Jim Dudlicek, Director of Communications and External Affairs
While the world of food retailing saw unprecedented levels of change during the first half of 2020, the financial and operational performance in 2019 served as an essential building block for responding to the incredible spikes in traffic, sales and engagement during the COVID-19 pandemic.
According to the NGA-FMS Independent Grocers Financial Survey, investments grocers made in 2019 in areas such as e-commerce, store development and labor were pivotal to their ability to respond to shifting demands during the 2020 pandemic.
Independent grocers increased same-store sales by 2.5% in 2019, with 56% improving same-store sales growth. Independents also invested in e-commerce, which was offered by 64% of independents in 2019, up from 32% in 2018. Coronavirus prompted two of the biggest weeks in grocery retailing in mid-March and elevated everyday demand has driven gains well above the 2019 base level ever since. In all, total store sales for independents were up 13.3% through the first half of 2020.
In a recent webinar hosted by NGA, Robert Graybill, president and CEO of FMS Solutions, reviewed the state of the industry, profits and performance among grocery leaders, and identified the most crucial moves that led to success during the pandemic.
The following are some key takeaways:
What can we learn from the profit leaders? Their sales featured a higher focus on fresh, particularly produce, meat, seafood and deli. They experienced higher margins, in center store and fresh. They focused on expense control, including the biggest cost areas of labor, benefits, rent and utilities. They controlled inventory with shrink management programs and drove higher turns. They invested more in CAPEX and store development but had lower debt-to-equity ratios.
A strong economy drove strong results for independents. COVID-19 changed the marketplace and independents are tracking right along with the total market.
The labor market was tight in 2019, driving up labor and benefit costs. COVID-19 brought high unemployment, but government incentives prompt a lack of applicants
Retailers were able to maintain or improve margins in 2019 by carefully managing inventory and in a marketplace that can absorb less aggressive pricing. COVID-19 brought SKU rationalization to optimize operations.
Independents can have an even better 2020 with a continued focus on differentiation in fresh, combined with a tailored assortment in center store, to help set themselves apart from competitors.
Learn more about the report HERE.
To learn how to purchase the report, click HERE.
To view this complete webinar and others in the series, visit https://nga.sclivelearningcenter.com/MVSite/default.aspx
