO Tom Haggai notes. And despite recent expansion, overseas opportunities remain virtually limitless.

If there is one key to IGA's international success, it is to steer clear of time-worn cliches like "think globally and act locally," says Paulo Goelzer, senior vice president, international. "If I had to use a phrase, it would be 'think globally, think locally and act appropriately.'"

Apparently this formula has worked well. IGA and its network of companies represent annual volume in excess of $200 billion. The IGA banner is flying in 36 countries, and the growth rate is outstripping domestic gains—especially in the last two years and in Australia particularly, Goelzer says. "I would say that last year Australia was tops in overall achievements, exceeding our expectations. It's a country with a population the size of New York, and with about 1,100 stores. It's a significant market, and IGA stores have a significant share," he says, putting it at about 25%.

Australia has also stood out for the development of new formats by its retailers—specifically IGA X-press, a convenience store concept, which will shortly make its debut in the United States, and Everyday IGA, a mid-range-size store.

South America represents another huge opportunity, according to Goelzer. "We're only in Brazil right now. But it is one of the most exciting of our existing markets for the future. It's not understored. There are some very strong international competitors such as Wal-Mart, Carrefour and Ahold. It is a market that's potentially bigger than the United States, but with demographic and logistical challenges," he says.

IGA is also looking at Colombia, Venezuela and Argentina, although the latter is something of a challenge. "Usually we grow through a network of wholesalers and retailers. But the market in Argentina is already dominated by chains. The only independents left are largely regional, and there's not a wholesaler that could make that link," Goelzer says.

At present, Goelzer's international initiatives are more about consolidation. "My focus is trying to build more than a global company by giving IGA members inside individual countries a competitive advantage through our system," he says.

By this, Goelzer means learning—getting knowledge and disseminating it on everything from food safety to store management. The other part of IGA's globalization program is on the trading aspect. "We need to take advantage of our local company connections and do more trading," Goelzer says.



He concedes that in the past vendors have not necessarily viewed IGA as a global company. "Usually we think of companies as those in a command and control system. IGA doesn't have that structure and is sometimes not perceived as a legitimate organization.

"We are, as Tom Haggai says, a comprehend, understand and commitment system. I can't command retailers to do anything. But the global promotion for me is the alignment of international partners and presenting them to manufacturers. As a group, I can change the perception of the local market. Then I can give local domestic partners better terms. In some respects, it's philosophical. By changing perception, you create new meaning. If I create new meaning—it's change."

The perception is that IGA should have been doing this already, according to Goelzer. "Our international members love this idea. In some respects, the philosophy behind the international promotion has more meaning than the mechanics of it all," he says.

Aside from the global promotion, IGA faces the considerable challenges of building a global brand. "The challenge of a global brand is to maintain consistency. We have to be careful to maintain IGA's standards throughout the world. McDonald's went through the same problem. McDonald's in France was terrible. But they couldn't take the franchise away from the guy who had it. He didn't think he was damaging the brand. But it's the risk you take when you go into global markets.

"For us, it's not just the store. We have private labels starting in those countries. Suppose someone puts something in the tuna or puts out products that are genetically modified. The market doesn't care that it's an individual store or that a distributor in a certain country may be to blame. All they see on the label is IGA. We increase the risk by putting our name out there. We have to be able to understand and manage the risk," Goelzer says.

For IGA, managing risk in the international marketplace begins with choosing partners in individual countries. "Before we go into a country, we do a feasibility study to assure us we have the best. We need to see who you are, what you do and whether you can be our master retailer. The first lesson of quality control comes with whom you allow to develop your brand. It's the first and perhaps most critical element."



The second is creating mechanisms in the local system that are self-managed and self-regulated. "For example, in Brazil I teach sanitation from the beginning—cleaning the store and personal hygiene," Goelzer says.

The third step is the assessment system. "That's when we bring in a fresh eye to look at things. We did it in Brazil and now in other countries. But the assessment is now in an electronic form. This allows us to get more data (from retailers) and manage it," he says.

Some question whether IGA's store assessment program should vary between countries. "I'm working toward one assessment system. I think it can be done, even taking into account cultural differences between countries. It's not just sanitation issues. Branding is a major part of it. Branding is even stricter in Brazil, and some U.S. retailers might not be able to pass muster by Brazilian standards," Goelzer says.

At present, Goelzer says there are between 10 and 15 prospective members overseas, including some in South America, Honduras, El Salvador, Dominican Republic, Aruba and Jamaica, as well as prospects in Vietnam and New Zealand. In Asia, Goelzer sees great potential for IGA in India's huge population and, at present, it is talking to a potential member in Taiwan. Even western and southern Europe, relatively mature markets, hold opportunities for IGA.

But to what extent should IGA stores be tailored to individual countries? "If you're a price impact operator such as Wal-Mart, you can go international with a more uniform strategy. But IGA is not that kind of provider. It doesn't fit our structure or strategy. We are competitive on price, but we need to explore more segmentation and differentiation in local markets," Goelzer says. "This means we have to adapt to every market, and it's all based on culture and economics. So we need to develop knowledge of local communities and build stores that provide value. We need to adapt almost on a store-by-store basis."



IGA's role is not so much to do the research for their international retailers, but to steer them in the right direction. "There are still independents in some markets who believe they can sell Tide lower than Wal-Mart. We tell them, 'Forget about the price of Tide. Let's talk about perishables and see what you can do.' No matter where we are in the world, consumers need to know that behind that banner is a guarantee of quality and excellence in service, and uniformity lies in our identity of community building and community involvement," Goelzer says.

Striving for excellence in all phases of retail operations is being helped along by the existence of "IGA University"—an educational initiative that involves an alliance with Coca-Cola in Singapore and Brazil, according to Goelzer. The concept also exists in Japan, Australia and Thailand.

The university's classes are geared to what is needed in each country. In Brazil, classes are focused on store and management improvements, including such areas as sanitation, marketing management, human resources, financials, general administration and how to manage departments such as dairy and bakery, Goelzer says. In Japan, the focus is more on merchandising. "We're trying to bring this to the United States. We don't have one IGA University—we have Fleming IGA U and Supervalu U," he says.

Goelzer sees IGA University as something of a global information broker. "We're not trying to reinvent the university process, just expand it and makeit appropriate for us."