Agile independent studios overcoming consumer wariness and operational challenges
The 2025 Independent Grocers Financial Study, recently released by the National Grocers Association (NGA) and FMS Solutions, offers valuable insights into the financial and operational performance of independent grocers.
The report, based on responses from 93 survey participants representing 626 store locations, highlights several key findings.
Store shrink increased to 3.5% of sales in FY 2024, up from 3.0% the prior year. This growth in losses from theft, spoilage, or administrative errors is a significant concern for independents.
Sales have risen for independents during the pandemic period, but this growth came with increased costs, including higher labor and operational expenditures. Cash flow may appear to be growing, but rising expenditures and future government liabilities put pressure on financial health, demanding careful management to sustain profitability.
The study emphasizes the success of prior investments (e.g., in e-commerce, store development, labor, and community engagement made since 2019) as crucial to navigating pandemic challenges and preparing for future disruptions.
FMS Solutions provides scalable financial services with advanced benchmarking and real-time insights, helping independents improve transparency, operational decisions, and financial performance. Strategic advisory from the study and FMS assists grocers with growth, operations, and mergers & acquisitions, reinforcing a data-driven approach to sustaining and expanding their businesses.
95% of independent grocers made use of ad circulars, with an increasing shift to digital formats. However, the adoption of self-checkout slowed, with just 47% of respondents offering the capability.
The report also sheds light on the emergence of perimeter bakery as a differentiator, with many independents employing seasonal items, in-store baking, and signature products to boost customer engagement and drive margin.
Grocery inflation remained moderate during fiscal year 2024. Sales growth was 1.3% year over year, with a 2.2% increase among multi-store operators and a 0.8% dip for single-store grocers. Weekly transactions grew to an average of 8,609 per store, but spending per trip declined as customers hunted for promotions without purchasing non-essential items.
The report does not provide information about margins, total expenses, labor and benefits as a percentage of net sales, net profit, EBITDA divergence among single-store, multi-store, and higher-volume operators, or consumer sentiment or shopping behavior changes due to economic factors in the current year.
Operationally, indies faced workforce challenges, including part-time associate turnover at 40.7% overall and 55.8% among multi-store operators. The report does not provide information about workforce challenges, part-time associate turnover, or adoption of self-checkout in the current year.
The report incorporates financial benchmarks from FMS' database of 507 independent grocers with 1,911 store locations, offering segmented insights by store count, region, and sales volume.
These insights underscore the importance for independent grocers to control shrink, manage rising operational costs judiciously, leverage technology and benchmarking tools for transparency, and invest strategically in capabilities like e-commerce and labor efficiency to maintain competitiveness and profitability in a challenging retail environment.
- In the face of rising costs and a growing concern over store shrink, strategic investments in technological solutions and benchmarking tools, like those provided by FMS Solutions, play a crucial role in helping independent grocers enhance their transparency, operational decisions, and financial performance.
- As the financial landscape continues to evolve, it is essential for independent grocers to closely monitor technology advancements, particularly the adoption of self-checkout and e-commerce, to maintain a competitive edge in the business and lifestyle sector, while also addressing workforce challenges such as part-time associate turnover.
