Industry Partners

7 challenges facing indie grocers—and how they’re tackling them

Small grocers are meeting in Las Vegas this week at the 2023 NGA Show to discuss the issues keeping them up at night. Here’s what has them buzzing.
IGA CEO John Ross
IGA CEO John Ross addresses the 2023 NGA Show Monday. / Photo: Heather Lalley

Thousands of independent grocers, suppliers and others in the industry descended upon Las Vegas this week for the 2023 NGA Show.

In packed educational sessions (the National Grocers Association didn’t release attendance figures, but said numbers are higher than at the pre-pandemic February 2020 meeting) and on the bustling show floor, small grocers discussed the many challenges they face when trying to compete with big-box retailers and national grocery giants.

From inflation to technology to global threats, there’s plenty to keep independent and regional grocers up at night. But NGA members said they are busy working to find solutions.

Collectively, the segment’s 21,574 stores make up one-third of the retail grocery industry’s sales, $253.6 billion annually, or 1.2% of the U.S. gross domestic product.

Here’s a look at what some of those grocers were buzzing about at the NGA Show Monday.

Omni-channel struggles

Delivery and curbside pickup are no longer perks, they’re table stakes of the grocery world. Operationally, though, omni-channel grocery can be a tough one for indies. “It’s a journey, it’s not a destination,” James Hunt, SVP of North American Retail for NielsenIQ, noted. “It’s like one of those ultra-marathons were you keep going and going and going.” And, in a world in which 68% of consumers still want to shop inside grocery stores for some items (notably produce, meat and bakery, according to NielsenIQ), small grocers also have to make sure the brick-and-mortar experience is solid.

Kevin Stafford, VP of marketing for K-VA-T Food Stores, parent company of Food City, said his company focused on its strengths when it started selling groceries online way back in 2015. Maybe the small grocer’s technology wouldn’t be as flashy as a larger retailer’s, Stafford said. But, “We knew from a service standpoint, we can win with people.”

Meeting sustainability demands

Sustainability has moved from a backburner issue to a front-burner one for grocers. Ninety percent of shoppers today say sustainability is important and 50% say its very important, according to NielsenIQ data.

Twenty-unit Utah grocer Harmons Grocery recently hired Kate Whitbeck as its first director of sustainability. She began by gathering baseline sustainability data, conducting an in-house carbon footprint assessment. Harmons has since lasered in on food waste (“Waste is my passion,” Whitbeck said), finding a variety of avenues to thoughtfully dispose of excess, including an anaerobic food-waste diverter, a food bank and an animal feed operation. Whitbeck said some stores keep as much as 70% of food waste out of landfills.

Fast-moving technological shifts

For Dierbergs Markets, which has been in business for more than a century, technology has been viewed as a “supportive function” that helps the grocer accomplish daily tasks, Dierbergs EVP Laura Dierberg Padousis said. “But, really, the challenge we’re looking at now is, how are we viewing tech to enable sales growth? How are we using it to enable relationships with customers?”

At Food City, the grocer has been in the midst of an “e-commerce reset,” Stafford said, as it looks to increase both its curbside and home delivery channels. “Moving forward, we’re laser-focused on operational excellence,” he said. “This is the year we turn it up a notch.” His company is working to build bigger baskets through CPG partnerships and is using technology to increase delivery and pickup timeslots, he said. “It’s hard to get in the weeds on some of those things, but you need to get in the weeds because that’s where you can save the time and the money,” Stafford said.

Generational shifts in the industry

There’s a seismic generational shift coming from both within and outside grocery, NGA Show speakers said. For one, grocery customers of different demographics have different demands. “We’re being held to the standards of the Amazons, the Targets and the Walmarts in that digital experience,” Padousis said. At the same time, Dierbergs is working to better understand how its customers want to connect. She noted, for example, that her 83-year-old father would have different requirements than a Gen Z shopper.

But there’s also a big change coming in grocery leadership, as many older independent grocers look to retirement. Russell Greenlaw, VP of sales for Associated Grocers of New England, said he knows of 30 food retailers who are turning over ownership to the next generation or to entirely new owners.

Antitrust law enforcement

The NGA on Monday announced an ad campaign, funded with $2 million in donations since 2020, designed to revive a dormant antitrust law, the Robinson-Patman Act. The association said big box stores have shut out all grocery competition in some areas and it is asking lawmakers to take action. The ad campaign is geared to drum up public support of the antitrust laws, the NGA said.

NGA's antitrust ad campaign

The NGA unveiled an antitrust ad campaign Monday. / Photo: Heather Lalley

Retail media pressures

Major grocery players like Kroger, Walmart and Amazon have introduced retail media networks that make hundreds of millions of dollars from CPG advertising. “I’m a retailer. I move boxes and cans and I’m actually a media property as well,” IGA CEO John Ross said in a keynote address. But independent grocers aren’t shut out of that revenue stream, Ross said. He said IGA has been growing its retail media network and that it now has more than 220 million ad impressions. “Our response rates are way better than those national chains,” Ross said, adding that is because shoppers are so loyal to their local grocers.

Credit card problems

Ross lamented that the grocery industry is investing in self-checkout technology, a platform that facilitates credit card transactions, when those very cards are causing a host of troubles. Nationally, credit card debt among consumers is soaring. “I need to be worried about the economic solvency of my customer base,” he said. But grocers are also fighting against mounting credit card processing fees. Ross said IGA pays seven times more on U.S. credit card fees than at IGA stores in other parts of the world.



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