Stores

Despite Inflation, Independent Grocers Record a Solid 2021

Grocer survey credits independent grocers’ knowledge of the marketplace for second-best fiscal year results.
Photograph: Shutterstock

Despite inflation, supply chain and labor challenges, independent grocers posted solid 2021 sales, with some nearing their record highs of 2020.

Independent grocers managed inventory and compressed margins in key departments, including meat and produce, to fuel sales in 2021, according to the 2022 edition of the Independent Grocers Financial Survey. The joint study between the National Grocers Association (NGA) and FMS Solutions surveyed 374 independent grocers, representing almost 2,000 stores. Of those grocers, 58% didn’t match their 2020 sales records, but many came close to those previous numbers.

“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,” Robert Graybill, president and CEO of FMS Solutions, said in a statement. “Supply chain challenges kept independent retailers on their toes with historically low order fill rates averaging 74.6%. Independent grocers focused on inventory management amid high inflation and kept turns high.”

Same-store sales declined 1.7%, however dollar sales stayed ahead of 2019 pre-pandemic levels. Additionally, center store represented almost 61% of the business, while various levels of inflation and out-of-stocks impacted departmental contributions to sales. The total store margin dropped to 27.4%—down 1 percentage point versus 2020. Expenses rose to 28.7% of sales, back to 2019 levels, with labor and benefits averaging 15% of sales. Many retailers also experienced increases in utility costs.

“Navigating these volatile times is a tremendous accomplishment that will help independents through tough 2022 marketplace conditions,” said Greg Ferrara, NGA president and CEO, in a statement.

Overall, the report indicates that 2021 was a strong year for independent grocers, despite the year-on-year declines. It is being projected that 2022 will not very likely bring about the same results as 2020 and 2021, but Ferrara said that independents are prepared for the challenge.

“For many years, independent grocers have proven to be resilient, creative and nimble,” said Ferrara. “Strongly rooted in their communities, independents are well positioned to weather the perfect storm of supply chain, inflation and labor challenges.”

 

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