2024 Independent Grocers Financial Survey: Webinar Key Takeaways

By Jim Dudlicek / NGA Managing Editor and Content Strategist

For grocers and their customers, the past year was defined by the cumulative impact of many months of inflation. Independent grocers continued to meet the challenging marketplace realities with creativity and nimbleness.

Many independent operators made changes to their sales and operational strategies - focusing on margin and shrink management, creating points of differentiation and upgrading their stores and online capabilities. All the while, independents fostered and built upon their strong community ties and invested in employee and customer loyalty.

NGA hosted a recent webinar that explored the results of the latest edition of the FMS Solutions annual Independent Grocers Financial Survey, conducted in partnership with NGA. The study reviews the operational and financial performance in fiscal year 2023, which ran through March 2024. Leading the discussion was Robert Graybill, president and CEO of FMS Solutions.

Here are some key takeaways from the discussion:

The rollercoaster ride continues. New factors join the list of pandemic disruptors as a home-centered world continues with grocery prices a third higher than in 2019, record high consumer debt levels and record low consumer savings rates, wage increases below the rate of inflation and falling consumer confidence.

Traditional grocery continues to lose share to mass/supercenter and club stores while the market continues to be splintered among discount grocery, dollar, drug and specialty channels.

Consumers are pivoting in response to inflation, affecting grocery and restaurant purchases, setting up supermarket deli prepared food for success. 87% of consumers are making at least one change to their grocery buying habits and 36% are eating out or ordering in from restaurants less often. 83% are more likely to purchase private brands. 70% compare promotions across different stores before shopping.

But wait … 94% of consumers are open to splurging a little, including for special occasions, a healthier product or for convenience.

2024 shows more unit growth, especially in fresh, with increases in produce, meat, deli, bakery and floral.

What can you do? Manage the negative narrative on price gouging. Promote where possible and be creative in the how. Consider a shift to digital vs. paper. Make private brands about value, not just cheap.

Independents are reinvesting in their businesses. 38% increased capital expenditures, 25% remodeled at least one store and 11% added new stores. Pickup is leading growth in ecommerce investment, with 76% offering online ordering with store pickup in fiscal year 2023; 56% use third parties like Instacart or Shipt while 22% use their own employees.

Staffing is stabilizing. Average store-level turnover is 39%; 85% of independent grocer HQ personnel and 42% of store-level associates work full time.

Out-of-stocks are down - 12.2%, about half of what they were in 2021. Average weekly transactions are up to more than 7,600. Buying less is dragging down turns while shrink rose slightly, highest for floral, bakery, produce and deli.

Inflation fueled growth, but price increases mostly drove gains and volume was down. Same-store sales grew 1.8%, but adjusted for inflation, 0.6%.

Total store gross margins were unchanged from 2022 as independent grocers kept margins compressed. Total expenses were up, with labor by far the biggest contributing factor.

What can we learn from the profit leaders? Higher focus on food vs. GM/HBC and other nonfoods, in particular produce, meat and bakery. Higher margins, in center store and in fresh. A focus on expense control, reinvestment in maintenance and repairs, and greater efficiency.

Graybill will lead a group of Industry experts in exploring some of the most pressing fiscal issues facing retailers amid dynamic market conditions during the Financial Symposium at The NGA Show, February 23-25, 2025, in Las Vegas. Register and find more information at https://www.thengashow.com.

For more exclusive insights, view a recording of the complete webinar here: https://attendee.gotowebinar.com/recording/7564652536842214657

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