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Independent grocery sales climbed 17% in 2020

NGA/FMS Solutions study cites impact of pandemic

Russell Redman

October 27, 2021

4 Min Read
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Helping to drive independents' sales gain were a boost in transaction size to an average of $31 and a “big upswing” in online orders, the National Grocers Association reported.Uncle Giuseppe's Marketplace

High consumer demand triggered by the COVID-19 pandemic fueled a 17% average comparable sales gain among independent supermarket operators last year, the National Grocers Association (NGA) reported.

Adjusted for elevated levels of inflation, independent grocery industry comp sales still rose 13.5% for the 2020 fiscal year ended March 31, 2021, according to the 2021 Independent Grocers Financial Survey, a joint study released Wednesday by NGA and and financial consulting partner FMS Solutions. That easily surpassed the sector’s 2.5% comp sales growth in 2019.

Driving the upsurge were a boost in transaction size to an average of $31 and a “big upswing” in online orders, NGA said. Customer stockpiling at the onset of the coronavirus crisis set the tone of shoppers making fewer trips to stores but spending more per visit, with independents ringing up 13.3% higher sales in the first half of 2020 alone.

Robert Graybill-FMS Solutions.jpg"The combination of high sales and better margins resulted in record net profits before taxes." — Robert Graybill, FMS Solutions (Photo courtesy of FMS)

“All of grocery retail had record sales in 2020, but the pandemic brought consumers back to independent grocers in record numbers,” Robert Graybill, president and CEO of Fort Lauderdale, Fla.-based FMS Solutions, said in a statement. “Whether one-store operators or small regional chains, independent grocers did what they do best during difficult times: take care of their communities.”

Related:Roundup: The NGA Show comes back in person

Center-store grocery, dairy, frozen and meat were the leading sales contributors by product category, the study said. Because of the escalated demand, inventory turns advanced to an average of 19.2 times per year, while shrinkage declined to 2.5% in 2020 from 2.9% in 2019.

The robust sales growth helped independents improve their margins across departments to 28.4% last year from 28% in 2019, with the largest gains seen in dry grocery; dairy; general merchandise and health and beauty aids; and beer, wine and liquor.

“The combination of high sales and better margins resulted in record net profits before taxes, at 5.02%, up from 1.05% in 2019,” Graybill explained. Net profit before taxes also was well over the 0.63% mark recorded in 2018.

Greg Ferrara-NGA-portrait.jpg"The independent community grocer has been instrumental in the food supply chain throughout the pandemic." — Greg Ferrara, National Grocers Association (Photo courtesy of NGA)

The top 25th percentile of independent grocers grew net profits before taxes by 9.8% last year, twice the industrywide average, and posted 1.6 percentage points higher total-store gross margin, according to the NGA/FMS report. Profit leaders exercised strong shrink control and labor, margin and expense management.

Related:Independent supermarkets drive one-third of U.S. grocery sales

Although independent operators grappled with higher expenses brought on by the pandemic — including enhanced cleaning, safety gear for employees and customers, bonus and appreciation pay, overtime, and hiring and retention costs — sales gains accelerated faster, the research showed. That led to a drop in total expenses as a percentage of sales to 26.9% in 2020 from 28.8% in 2019.

“With continued elevated retail demand, the biggest competition now is not for the consumer dollar, but for independents’ greatest asset: people,” Graybill noted. 

Indeed, independent grocers cite hiring and employee retention as their chief marketplace concerns. Seventy-one percent of independents surveyed described hiring amid the pandemic as a challenge, and 64% said that situation negatively impacted retention. 

Sales growth driven by the pandemic, however, is being redirected into increased business investment, NGA/FMS found. In 2020, 62% of independent grocers increased capital expenditures, including for e-commerce and stores, with remodels and new openings reaching their highest levels in years, the study said. Independents also shored up their balance sheets by improving their debt-to-equity ratios and paying down long-term liabilities. 

“Alongside the important role in feeding America’s communities, the pandemic has illustrated the agility and resiliency of independent grocers,” NGA President and CEO Greg Ferrara commented. “As the supermarket industry continues to navigate these changes, independent grocers are in a unique position to find innovative and creative ways to better serve their customers. The independent community grocer has been instrumental in the food supply chain throughout the pandemic and has been reinvigorated within their communities even as restaurants moved towards the new normalcy.”

In mid-June, NGA released new research on the independent grocery industry’s overall economic impact, including its direct and indirect impact in dollars and employment. Sales by the independent sector rose almost 94% to $253.61 billion in 2020 from $131 billion in 2012, the year of NGA’s last economic impact study. As part of the economy, independent grocers accounted for 1.2% of the 2020 U.S. gross domestic product of $20.93 trillion, with a total output topping $255 billion. The sector encompasses 21,574 stores nationwide, NGA reported.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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