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 to under 1 percent in 2014 from the previous year’s average of 1.5 percent.

Like IGAs, food co-ops are independent grocers. While being in a natural/organic niche or a cross-over category may support higher margins than those of conventional grocers, the niche position does not support an assumption of less competition.

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 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 are GMO labeling, allowable tax deductions, SNAP data, and EMV/chip cards.