Good News for Independent Grocers

Financial performance at independent grocers exceeded expectations for the 2025 fiscal year ending March 31^st. This is encouraging given the economic environment and continued pressure on household budgets. A study by the National Grocers Association (NGA) and FMS Solutions found that independent retailers remained financially stable despite these challenges.

Although top-line growth wasn’t overly impressive, overall performance remained steady and improved slightly. Gross margins increased from 27.4% in the prior year to 27.9%, while same-store sales rose 0.4%. These gains may be small, but they represent positive momentum amid intense competition, value-conscious shopping, and shrinking basket sizes.

Higher food costs have changed how consumers shop too. Customers are visiting grocery stores more frequently but purchasing fewer items per trip. Promotions, private-label products, and value brands are increasingly influencing their choices. Grocers have responded by strengthening their digital marketing and loyalty programs while continuing to offer fresh food at competitive prices.

Operational results were mixed. The out-of-stock rate improved to 6.6%, while shrink increased to 3.9%. Inventory turns did decline slightly, falling from 17.8 to 16.1. Labor remains a persistent challenge, with employee turnover holding at approximately 44%. Rising wages and benefit costs continue to put pressure on operators, while only about half of independent grocers currently offer self-checkout.

Online shopping continues to be a valuable and profitable channel, with online baskets averaging approximately 3% more than in-store purchases. Fresh food and perimeter departments are also experiencing renewed growth and investment, partly driven by increased GLP-1 usage and consumers’ growing focus on protein-rich foods.

Artificial intelligence is beginning to play a role as well. Although adoption among independent grocers remains limited, a growing number are using AI, particularly to support marketing and other business operations.