Progressive Grocer Independent

JUN 2016

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State of the Independents Annual Report Conflicted Outlook But even while optimism seems scarce, independents seemed to think that this year would be slightly better than average — forecasting 2016 as a 67 on a scale of 0 to 100, where 0 is awful and 100 is sensational, about the same as 2015's 66 rating. Tis projection, which seemed to contra- dict the lack of optimism, could be based on independents' outperforming national chains in the area of customer satisfaction, according to Peter Larkin, president and CEO of the Arlington, Va.-based National Grocery Associa- tion (NGA), referencing a consumer trends study conducted by Nielsen. "But this is a very competitive market," he adds. "While the econ- omy seems to be doing better and wages are slowly increasing, we now live in a global marketplace, and I bet independents are facing a number of challenges in the marketplace and on the operational side." Te lack of confdence when it comes to the retail climate is a culmi- nation of several factors, according to Dave Bennett, SVP procurement and exclusive brands for Chicago-based IGA. Many retailers are concerned about where they ft in the digital e-commerce landscape and how their stores integrate into an increasingly digital marketplace, he notes. Te industry as a whole has so many varying outlooks on the future that fguring out the "why" may not be possible. "In our conversations with our membership, I encounter the whole range of outlook opinions, from 'the cup is half-full' to 'the cup is half-empty,' and even some wonder- ing 'who moved my cup?'" says Leslie G. Sarasin, president and CEO of the Arlington-based Food Marketing Institute (FMI). "Tere are so many forces that determine and infuence the way grocers are doing business." Worry Over Wages Many of these forces, such as fnding employees and comply- ing with government regulations, were increasingly worrying for independents. As to what keeps them up at night, wages and benefts jumped signifcantly from last year, with three-quarters say- ing it was their biggest concern. Tis was up from slightly more than half last year, and a jump from the third spot to No. 1. Many states or mu- nicipalities are introducing legislation to increase the mini- mum wage, and some of the larger retailers have already pledged to increase pay for hourly workers in their stores. "Te worry may be coming from the fact that Walmart and well- known brands in other industries like fast food have raised wages," says Doug Fritsch, IGA's SVP retail and business development. "A ripple efect would be expected in order to be competitive in a market where fnding quality people continues to be increasingly difcult." (In the survey, "This is a very competitive market. While the economy seems to be doing better and wages are slowly increasing, we now live in a global marketplace, and I bet independents are facing a number of challenges in the marketplace and on the operational side." —Peter Larkin, NGA Retail Climate … Indies Less Optimistic Percent of retailers who feel more or less optimistic when comparing the current retailing climate with a year ago Source: Progressive Grocer Market Research, 2016 More Optimistic 27.6 44.3 32.9 36.2 25.3 30.3 Less Optimistic No Change This Year Independent Last Year Independent This Year Total Market 36.8 30.4 36.2 20 | Progressive Grocer Independent | June 2016

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