A study finds independents grew sales on strong community ties and employee loyalty during the pandemic.
The 2021 edition of the Independent Grocers Financial Survey revealed record financial and operational performance benchmarks in a banner year for the $253 billion independent supermarket industry, according to a news release.
The study was a partnership between the National Grocers Association (NGA) and FMS Solutions.
In fiscal year 2020 ending March 31, 2021, sales rose an average of 17% for many retailers, boosted by a bigger transaction sizes at an average of $31 — plus a big upswing in online orders.
However, fresh produce was not listed as one of the most successful grocery departments, rather it was dry grocery, meat, dairy and frozen.
While inflation was high, sales still gained 13.5% once adjusted for the price increases.
“All of grocery retail had record sales in 2020, but the pandemic brought consumers back to independent grocers in record numbers,” FMS CEO and president Robert Graybill said in the release. “Whether one-store operators or small regional chains, independent grocers did what they do best during difficult times: take care of their communities.”
While hard-dollar expenses rose in areas such as wages, benefits and supplies, sales gains accelerated faster. This prompted a drop in total expenses as a percentage of sales to 26.9%, down from 28.8% in 2019. “With continued elevated retail demand, the biggest competition now is not for the consumer dollar, but for independents’ greatest asset: people,” Graybill said in the release.
Hiring and retention are the top marketplace concern among independent grocers. Hiring during the pandemic is a challenge, according to 71% of independents, and 64% reported it had a negative impact on retention.
Independents had many COVID-19 related expenses, including enhanced cleaning, protection equipment for employees and customers, bonus, hero pay, overtime, and hiring and retention costs.
The complete survey is available at www.fmssolutions.com.