“One has to love marketing and PR companies. Some more marketing material from its US parent… “
Whilst there may be some license agreement for the use of the IGA brand in Australia, Metcash is not owned or controlled by the IGA operation in the US.
It is an Australian listed public company with around 80% of its shares currently held by the top 4 shareholders, all of which are funds controlled by investment banks.
Metcash would not be foolish enough to falsely claim that the individual stores are independent if they were in fact franchisees, thus giving Coles, Woollies and other competitors ammo to use against them.
If Metcash was in fact the largest franchisor in Australia, one would expect them to be a member of the Franchise Council of Australia, which they are not.
Apart from the Wikipedia article and the Inside Retail article you provided links for, there is no mention that I can find which remotely claims that the Australian IGA stores are franchises.
If they were franchises, Metcash could easily create websites for the stores similar to Coles and Woollies.
Instead, an article was published in the Financial Review on 08.04.2018 titled “Metcash facing IGA retailer rebellion”. These sorts of things do not happen when a franchisor holds control over the franchisees.
If you have any further information on the subject, I would like to see it.
They are franchises… They might call it something else, but in the end they are franchises of the Metcash group. Franchises are independently owned would pay licence fees or royalties back to the franchisee (or an up capital for the privilege). They may also purchase stock though Metcash *economies of scale to remain competitive). Metcash reports the earnings of the whole of IGA and not just its ‘management’. This is the model Metcash uses and similar to other franchise models. The difference appears that the franchises in the past have had a level or autonomy…but the article you found indicates that this may be changing.
Woollies and Coles are not franchises. All their stores are owned by Woolworths Group and Westfarmers respectively.
That is correct, but Metcah is likely to pay licensing fees to the US Unified Grocers for the use of the IGA name. Alternatively, United Grocers may have a private financial interest in Metcash’s operations. When I get time, I’ll see what I can dig up.
Yes it can, there are dozens of franchise disputee each year. The ACCC recognises this occurs…
A group starting to become bigger in the IGA chain is the Bansal Group (http://www.thebansalgroup.com.au/about-us.html). They call themselves Independant Grocers and as such they are just like any Harvey Norman franchise is able to be somewhat Independant of the parent. What they benefit from is the support of the “parent” that allows collective purchase power for items eg Black & Gold items, meat products, milk, and so on. If they pay a fee to remain a part of the IGA family and use that branding the least you could call them is an authorised licencee but franchisee would seem the better term (even if the franchise rules for the organisation are more relaxed than for other franchise operations).
In the long run does it really matter if they are a franchise or if they are totally independant businesses? If they provide the service at the price point shoppers want then where some of the money finally funnels to is of minor importance. If you truly want really independant you need to find the non branded stores that used to fill the landscape but have been decimated by the larger and richer branded stores of any ilk eg Woolworths, IGA, Aldi, Costco.
The ABC News website today has an article regarding the disgraceful behaviour of the local supermarkets in more than 20 indigenous communities in remote areas across Qld where the supermarkets have a monopoly and are owned by the Qld Government.
double seems a bit harsh but you do have to factor in freight costs (if its remote). https://goo.gl/maps/MZTgUVfTuX82 and yeah its pretty remote. Also volume of sales the population is touted to be about 1200 odd.
Small volumes larger margins … larger volumes smaller margins (and probably more choice and competition).
Yes it sounds bad! But for those of us who have lived and worked in more remote areas it might be no surprise. You usually do without nearly every non essential.
What’s the alternative? Do those who live in Brisbane subsidise all supermarkets so that everything costs the same where ever we choose to live?
And if there is only one store (1200 people does not a supermarket need) in town which specials does the local service need to match? Coles, or Woolies or IGA or Aldi or none?
There are many small towns thru Qld and Western NSW that do charge a small fortune for groceries etc. It’s that or nothing? At least while you do your groceries you can also fill up the car, have a hot lunch and beer, buy some fencing wire and put it all on the same docket!
The simple test is order on line from your favourite supermarket and then get a quote for freight to see how it compares. Usually by plane, although in the dry most places on the Gulf and Cape are only a day or two or three away in a 4wd.
Noted the State Govt does subsidise some of the items per the Text in the ABC article, but not instant coffee.
For example, 1L Cold Power in Brisbane (Woollies) is $10, not $5 as reported. Moccona 200gm is $13 and not $9.
I know that the ABC has had challenges with financial numbers in the past, and looks like this may be another example of unchecked data flowing into an ABC story.
Alternatively, they might be comparing sale prices in Brisbane with full retail price in Doomadgee…such would be clased as biased sampling and reporting.
Also, noy only are these stores remote (additional freight costs), but the volume of sales would be far less than a city supermarket. Higher volume usually means lower margins or cheaper prices.
The Arnott Family Assortment price quoted by ABC is correct ($4.50)
Nan manufactured baby milk formula is also correct ($29.99)
Black and Gold Milk Powder also appears incorrect. IGA is an IGA store brand and each individual sets the regular retail prices. The ones I have found online range upwards of $6.99…with eBay prices way above this. The $5.70 figure used by the ABC appears to be the retail price of Woolworths/Coles store brands. Comparing Black and Gold to these is disingenuous as they are different brands, albeit similar product.
The Instant Oats and toothpaste price is the same (comparing regular prices).
The only 16 pack of throat lozengers at Woolwortts are Difflam and these are $8 per pack. ABC quotes $5.50.
2L of milk ranges in price from $2 for store brand to $4.60 for Maleny full cream milk. The ABC quotes $2.99. I suspect that the milk in Doomadgee would be freighted some distance as the dairy industry on that part of Australia is limited.
It should also be recognised that Doomadgee is one of the more remote parts of Queensland/Australia, and this remoteness would result in higher prices for all consumer items due to additional freight and handling required.
The ABC also states: Note: Food prices were sourced in Doomadgee on June 26 and compared with the same/equal brands from a major supermarket in Brisbane City on July 2. It appears that the pricing used included special/discounted prices which is not a fair comparison as the Doomadgee prices were likely to be regular store price (I wonder if the ABC validated these prices or relied on information provided by a third party with vested interests?).
It is a shame that the ABC has stories on their website with flawed information, as it reduces the credibility of the argument in the story as a whole.
Absolutely just like with Harvey Norman topic do your homework if you can find just good as a deal from a smaller business go for it.Support your local retailers jobs.Keep your money in Australia
I often get the feeling the genuine smile in part comes from someone who has some confidence they will see you again, and you’ll both be happy when they do … Job satisfaction, and knowing the transaction has been a win-win, as corny as it sounds, is a nice thing and sadly a bit of a rarity.
How local manufacturers get ‘supported’ is a reflection of opportunism.
Government asked, the company responded, the urgency diminished, the company made its bets and is left holding the bag. Cheap is all the matters except when it doesn’t, but as with most ‘policy’ businesses and manufacturers are just more of the gig society who need to learn to operate in ‘gigs’, no promise of tomorrow; why should they step up when it is demonstrably on their own dollar and risk?
It appears they produced what the government requested, 60 million masks…but may have assumed that supply contracts would continue indefinitely. Did the government committed to extending the contract?
It appears that they were not the only ones to ramp up production, since the article claims there is a ‘oversaturated market’.
I hope they priced those 60 million to cover their investment.
As an aside I have been in many situations where the ‘marching order’ was ‘get it done’. when that happens there is usually little reference to the economics, only the importance of getting on with it so a certain amount of trust occurs that ‘we will be taken care of’. In the situations I was in ‘the bill’ was always paid, it got done, and there were no ‘negative economic consequences’ for anyone involved.
Sometimes the trust is misjudged or misplaced. If there is a next time perhaps the company involved will guess how it might go and respond to government by 'we will order it from and add our markup for you, as fast as we can?
This is good advice for any business…and…one has to assume any contract is a one off and not likely to be extended (unless a contract is extendable and it’s extension is guaranteed). If it is extended say through a competitive tender process, a business which in this case and if they had done…
could be well placed to win future contracts.
Anyone who has dealt with government (or big business) contracts also needs to ensure they have and understand what is being offered before signing up with the contract. The days of handshake deals or looking after ‘mates’ has long gone.
