Independent Grocers See Earnings Shrink to Under 1 Percent

Food co-ops are hardly the only ones experiencing greater competitive pressures. All independent grocery retailers are increasingly squeezed, reducing average earnings by these businesses to under 1 percent in 2014 from the previous year’s average of 1.5 percent. Food co-ops are independent grocers, and while being in a natural/organic niche or a “cross-over” category may support higher margins than for conventional grocers, the natural/organic position does not support an assumption of less competition.

Year 2014 was a very difficult one for independent grocery retailers, and 2015 is unlikely to be any different. The annual financial benchmarks survey from the National Grocers Association, as discussed in The Shelby Report (http://www.theshelbyreport.com/2015/12/05/for-independent-grocers-2014-was-a-very-difficult-year/), identifies additional market and political factors affecting all independent grocers:

• •Margins are down, as are profits.
• •Competition is greater and is the top concern.
• •Organic and local continue to be growth categories.
• •Changes in overtime rules will soon reduce the number of non-exempt employees.

            Other key industry issues identified were GMO labeling, allowable tax deductions, SNAP data, and EMV/chip cards.