A GLOBAL COMMUNITY

CHICAGO -- In the food retailing industry, there's no such thing as one-size-fits-all. That's especially true for IGA here, the world's largest voluntary supermarket network. With licensed supermarkets in all 50 states and two dozen countries, IGA has managed to adapt stores to a vast array of cultures, marketplaces and economic climates -- all the while enforcing a strict code of standards for its

CHICAGO -- In the food retailing industry, there's no such thing as one-size-fits-all. That's especially true for IGA here, the world's largest voluntary supermarket network. With licensed supermarkets in all 50 states and two dozen countries, IGA has managed to adapt stores to a vast array of cultures, marketplaces and economic climates -- all the while enforcing a strict code of standards for its operators.

This type of international growth fuels -- and is fueled by -- U.S. operations through the knowledge base obtained from nearly 10 years of globalization.

Overseas operators in Asia, Latin America and the South Pacific benefit from IGA's 71-year experience in store layout, advertising and marketing programs, private-label strategy and technology.

U.S. retailers, meanwhile, find new ideas in merchandising fresh food, and also gain insights into ethnic groups that they serve in their own culturally diverse markets.

About 1,000 of these retailers, along with distribution company executives and manufacturer representatives from around the world, will meet later this week in Orlando, Fla. for IGA's 1997 Merchandising, Advertising and Promotions Conference -- IGA's largest annual event.

"One of the advantages of having the international and the U.S. [operators] come together at our conferences, is that the international people get to see what goes on in the United States," said Larry Willis, IGA Inc.'s president and chief operating officer. "Our programs are put together around a lot of things that are happening in the United States, and some of the things that are happening overseas."

IGA Inc., the nonprofit organization that governs the U.S. and international divisions of IGA, is owned by wholesalers which are granted a license to warehouse and distribute IGA-branded items in exchange for IGA stock.

In the United States, there are 12 wholesalers, or "owning companies," serving 2,140 stores. Overseas, there are eight, which supply 584 stores. (A separate entity, Canada IGA, has 750 stores serviced entirely by Oshawa Group, Etobicoke, Ontario, and operates "autonomously and harmoniously" with IGA here.)

IGA's U.S. sales were $10.3 billion in 1996. Sales internationally, including Canada, were $8.3 billion.

IGA does not have a target for growth -- that is left up to the ambitions of IGA's wholesalers and the IGA retailers they serve, the company said.

U.S. growth will come mainly from store quality (remodeled and enlarged stores) rather than quantity, but overseas is another story.

With interest in IGA programs coming from such underserved areas as Asia, the Middle East and Eastern Europe, IGA expects to have as many international stores as it has in the United States within the next few years, officials told SN.

As sophisticated as American food retailing has become, U.S. operators can always learn a thing or two from their overseas counterparts.

In Australia, where there are some 239 IGA stores, U.S. retailers have been taking an interest in local fresh departments.

"They probably do the best job in fresh," said Tom Haggai, chairman and chief executive officer of IGA Inc., referring to three Advantage IGA stores on the western side of Australia, in Perth. "[They] have fresh with such variety and a shrink of almost zero. We probably have only one store in the United States that has that variety of fresh.

"We do learn things that they do better than we do," Haggai said. "That's one of the strengths of the network. We get that back-and-forth."

For example IGA Australia took its IGA-branded fresh meats one step further, using them to create a signature line of prepared meats.

Not all of the shared information is terribly complicated. Haggai said Bozzuto's, Cheshire, Conn., which supplies IGA stores in the Northeast, has printed shopping bags with the slogan "Hometown Proud" translated into eight languages.

Advances that are made in U.S. stores are eagerly devoured by international operators, Willis said.

"We're going out and we're getting the U.S. [retailers] interested in meal solutions, and teaching them about loyalty cards, and things of that nature -- and that spreads itself out overseas," Willis said. "The people overseas learn a lot by coming to our conferences, about what's going on in the United States, and I think that's one of the reasons they want to be a part of IGA. They see what's going on in the United States and around the world, they look up to IGA."

What sounds like basic food retailing in the United States actually can be groundbreaking in other countries, said Haggai. In Japan, IGA helped redesign small stores (5,000 square feet or less) to maximize profits. Staples like rice, which were once in the front of every Japanese supermarket, were moved to the rear, to encourage longer shopping visits and to promote higher-margin items in the front end.

This year, IGA will host tours of its U.S. stores for Japanese executives. Willis said Japanese operators are so interested in home-meal replacement that they will visit Dallas-based Eatzi's, which is not an IGA store.

Willis said such visits have been so popular among IGA licensees that they have become more formalized. In the past two years, IGA has seen an increase in employee exchanges from all corners of the globe.

"These partnership relationships have been built up over time, it's been a plus for both sides," Willis said. "with the United States becoming more of an international country, with all the people moving in and different cultures. Especially in the southern states -- with all the Latin people moving in -- what we're learning in Brazil is helping us in that part of the country, and vice versa."

In many instances, IGA is redefining the role of the supermarket in its foreign locales. In February, a group of Chinese-American retailers visited Pearl River Distribution, a Hong-Kong-based wholesaler servicing about 59 Chinese IGA stores, for a seminar in meatcutting. The sessions were mandated by the fact that most fresh meats are bought not in Chinese supermarkets -- but in outdoor farmer's markets.

More formally, IGA partners with Coca-Cola to operate a school in Singapore -- IGA University -- which trains all levels of store personnel. The school, which was founded in 1988 and has satellites in Malaysia and Indonesia, recently graduated its 40,000th student. The company also offers IGA training in Australia, Japan, and soon, South Africa and Brazil. Students can gain everything from entry-level job skills to a Master's Degree.

IGA credits Coca-Cola with being very instrumental to IGA's entrance into foreign markets -- "as helpful as the State Department," Haggai said. "They just opened up and told us everything," Haggai said. "They gave us their experience. They gave us advice. They opened up their resources. They were a great help to let us learn by their disappointments."

Those who cannot make it overseas are invited to exchange ideas at one of two international conferences (including the MAP Conference), or attend one of several ad hoc roundtables with visiting international retailers.

Retailers at this week's conference will probably gain as much from talking to each other as they will from the line-up of high-level speakers, IGA officials said.

"We're using our MAP Conference to get the retailers together -- from the United States and from around the world -- and get them rallied, to get them to feel positive about what's going on today," said Willis. "We feel that's a big concern to us."

Many of the best practices to be discussed this week -- both domestically and internationally -- are incorporated in IGA's Standards of Operation -- a set of guidelines designed to make IGA stores cleaner, safer and more technologically advanced so they can build the IGA brand and compete more effectively in their respective markets.

"When you go into a new country, you're able to set out new standards from day one, and say, 'This is how we want to go out with the program,' " Willis said. "Sometimes it's easier to start something from scratch, provided you do it the right way. And we're doing that based on what has been learned in the United States.

"We're 71 years old, we've made a few mistakes along the way," Willis said.

Haggai said the same standards apply to both U.S. and foreign stores. But foreign stores tend to withstand more thorough examinations by third parties. In the United States, IGA expects to lose about 100 stores which could not meet standards for size, sales or other criteria.

Haggai said supermarket expansion in Asia has been aided by two factors: available space and the lack of legislation limiting the size of new stores. Supermarkets are restricted in Tokyo, but that has more to do with lack of space than zoning laws.

Those zoning laws have limited new store constructions in Western Europe and catalyzed the series of acquisitions seen or under way. Still, IGA has not been contacted by Western European retailers or wholesalers.

"At this stage of the game, Europe simply hasn't come calling," said Haggai. "We're growing at a pace where our tongues are hanging out just from the companies that have come calling. If they did come, they'd have to come pretty aggressively. We feel that Western Europe has sufficient supermarkets. They don't need us. But if they came, we would listen."

However, Haggai said IGA has heard from operators in Eastern European nations, and expects to have IGA stores in the Czech Republic, Poland and Ukraine, plus the Middle East, by the end of 1998.

"We're not going out to win the world, we're waiting for the world to say ,'IGA, you can help us,' " Haggai said. "We have not sought other countries, they have come to us. We have a pretty sound strategy."