17. TOM HAGGAI

David Orgel

Key development: Continuing to bounce back from loss of business after Fleming debacle.

What's next: Pursuing new U.S. wholesaler relationships and international growth.

Even the consummate optimist is tested in the toughest of times.

That was the case in 2003 for Tom Haggai, chairman and chief executive officer of Chicago-based IGA, who watched the devastating impact of the implosion of grocery wholesaler Fleming Cos. on his network of independent grocers. In that year, IGA's overall sales fell by $1 billion, and it lost some 20% of its U.S. store base as supply arrangements collapsed. Today, IGA has about 1,150 U.S. stores and domestic sales of $7 billion, figures still well below those of 2002, before the Fleming debacle. IGA's global sales last year totaled $20 billion.

Haggai, who earlier in his career was a church minister, has recently spent a lot of time reminding himself that "you get stronger with adversity if you don't feel sorry for yourself," he told SN in an interview.

He spent the last few years rebuilding IGA's operations, which he said are now poised to become stronger than ever.

The rebuilding efforts are based on new and expanded relationships with wholesalers, including Nash Finch, Minneapolis, and Associated Wholesale Grocers, Kansas City. This year Nash Finch began remaking its Cincinnati distribution center into a dedicated IGA facility to produce lower prices and improved service. Also this year, IGA granted a distribution license to AWG to help rebuild the base of Midwest business IGA lost due to Fleming's collapse.

IGA is also embracing smaller store formats, including a 10,000-square-foot conventional/convenience store hybrid format operated by its retail partner Houchens Industries in Kentucky. Convenience stores in general hold allure for IGA, Haggai said, although the cooperative has only about 20 so far.

"We are moving into the c-store category, and our wholesalers are looking at it," he said.

Haggai underscored IGA's mission to serve communities with compact supermarkets and c-stores, stressing, "We forget that we are a nation of small communities."

IGA continues to make a name for itself in the world community and now operates in 46 countries on numerous continents. Haggai said IGA's emphasis on fast-growing international regions such as Asia and Eastern Europe helps support the organization's overall growth.

"The reason for our success is that we don't Americanize these countries," he said. "They want our expertise, and we blend very well."

Haggai pointed to fast growth in particular in China, where IGA operates some 165 hypermarkets. Chinese IGA operators are also helping IGA open shop in other countries. IGA has operations in seven Asian nations. One of Haggai's major international goals is to help steer the Chinese operators toward managed growth.

"We push these operators to grow same-store sales rather than just depending on inflation or new stores," he said. "We work with them to get labor costs under control and to improve presentations for consumers."

Haggai was honored this year with the Hall of Achievement Award from the Grocery Manufacturers Association. It recognizes "extraordinary contributions to the food, beverage and consumer products industry."

Haggai, 74, who became chairman and CEO of IGA in 1977, remains passionate about the organization even as he refers to a process that will eventually reduce his leadership role. He said the IGA board will develop a succession plan using an outside search firm. The board will identify a successor, who will initially become chief operating officer for at least a year in the U.S., but eventually would take charge. The upshot is that Haggai is likely to remain CEO for at least the next two years. But that doesn't mean he will ride into the sunset after the transition.

"I would go back to being non-executive chair and stay active, with a heavy focus on international," he said. "I would be building relations with retailers."

Haggai ascribes IGA's longevity as an organization -- it is almost 80 years old -- to its ongoing identification with communities.

"We are local," he stressed. "Everything our bigger competitors want to be, we already are."