The survey from NGA and FMS Solutions found that independent grocers are well positioned for a solid 2022.
Independent grocers across the U.S. experienced a mixed bag of supply and demand during fiscal year 2021, according to the 2022 Independent Grocers Financial Survey, a joint study between the National Grocers Association (NGA) and FMS Solutions. The survey covers financial and operational data for 374 independent grocers representing nearly 2,000 stores for the fiscal year ended March 31.
"While down from the incredible spikes in 2020, independent grocers' knowledge of the marketplace, grit and nimbleness resulted in the second-best year on record in terms of net profits before taxes," said Robert Graybill, president and CEO of Ft. Lauderdale, Fla.-based FMS Solutions.
Though the fiscal year brought a 6.5% inflationary boost, 58% of independent grocers were unable to match their 2020 sales. Same-store sales were down 1.7% and store shrink was up 3%, while total store margin was down 1 percentage point from 2020 to 27.4%.
Center store sales represented 61% of the independent grocery business, and the study found that out-of-stocks and different levels of inflation influenced other departmental contributions to overall sales. While this was the case, FY21 results were still substantial.
"Slightly lower sales and compressed margins combined with rising expenses meant a year-over-year decrease in the net profit before taxes and EBITDA ratios," Graybill explained. "However, this was to be expected in going up against profits that rose five fold in 2020. At 3.62%, the net profit before taxes for independent operators in 2021 was the second-best result on record."
The study also covered the top 25th percentile of independent retailers in terms of net profits before taxes, and Graybill says these profit-leading grocers are razor focused on efficiency and effectiveness. Those retailers had an average net profit before taxes of 10.1% and improved upon their 2020 performance through a focus on fresh, bigger baskets and above-average transactions.
"Navigating these volatile times is a tremendous accomplishment that will help independents through tough 2022 marketplace conditions," said Greg Ferrara, president and CEO of Washington, D.C.-based NGA.
"For many years, independent grocers have proven to be resilient, creative and nimble," Ferrara continued. "Strongly rooted in their communities, independents are well positioned to weather the perfect storm of supply chain, inflation and labor challenges."