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Independent grocers last year experienced a solid 1.52 percent net profit before taxes, according to latest results from the "2008 Independent Operators Survey" conducted by the National Grocers Association and Financial Management Solutions.
The segment showed overall gross margin gains, although sales were flat. Many operators managed to shift dollars from center store to other higher margin profits, NGA said.
Total store gross margins grew by 76 basis points over last year, and single-store operators showed a stronger net profit before taxes, while multi-store operators' profits dipped below their previous year’s high of 2.44 percent according to the survey, which the partners have been conducting and presenting as a financial and accounting benchmark for NGA’s membership since 2002.
For the first time in the survey's six years, energy policy and energy tax issues placed second, behind health care reform, in a list of retailers' political concerns. When asked which one type of tax change or reform they would choose to pass this year, 22 percent of respondents opted for boosting tax incentives for environmentally sustainable practices. The only item to rank higher was overall corporate tax rate reductions.
As FMS v.p. Robert Graybill noted, "Retailers are feeling the impact of energy costs from both sides, internal costs are increasing, and consumers' budgets are tightening."
"Retailers, wholesalers, and manufacturers continue to show resiliency in a very turbulent market, with increases in energy and commodities at a seldom-seen level "The results of this survey provide excellent benchmarking information for independent retailers" added NGA v.p. Frank DiPasquale.. Additionally, health care costs continue to increase at double-digit rates. Unlike other industries [such as] the airline industry, supermarket operators continue to focus on service and other points of differentiation to buttress the consumer's negative responses to continued price increases."
FMS and NGA this year asked more than 50 questions.