The NGA (National Grocer’s Association) comprises over 1,500 family-owned or privately controlled retail companies operating in various formats across the USA. It represents the majority of the independent grocery sector. Greg Ferrara is the NGA President and CEO.
The pandemic that refuses to entirely go away is still having an impact on grocery operators, as its ripples continue to be felt in the supply chain. Inflation is as much of a challenge for grocers as it is for their customers, as they strive to maintain reasonable prices and deliver good value amid their historically tight margins. Grocers operate in a complex marketplace in which the only constant has been change.
Navigating these volatile times is a tremendous accomplishment that will help independents through tough marketplace conditions that have lingered throughout 2022. Overall sales for independent grocers have been something of a rollercoaster, with peaks in April and July and valleys in March and September. Still, same-store sales for every month of 2022 have shown positive year-over-year growth.
The Fresh departments have been a key area of growth and a point of difference for NGA retailers. Local fresh produce, in-store custom butcher shops, scratch-made bakery goods and culinary-inspired prepared foods are leading the way to attract and retain customers, along with a high level of customer service, as smaller grocers are less able to compete on price. The organisation is also seeing renewed growth in private-label products, which is also driven by inflation.
In terms of challenges, independent grocers in the USA were among the earliest adopters of Covid precautions, meeting or exceeding local guidance for employee and customer safety. Pandemic-driven challenges on the supply chain; a sweeping labour shortage impacting retail, manufacturing and transportation; soaring inflation; and high fuel prices drove independent grocers to innovate and pivot in a variety of ways, including alternate sourcing of products, incentives to attract workers and enhanced consumer engagement to offer value-driven shopping guidance. In particular, the pandemic magnified long-simmering inequities in the marketplace caused by large dominant retailers, also known as power buyers, who leaned on anticompetitive tactics to shut out smaller grocers from high-demand products and goods.
The merger of the USA’s top two grocery chains should raise serious questions about a single supermarket giant gaining unprecedented dominance over the nation’s food supply chain. A merger would not only put smaller competitors at an unfair disadvantage but also increase anticompetitive buyer power over grocery suppliers, which ultimately would harm consumers.
Years of grocery consolidation enabled dominant grocers to use their economic power to disadvantage smaller competitors and shut out rivals. The announced merger between Kroger and Albertsons will only increase the influence that a handful of grocery players wield over food suppliers unless clear guardrails are in place that limits their market power. Without strong enforcement of the Robinson-Patman Act, consumers are deprived of the benefits of a competitive market, where a diverse set of businesses compete to offer better prices, higher quality, better service, more locations and a greater diversity of products. Further, should the merger be approved, the divestitures must consider the broad economic realities of grocery retailing in today’s economy, and provide capable operators with the chance to buy divested assets rather than to spin off stores for the benefit of a narrow band of private equity investors and in a way that puts consumers at risk.
This past year the NGA has been encouraged by the support for the antitrust reform by members of the Federal Trade Commission and policymakers on both sides of the aisle. We have recently seen the most movement and greatest chance for reform and renewed enforcement in the four decades that our association has been advocating for this issue.
In addition to this advocacy, NGA supported a Farm Bill renewal process that included expansion of the Supplemental Nutrition Assistance Program (SNAP) and reinvestment in programs like nutrition incentives, which have proven to be a successful public-private partnership to enhance public nutrition and uplift communities. These programs are important to independent grocers serving urban and rural areas where food insecurity has been a problem.
NGA looks forward to honouring commitments made in connection with the White House Conference on Hunger, Nutrition and Heath to address food insecurity in the nation. Specifically, over the next two years, NGA will assist with improving access to grocery stores across the country by working to increase the number of grocery retailers authorized for SNAP online purchases with a prioritization on rural areas and areas with low food access and creating a toolkit with a list of resources and funding opportunities to support the expansion of full-service grocery stores in designated food deserts.
Further, NGA appreciates bipartisan efforts to advance credit card reform legislation and reverse the trend of higher credit card processing fees (swipe fees) that add pressure to independent grocers’ already strained bottom lines.
Members are also continuing to consider sustainability, using conservation methods or replacing old technology wherever possible. Additionally, many members promote partnerships with local produce growers and ranchers commuted to sustainable agriculture. Independent grocers are among the most community-minded business owners, committing significant time and resources to local organisations.
We expect challenges like inflation and supply chain pressures to continue but gradually moderate in the coming year, allowing grocery operators to deliver a greater value to their customers. Independent community grocers will continue to demonstrate the skill and commitment that has made them some of the most innovative operators in the grocery industry and significant contributors to the local and national economy.
