IGA Express : Wow!… but are they profitable?
To see a WOW convenience store, go to one of the 20 IGA Express in Quebec.
WOW! … This is the right word to describe the shopping experience offered under this banner.
What a great convenience store! Spectacular, well-stocked, modern, clean, well-lit, trendy, beautiful, chic with well-chosen colors on each of its 4,000 square feet.
It is so impressive that one wonders if Sobeys does not do a little too much, hence the question: are they profitable?
But first let’s take a look at this retail wonder that makes you want to buy everything.
Actually, this layout concept is so strong and beautifully rendered that it sounds too good to be true. This leads us to question the profitability of the concept.
First, it is a bit of Sobeys’ fault because in the enthusiasm of the banner launch in 2013, its representatives declared they want to open 50 to 60 stores “within five years”. However, four years later, there are still only 20, a third of the initial target.
If the concept was highly profitable, we would have seen more of them. So it’s a sign that there could be something wrong.
Various sources in the industry have told us that the management of these stores, in the franchise mode, is very hard and time consuming because closely controlled by the parent company who is keen to preserve the concept purity. This discipline showed up in the store visited, since even on a Sunday, everything was absolutely perfect in terms of maintenance, inventory and cleanliness.
Last but not least, we know the ready-to-eat category to be trendy and offering good margins, but it remains a very difficult category to manage and profit from. The losses can be enormous.
Also, is it a good idea to have given the IGA brand to these stores and not a new distinctive brand? The global marketing gurus Al Ries and Jack Trout have always warned companies against what they call the “brand extension trap”, insisting that if IGA means supermarket, for instance, it could loses its impact when associated with another category like “convenience store”. And why the heck have they named some “Mini” and others “Express”?
In conclusion, IGA Express is an absolutely magnificent concept for the consumer, as it is very generous and attractive, but maybe not as much for the retailer’s profits, knowing how ruthless the market is in terms of profitability.
It is the impression that we keep from this visit but so much the better if the future proves us wrong!
Congratulations at least to Sobeys for such an innovation. The chain is well justified to be proud of its creation: it is really superb!
It remains to be seen whether it will actually spread or rather remain marginal.