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Showing their resilience and business savvy, independent grocers capitalized on the improvements in the economy and demonstrated strong growth in sales and profits last year, according to a research study released by The National Grocers Association (NGA) and FMS.
Acccording to the 2013 Independent Grocers Financial Survey, independent grocers posted an average net profit before taxes of 1.65 percent in fiscal year 2012, up from 1.12 percent in 2011. They also grew inflation-adjusted same-store sales and improved gross margins across key store categories. As unemployment, consumer confidence and other key economic indicators improved, so did the financial results of independent grocers.
"Fiscal year 2012 was quite the comeback year for independent food retailers," said Peter Larkin, president and CEO of NGA. "We found vast improvements in financial performance, much higher levels of store development, stabilized payroll and lower levels of theft-related shrink for the majority of respondents."
Independent grocers pushed through one of the worst economic downturns in the nation's history and are coming out better and stronger, according to the study, which reviews the top 25th percentile in net profits, the "profit leaders," that once again showed a strong performance with an average net profit of 4.01 percent through superior expense control, margins and sales.
"In 2012, the pack fought back," said Robert Graybill, president and CEO of FMS. "The profit leaders continued to do well, but the rest of the industry significantly reduced the gap between the best and the rest by tightly managing costs and margins. Independents also closed in on the publicly-traded grocery chains."
Among the key report findings were:
- Fiscal year 2012 same store sales were up 1.46 percent before being adjusted for inflation. Inflation-adjusted same-store sales increased 0.2 percent, up from -2.2 percent in 2011. Fewer independent grocers reported sales gains below the rate of inflation at 49.2 percent versus 72.7 percent in 2011.
- Many retailers improved margins in key categories leading to a slight increase in the total store margin to 26.48 percent.
- The net profit for all companies increased to 1.65 percent from 1.12 percent in 2011. Additionally, only 1.9 percent of companies reported negative profit numbers versus 13.5 percent in 2011.
- On the cost side, healthcare costs continued to increase at a rate of 7.6 percent in 2012, with 81.8 percent of retailers expecting higher costs in 2013. With lower energy prices, utility costs did come down as a percentage of sales, as did rent expenses.
The 2013 Independent Grocers Financial Survey is based on data from 146 independent grocers and was conducted by 210 Analytics, LLC.
The National Grocers Association (NGA) is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry.