Arlington, VA (PRWEB) September 23, 2015
The National Grocers Association (NGA) and FMS Solutions unveiled the results of the 2015 Independent Grocers Financial Survey at the jointly sponsored Financial Management and Technology Conference, held September 16 – 18. In addition to providing an analysis on the operational and financial performance of independent supermarket operators for the 2014 fiscal year, this report takes an in-depth look at the competitive, economic, and political challenges faced by the industry.
As a group, independent supermarket operators showed a healthy gain in same-store sales between 2013 and 2014; however for most companies sales growth was driven by food-at-home inflation rather than a real growth in sales. In inflation-adjusted terms, industry sales were down 0.9 percent.
Reflecting the fluctuation of food-at-home inflation, retailers carefully managed their inventories, assortment and forward buying practices throughout the year. Single-store operators managed to slightly improve on margins following a drop in 2013, whereas multi-store operators fell back to 2010 margin levels.
2014 also proved to be another year of intense competition for independent grocers. Supercenters remain the greatest source of competition, with 80.5 percent of the stores represented in the sample having a Walmart supercenter in their direct market areas.
“While overall results were down over the prior year,” says Robert Graybill, President and CEO, FMS Solutions, “much of this decrease was fueled by the Northeastern part of the country facing non-recurring business challenges on the wholesale side along with a harsh winter. Despite these challenges, the top 25 percent managed an impressive return, as always.”
“Despite a challenging and competitive environment, independent supermarket operators, nimble in their nature, continue to find innovative ways to differentiate themselves in the marketplace,” said Peter J. Larkin, president and CEO, National Grocers Association. “Whether it’s a change in store format, more engagement on social media, investment in their workforce, or a focus on the fresh/perishable department, independents are employing tactics to not only meet consumer demand, but become the store of choice.”
Additional Challenges and Opportunities:
- Total expenses increased for the fourth consecutive year, surging to 22.62 percent for the year, with higher costs in labor and utilities.
- Healthcare costs, which increased by an average of 4.4 percent in 2014, are of great concern to independents as nearly seven in 10 independents saw their expenses increase.
- Space utilization improves among independents with the average selling space at 78.9 percent.
- More than 70 percent of independents increased the number of organic items over 2014. A very similar share, 67 percent, saw their organic dollar sales increase.
- In 2014, staff turnover at the store level was stable, at 12.4 percent for full-time employees and 38.5 percent for part-time employees compared with 2013 averages of 12.1 percent and 37.4 percent, respectively.
- Independents use of social media platforms to reach their customers is up seven percent.
The 2015 Independent Grocers Financial Survey is based on data from 153 responses from independent grocers across the country.
About FMS, Inc: Headquartered in Baltimore, Maryland, FMS, Inc. (http://www.FMSSolutions.com) provides over 3,500 independent retail grocer and independent supermarket operations with financial, accounting and consulting services such as industry benchmarking, best practices and mission-critical decision support throughout the United States, Canada and in the Caribbean. FMS is proudly the National Grocers Association’s preferred provider of industry benchmarking, best practices, and mission-critical decision support.
About The National Grocers Association (NGA): The NGA is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. Most are serviced by wholesale distributors, while others may be partially or fully self-distributing. Independents are the true “entrepreneurs” of the grocery industry and dedicated to their customers, associates, and communities. The independent grocery sector is accountable for close to 1% of the nation’s overall economy and is responsible for generating $131 billion in sales, 944,000 jobs, $30 billion in wages, and $27 billion in taxes. NGA members include retail and wholesale grocers, state grocers associations, as well as manufacturers and service suppliers.