National Grocers Association (NGA) and FMS Solutions Holdings released their 2018 Independent Grocers Financial Survey June 12th and the 139 respondents cited that despite increasing competition and labor and benefit cost, along with deflation, sales and revenue pressures eased over the year leading to future optimism.
Three things stand out to us from what was said in the survey:
- The survey showed that same-store sales for 2017 dipped by 0.6% but improved from 2016’s 1.6% decline. The improvement reflected, in part, an easing of deflationary pressures that marked nearly all of 2016 and most of 2017.
- Grocers in the top 25% of net profits saw greater sales contributions by fresh departments, including produce, meat and deli, at higher-than-average margins.
- Profit leaders focused on managing inventories, averaging lower shrink and higher turns across departments. They showed a high probability to reinvest into their businesses while minimizing long-term debt.
While there are many entities competing with independents for shopper share-of-wallet (discounters, meal-kits, home delivery), profit leaders were able to maintain a hold on their bottom-line’s with focus on traditionally higher profit store areas like fresh, produce and meat & deli. Paying attention to profit-stealing overstocks seemed to have an exponential impact for those organizations, as it led to “lower shrink and higher turns”.
This. Is. Huge. Ok…Yuge.
Itasca’s customers (Wegmans, Sobeys, Price Chopper (Golub), SpartanNash and others) have had this ability with our solutions since 2004 and have had tremendous success in rigorous, yet automated and simple control of managing inventory. With capital that used to be tied-up in back-rooms bursting-at-the-seams with excess inventory, Wegmans is focused on opening new stores; Sobeys’ same-store sales increased 1.1% for Q1 2018; and Price Chopper continues to remodel and open Market 32 banner stores over this same time.
The high cost of inventory can have a monumental drag on profits – not that you need us to tell you that. It becomes an asset, even a strategic weapon to empower shopper success in the New Age of retail, when managed well with Itasca Inventory Optimization tools.