In 2013, the Food Marketing Institute (FMI) honored Dorothy Lane Market CEO Norman Mayne with the Robert B. Wegman Award for Entrepreneurial Excellence. Upon accepting the award, Mayne, an independent grocer with three stores, said, “I want to thank The Kroger Co. for making me a better retailer every day.”
That is how IGA USA President Mark Batenic remembers it. In June at the Supermarket Management Class 2.0 in Chicago, Batenic explained that what Mayne was saying—in a nice way—is that he learns from the competition every day.
“I was talking to one of our larger operators in North Carolina…He has 24 stores in eastern North Carolina and he’s about ready to get hit by Lidl. He’s scared, as he should be,” Batenic said at the early May gathering, about a month before the first Lidls opened in the Carolinas and Virginia. “Because that German company has billions of dollars to spend. They’ve spent $32 billion in the U.S. already and haven’t turned one cash register on yet.”
The operator in North Carolina had done everything he knew to do to get ready for Lidl. He knows he cannot compete on price.
“But the one thing that he can do that Lidl can’t is he is involved in his communities. He is deeply involved in his communities,” Batenic said. “Not just from a charity standpoint, but deeply involved in Little Leagues, deeply involved in churches, deeply involved in the governments that are in some of the communities in that part of the state of North Carolina. He will thrive.”
A noble profession
Owning or working for an independent grocery store is noble and something to be proud of, Batenic told attendees of Supermarket Management Class 2.0, which veteran industry educator Harold Lloyd and Paulo Goelzer, president and CEO of the IGA Coca-Cola Institute, collaborated to produce after it was announced that FMI Connect would not be held this June.
The class is designed to develop food retail industry leaders.
“Because independent business is the backbone of business in this country and not just in this country but around the world,” he said. “Independents are really strong; I prefer to say they’re thriving not surviving.”
Batenic talked about the varying definition of an independent grocer. It can be a one- or two-store operation. Publix with 1,000 stores and Wegmans with more than 90 stores both are considered independents because of their ownership structure. Sam Walton, who in 1962 started with one store in northwest Arkansas, was first an independent grocer.
“So I get kind of agitated when people get mad at a chain store, because at the beginning that chain store was an independent grocer at one time, or an independent businessman at one time,” Batenic said.
Independent retailers are completely responsible for the business that they build from the ground up. They are committed financially.
“My point is that independent grocers have everything on the line every day,” Batenic said. “It’s all risk. You’re gigantic risk-takers. Hopefully smart risk-takers with a dream of not only being successful but a dream of providing for your family, providing for your communities, providing for your customers and also providing for your employees.”
He said there’s no question that some independent grocers have gone out of business over the last two decades.
Just 11 years ago, when Batenic joined IGA, there were nearly 30,000 independent stores (defined here as chains with 50 stores or less) in the U.S. Today, there are about 8,500 independents.
“Let that sink in for a second,” he said. “There has been massive consolidation and there have been massive closings, too. Last year, IGA here in the United States lost 90 stores from our membership. We picked up 85.”
Half of the stores IGA lost were closures. Many of the operators quit the business, Batenic said. One of the biggest challenges in the U.S. is succession planning. The average age of IGA retailers in the U.S. is 62; in Australia, it is 47 and in China, it is 38.
All retailers facing similar challenges
Even the most remote retailer isn’t safe from e-commerce, which is another worry. Batenic said independents don’t have a choice in this arena. They must go social and mobile.
“There is more power in (a smartphone) than what Alan Shepard went up in the first Mercury capsule; more power in these things today than what powered the first manned space flight,” Batenic said. “Artificial intelligence, they’re telling us that’s going to take over, and food production…these are things you have to worry about as operators today. And the big guys are worrying about them, too.”
Consumers want personalized service, ethical values, specialty products and an expanded value equation.
Batenic said an operator in Connecticut “is literally going to take away 10,000 s.f. of grocery and put it all into perishables and fresh because that’s what the shopper is looking for today.”
Meal kits are another competitive arena, and the notion that Millennials are the main consumers using them is wrong, he said.
“There are people in our offices who are in their 50s and 60s and their husbands and wives are buying that because it’s easy, it saves time, it’s nutritious and it’s reasonably priced when you figure out the cost per meal,” Batenic said. “You’re going to have to figure out how to get meal kits.”
Be famous for something, stay strong
“You guys have a lot of stuff facing you, but I’m here to tell you the independent grocer is still strong; independent businesspeople are strong. You continue to have the fortitude to risk everything every day to go into business, to try to make a better life for your family and for your communities,” Batenic said.
IGA is 91 years old and considers its stores “community centers” around the world. It continues to try to reinvent itself, just as independent grocers must.
“And we’re having to move at warp speed, literally. That’s how quickly it’s changing, and you guys have to stay on top of it, too,” Batenic said. “We would encourage you to hire the best and brightest people you can get your hands on, even if it costs you a little more. Because they will pay you dividends down the road.”
He implored attendees to keep their entrepreneurial spirit going because “it’s the backbone for commerce around the world.”
He suggested they learn from larger companies and the competition, “like Norman Mayne does every day from Kroger.”
Go see what the competition doing, then adapt it.
“Come up with something you’re famous for that no one else can touch,” Batenic said. “That’s what our Australian retailers do. Each one of them has to have something they’re famous for in their businesses. And that will change in six months because somebody will copy it. Think of something that is unique that is going to make that shopper drive past two other stores, three other stores, to arrive at your location and shop at your store and be a solid, loyal customer.”
What trait does Batenic most often see in top-echelon retailers across IGA?
“There’s always a deep passion for the business, and it never goes away,” Batenic said. “The independent movement—I think it’s still strong, it’s going to grow, and IGA hopes to be a part of that.”