For those of you who have never heard of it, IGA is the Independent Grocers Alliance, a sort of franchising model among grocery stores and supermarkets in contrast to a chain of them. They’re independently owned but also work together. As with fast food franchises and the like, though, someone with a successful IGA store here may also start an IGA store over there.

The IGA in Summit closed earlier this year, after being in business for some 20+ years. Nearly everyone is attributing this to something that they already opposed. One faction blames Walmart, which opened up right down the street. Another faction is blaming unions, as IGA ran a union shop. The people who owned the IGA are actually busy working on getting a new location opened up in Callie.

Here in Callie, we have two supermarkets, a dinky little IGA downtown, and a large Safeway on the side of town. I uniformly shop at the latter. Partly because it’s closer. We live on the same side of town. Also, it’s less expensive. Also, it keeps better hours. Also, it’s more convenient. This is rather a common theme. Don’t like big box stores? Try living in a place without them. It’s uncertain to me how IGA stays in business, aside from community loyalty and being slightly on the west of down. I’m not sure if that’s going to be enough to keep Chain IGA from driving Dinky Little IGA out of business. Two large and convenient locations on each side of down, and LDIGA sandwiched in between.

I believe the ultimate answer to why IGA is leaving Summit has little to do with Walmart, per se, or unions. To the extent that CIGA’s leadership has commented, they said that Summit’s supermarket market is oversaturated. There are six large supermarkets and that appears to be one too many. It was profitable, but not profitable enough. And not as profitable as the new location in Callie should be.

I don’t fully understand why this community needs a second store. Then again, we also something on the order of five auto part places, several garages, and broadly more choices than I would expect to exist in a community of a few thousand. That’s been one of the surprises of ruralia, to be honest. When debating whether or not a pharmacist should be able to refuse to fill a prescription for birth control, the spectre of “the town where there is only one pharmacy” comes to mind. But if towns of only a few thousand have three pharmacies, how many towns of a single pharmacy exist? How many are in places that people aren’t used to regular trips to a larger town.

It’s been an interesting experience, living in a place smaller than I had ever intended. The commercial options are certainly more limited, but a lot less limited than I would have guessed. I guess I had sort of envisioned a Mayberry, where there was the grocier, the pharmacist, the mechanic, and so on. The number of things that come in ones are quite few. Even large supermarkets, apparently.


Category: Market

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9 Responses to IGA, Supermarkets, & Small Towns

  1. Peter says:

    In a couple of respects supermarkets are a bit different from most other forms of retailing. There are no national chains, and in most areas there are no more than two or three (and sometimes just one) chains that completely dominate the market.

  2. trumwill says:

    Well, there are none truly national, a number of them do span pretty far.

  3. Scarlet Knight says:

    There are no national chains

    It is very difficult to get the economies to scale in the supermarket business. Maybe because of the low margins.

    Similar to IGA, the Mid-Atlantic has ShopRite. Most people don’t know that it is also a co-op, rather than a chain. The rule is, they have to honor all advertised specials. Unlike a place like Subway, which is fussy about honoring coupons.

    Because ShopRite is a co-op, each store can look different, and give a different shopping experience. I know people who won’t go to the ShopRite in town, and instead go to the one in the next town over. This doesn’t happen with, let’s say, Burger King.

  4. trumwill says:

    It is very difficult to get the economies to scale in the supermarket business. Maybe because of the low margins.

    I’d think that the added purchasing power of conglomeration would mean quite a bit here. I think it’s more a product of it having not been as much a singular idea as Walmart and the hypermarket, but rather they all grew organically from the grocery stores they came from. Bigger, better, bigger, better, etc.

    It’s worth noting that there is less diversity than we might think. A lot of places with different names are actually a part of the same corporation. It’s just that when they expanded by purchasing competitors in new regions (much easier than getting building permits, I’d guess), they left the old names in tact. Kroger’s operates under 20+ names.

  5. mike shupp says:

    Been a few years, but my recollection of life in small towns was that a town of say 500 people would have a grocery store of small/medium size, and a gas station, and possibly a fast food shop or Dairy Queen. There just might have been an implements dealer on the outskirts. Maybe 10 miles away, the county seat would have 5000 people and stores that serviced all needs of the 15000 people in the county. Add a few more stores if a major highway passes through or by the town.

    So, my guess is your local stores serve a wider area than just your community. More accurately, SOME of your local stores serve a wider area.

  6. trumwill says:

    That’s true. The town itself is a hub for the two-county area. There are other towns that pick up some of the slack in the neighboring county, but our hospital for instance has a “call area” of 13,000 residents (and an area surpassing that of New Jersey). So, good point.

  7. Peter says:

    What do cotton balls and bulk candies have in common?

    They’re the most profitable items for supermarkets to sell.

  8. Scarlet Knight says:

    I’d think that the added purchasing power of conglomeration would mean quite a bit here.

    Yes, but that doesn’t translate as well when so many of the products are perishable and the margins are so low. Economies of scale don’t apply to buying milk; that is strictly local, no matter how big you are.

    Look, I’m not saying it is impossible, but it is 2012 and it hasn’t been done yet.

  9. trumwill says:

    Is milk strictly local? I thought that was also shipped around the country.

    I’m not saying that truly national chains are inevitable. Just think it might be attributable to things other than the inability to scale economically.

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