How small but mighty independent grocers navigate 2023

When Quince Supermarket opened in Tamarac, Fla., it was August 2020 — primetime for the COVID-19 pandemic as well as retail grocery business, with fewer people gathering for restaurant meals.

The store serves a niche market that meets the needs of this pocket of South Florida: a big variety of West Indian and South American items, as well as specialty produce from Homestead, Fla., Colombia, Trinidad and Tobago, Costa Rica and Ecuador. 

“We definitely pay more for national items than big chains, but we have the advantage of having more flexibility,” said Duver Zapata, Quince Supermarket manager and buyer. “We have the capacity to adapt quicker to changes in the economy, supplies and demand. Also, we assume the cost of transportation and go look for produce ourselves, even if it is small batches, that would serve our customers.”

The ability to flex with the neighborhood is quite the selling point for independent supermarkets, compared to national chains. An independent retailer is a privately owned or controlled food retail company operating a variety of formats.

Independent community grocers account for 33% of all grocery sales, exceeding $250 billion, and more than 1.1 million American jobs, according to the National Grocers Association. Based in Washington D.C., the NGA represents the independent sector of the food retail and distribution industry.

Challenges

Like larger companies, small grocers dealt with a lot of challenges in 2022: out-of-stock items, higher prices due to inflation, increases in transportation prices, Zapata said. But being small can mean being nimbler.

“We can change our target customer faster than big chains by not being subjected to centralized, or generalized, weekly ads,” Zapata said. “We adapt to our local needs.”

After all, how many retail produce departments offer naseberry, napoles, mamey sapote, platano guineo, tomate de arbol, name blanco, eggfruit and lucuma?

Related news: IGA names these nine grocers the 2023 U.S. Retailers of the Year

Labor continues to be a challenge for independent operators, NGA President and CEO Greg Ferrara said.

“Grocers have offered financial incentives to attract and retain personnel, and continue to explore ways to improve efficiencies, including technologies that streamline back-of-house operations to maximize opportunities to engage consumers in store,” Ferrara said.

Yes, technology can save some labor costs, better pinpoint shoppers’ desires and provide more transparency and traceability of the fruit or vegetable’s path from point of origin.

But there’s so much data.

“Big Data can indeed be overwhelming for smaller businesses that lack sufficient time and resources to devote to analytics,” Ferrara said.

To address this need, NGA partnered with BRdata to offer Independent Insights, an independent-centric, cloud-based program that allows users to see item, category and basket trends among independents nationwide to more easily determine what items are trending, selling or not selling, he said.

Independent Insights users can also see what categories are underperforming.

“The platform also assists vendor partners in helping grocers merchandise and provide volume-based deals through data focused exclusively on independents, rather than being amalgamated with all grocers,” Ferrara said.

More solutions

Small and large grocers alike are focusing on value to meet consumer demands during these inflationary times, said Wayne Hendrickson, director of sales and retail services at Four Seasons Produce. Most of the Ephrata, Pa.-based wholesaler’s customer base are independent supermarkets, independent natural food stores and co-ops.

“We’re seeing the need more than ever for value. They want to come in the supermarket and get deals. Our customers are looking for extra opportunities for deals to promote, to drive additional sales,” Hendrickson said.

But you can’t only have low pricing.

“If you have poor-quality product, that’s not a real value,” he said. “If you’re not getting merchandising services, not getting attention from your salesperson, that’s not value. We really want to focus on quality, service — then price.”

Large, corporate supermarket chains often have teams of folks, such as category managers and merchandisers, doing deep analysis for right product mix, pricing, promotion and merchandising setup, from retail back to the supply chain. And the independent supermarket, those with 20 stores down to the one store, doesn’t have those resources in place to do that.

“That’s where a wholesaler can help, curate their product mix, promotions, tell them about the trends we’re seeing,” Hendrickson said. “We essentially want to help be their category manager and merchandiser.”

Farm bill

On Feb. 2, the NGA sent a letter outlining its 2023 farm bill priorities to the U.S. Senate Committee on Agriculture, Nutrition and Forestry, and U.S. House Committee on Agriculture.

NGA supports, Ferrara said:

• Continuing the USDA’s Supplemental Nutrition Assistance Program called SNAP Choice to maximize flexibility for shoppers.
• Expanding the Gus Schumacher Nutrition Incentive Program, or GusNIP, to continue driving sales of fresh fruits and vegetables.
• Protecting retailers from an EBT tax, which would further squeeze already tight margins pressured by administrative expenses and make it more difficult for grocers to serve their communities.

GusNIP provides incentives for shoppers buying fruits and vegetables at the point of purchase. It also includes a produce prescription program and provides training and technical support for these initiatives.

Related news: NGA advocates for SNAP, other programs in 2023 farm bill

The data from the first years of the program show that the program is working and consumers participating in this program have increased purchases of fruits and vegetables. Congress should build upon the success of this pilot and target resources to communities in need, the letter said.

Ferrara said NGA is advocating to make it easier to use SNAP benefits to buy a variety of foods, including fruits and vegetables, rather than imposing restrictions on choice. 

Digital modernizations

Independent grocers don’t have all the resources for online shopping, but sometimes they partner with third-party providers to provide the platform and handle the logistics. Enter the behemoth in this sector: Instacart.

Related news: Instacart and Foodcellar Market in NY introduce Scan & Pay checkout

Small grocers are also turning to online advertising more and more.

“The way we advertise has changed dramatically,” Quince Supermarket’s Zapata said. “We had to change to solely advertising online, via our social media and web page.

“So far, we have a very successful store model.”

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