Retailer forced to trim IGA portfolio

A PROMINENT retail franchisee has slashed his portfolio of 17 IGA supermarkets by half to satisfy banks and creditors.

Gaurav Bansal, who put his company OM Mahalaxmii and its two IGA supermarkets in liquidation last month, said rising costs and flatlining profits suggested a bleak future for the grocery chain.

Mr Bansal’s other company, Bansal Group, which he runs with his brother Vishal, once owned 17 of the independent supermarkets across Queensland, New South Wales and Western Australia.

The brothers say they have lost money after selling nine of their Iga-branded stores to pay banks and creditors.

Mr Bansal said the sales were forced by increasing rent and wages coupled with a lack of profit growth.

“Retail is going through a tough time and it’s impossible to run IGA (stores),” he said.

“Wages and rent goes up 3-4 per cent every year but sales don’t.”

A spokesman for the IGA brand’s owner, Metcash, said with 1400 stores, it was “not unusual to have a small number of stores turning over”.

“We are encouraged by the confidence of our independent retailers in the future and their willingness to continue to invest and improve their stores,” he said.

“Metcash continues to work closely with them, and is investing significantly in the network to further improve its competitiveness.”

Bansal Group is also responsible for the rapid rollout of American food giants Carl’s Jr and Cinnabon in Queensland. Mr Bansal revealed the group would shift its focus from IGA to growing the fastfood businesses.

The company will open the Rockhampton Carl’s Jr store in a fortnight and said two Cinnabon stores would open before the end of the year.

Mr Bansal said margins were tight across the retail sector and suggested the only way to make ends meet was to copy the 7-Eleven business model.

“This is the start,” he said. “I don’t see many independent businesses surviving in the next seven years … unless they take shortcuts like 7-Eleven.”

In April 2018, the Federal Circuit Court penalised operators of two Brisbane CBD 7Eleven stores $192,961 for short-changing workers by more than $31,000.

Mr Bansal said his business was only surviving by him “not taking any big salary”.

Metcash shares closed 4.14 per cent lower at $2.78 yesterday.