"Independent grocers' knowledge of the marketplace, grit, and nimbleness resulted in a solid year in most key metrics," said Robert Graybill, president and CEO of FMS Solutions, an accounting service that teamed with the National Grocers Association on the 2023 Independent Grocers Financial Study which measures small grocers’ operational and financial performance.
The research included 521 independent grocers representing nearly 2,000 stores who shared their results for fiscal year 2022.
Inflation dominated the headlines for the fiscal year. Shoppers sought out sales promotions, switched between stores, and bought less. This hurt volume and unit sales, and inventory turns slowed, while shrink increased, according to the report.
"Same-store dollar sales still trended 4.8 percent above year-ago levels," said Graybill, "but sales growth was below the rate of inflation for 77 percent of independents."
Despite the bleak outlook, a group of profit leaders averaged 7.9 percent in net profits, 2.8 times the average among the rest of the group. According to Graybill, these retailers showed a strong focus on fresh, both in the contribution to sales and margin management.
For the rest of the industry, effective margin and expense management from the average independent resulted in net profits that remained above pre-pandemic levels. "While down from 2020 and 2021 levels, net profit averaged a solid 2.9 percent of sales," said Graybill.
The cost of goods, utilities, rent, and labor all increased in 2022, though inflation-boosted sales masked the increases when considering expenses as a percentage of sales.
"Inflation, competition, and continued supply issues were just some of the challenges facing independent grocers in 2022," noted Greg Ferrara, NGA president and CEO, in a statement. "However, independent grocers did what they do best: pivot to meet the ever-changing marketplace opportunities and challenges. Independents reinvested into their stores and built or expanded loyalty programs, e-commerce platforms, and digital marketing."
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