Agile indie companies maneuver through consumer wariness and operational hurdles effectively
The National Grocers Association (NGA) and FMS Solutions have recently released the 2025 Independent Grocers Financial Study, providing insights into the financial and operational performance of independent grocers during fiscal year 2024.
Amid plummeting consumer sentiment, shoppers emphasized value, leading to an average of 8,609 weekly transactions per store. However, spending per trip declined as non-essential items weren't purchased. Despite this, sales growth for independent grocers was 1.3% year over year.
The report reveals that grocery inflation remained moderate during fiscal year 2024. Multi-store operators experienced a 2.2% increase in sales, while single-store grocers saw a 0.8% dip.
Operationally, indies faced workforce challenges, including part-time associate turnover at 40.7% overall and 55.8% among multi-store operators. Labor and benefits alone hit a record 16.3% of net sales for independent grocers.
The study also highlighted the perimeter bakery as an emerging differentiator for independent grocers. Adoption of self-checkout slowed, with just 47% of respondents offering the capability.
A significant finding from the study is the notable rise in store shrink, which averaged 3.5% of sales in fiscal year 2024, up from 3.0% the previous year. This shrink rise is significant as nearly 20% of sales are affected, impacting profitability.
Independent grocers showed resilience and adaptability in meeting evolving consumer needs amid persistent cost pressures and economic uncertainty. Many independents are employing seasonal items, in-store baking, and signature products to boost customer engagement and drive margin.
The study offers segmented insights by store count, region, and sales volume, based on responses from 93 survey participants representing 626 store locations. E-commerce accounted for 1% of total sales, with an average basket size of $105 online compared to $34 in-store.
Technology and operational strategies are essential for grocers to combat issues like shrink and maintain competitive financial performance. Partnerships, such as collaborations between grocers and delivery platforms, also reflect industry efforts to innovate and expand market reach. Resources linked to the study suggest that integrating change management frameworks can help retailers adopt technology more effectively to improve outcomes.
In summary, the 2025 FMS/NGA study points to rising shrink as a critical challenge for independent grocers, continued margin pressures in a tough retail environment, and the increasing importance of technology adoption and strategic partnerships to sustain financial health and competitive positioning.
In light of the findings, it's evident that technology plays a pivotal role in helping independent grocers adapt to challenges such as rising shrink and maintain a competitive financial performance. This is partly achieved through strategic partnerships, including collaborations with delivery platforms and the implementation of change management frameworks to facilitate technology adoption.
Moreover, the study indicates that business strategies, like adopting seasonal items, in-store baking, and signature products, can contribute to boosting customer engagement and driving margin for independent grocers in the technology-driven business landscape. Additionally, the report underlines the significance of understanding regional and sales volume segments to formulate effective business and financial strategies.
