That shift in consumer behaviour towards shopping locally is expected to stick around and it’s helped independent grocery chain IGA stage somewhat of a comeback.
Overtaken as the third largest grocery chain by Aldi some years ago, IGA is now experiencing a resurgence as it differentiates itself from its bigger rivals.
While Coles last week abandoned its local in-store butchers, IGA is expanding them.
In the past few days they’ve hired six Coles butchers with plans to take on dozens more as they continue to personalise their in-store service.
While all the supermarkets recorded bumper revenue on the back of lockdowns and panic buying, for IGA the last 18 months in particular have proved a turnaround with changes in consumer behaviour including a preference for local shopping, increased migration to the regions and people working from home and cooking more.
IGA owner Metcash’s most recent results show the grocery retail network increased like for like sales by 10.5 per cent compared to last year and 18.8 per cent compared to the 2019 financial year.
Coles increased sales by 3 per cent and Woolworths supermarkets by 5.4 per cent in the past year, albeit off a much higher base than IGA.
Under Metcash’s MFuture initiatives, IGA has embarked on store upgrades, rolled out new store formats including their bulk offer, expanded private and exclusive label ranges, and accelerated their e-commerce plans.
Some stores have moved towards walk-in cheese rooms, pizza ovens, an on-site sushi chef, Asian grocer and now expanded on-site butcher services.
“You’ve got that point of difference because you have the servery where you can have the contact with the customer, even if it is a pre-packed item we can still advise the customer on how to cook and prepare the item at home,” IGA butcher Baylee Marcola-Lowe said.
Almost a decade ago, IGA focused on competing on price with its “Locked Down Low Prices” campaign, but it was no match for German juggernaut Aldi and the bigger chains Coles and Woolworths.
While they still compete on price and produce catalogues with weekly specials to match their rivals, it’s no longer their entire focus.
“They’ve moved away from focusing on price and locking down prices to ways they can actually create greater value for shoppers,” Associate Professor Gary Mortimer from the QUT Business School said.
Jospeh Romeo, who owns around 30 IGAs, said he’s seen a big shift towards shopping locally since the onset of the COVID-19 pandemic, and the chain’s future was looking brighter.
“As the IGA brand does evolve you will see more and more different formats and there’ll be more IGAs coming around your corner soon,” he told Nine News.
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Metcash’s CEO Jeff Adams announced on Friday he was retiring and will be replaced by Doug Jones, current CEO of South African-based Massmart Wholesale.