Last updated on August 25th, 2022 at 01:55 pm
Competition, the cost of providing healthcare insurance and the economy are the three major worries among independent food retailers, according to the 2012 Independent Grocers Financial Survey, released last month by FMS and the National Grocers Association (NGA).
On a scale of 1-10, where 10 is highest, competition averaged 7.9 with supercenters and conventional supermarkets having the greatest competitive impact. Additionally, independents expect competition to grow more intense over the next year.
“While supercenters continue to have the greatest impact on independents, their relative influence has decreased compared with previous years,” says Robert Graybill, FMS president and CEO. “Instead of focusing on supercenter competition alone, independent retailers are increasingly impacted by competition from formats such as gourmet, dollar, hybrid-convenience and drug stores.”
Despite rising competitive pressure, independents managed to grow the average transaction size from $21.90 in 2010 to $22.73 in 2011. Independent supermarkets averaged 9,750 transactions per store, per week.
In second place, the impact of healthcare costs ranked second with an average of 7.8, followed by the economy at 7.0 on the 10-point scale. Independent grocers are impacted by the economy in many ways, one of which being theft-related loss. No less than 63.6 percent of independent grocers reported an increase in shoplifting and 29.1 percent noted more incidents of employee theft. On the other hand, employee turnover is much lower compared with pre-recession at 12.2 percent among full-time employees and 35.2 percent among part-time associates.
The economy also is affecting store development activity that remained subdued in 2011. Independents point at the tight credit market and the challenging business environment as the two most important reasons to hold off on store openings and remodels.
“All capital investments are under severe scrutiny to achieve a desirable return-on-investment,” says Peter J. Larkin, NGA president and CEO. “Likewise, independents are doing everything to control expenses. For example, 76.9 percent are limiting overtime availability and 34.0 percent are limiting bonus eligibility. On the revenue side, our members are applying a multitude of differentiation strategies ranging from customer-centric merchandising, in-store events, better in-stock performance, price competition and excellence in customer service.”
In addition to an in-depth review of the political and economic marketplaces, the study includes operational and financial benchmarks as well as sales, margin and profit data by region, store sales volume and profit leaders. The 2012 Independent Grocers Financial Survey is based on data from 123 independent grocers. To purchase the report (NGA members/FMS customers $75, nonmembers $300), visit the NGA website or the FMS website.
