The National Grocers Association (NGA) and FMS Solutions (FMS) have released the 2026 U.S. Independent Grocers Financial Study, revealing how independent operators leveraged value-focused strategies, operational discipline, and technology to maintain profitability through fiscal year 2025.
Strategic Resilience in a Challenging Market
As the definitive financial benchmarking resource for the independent retail sector, the annual report highlights that grocers successfully navigated cautious consumer spending, rising household debt, and broader economic uncertainty by doubling down on efficiency and customer-centric value propositions.
Key Findings
Financial performance remained resilient despite modest top-line growth. Total store gross margin increased from 27.4% to 27.9% year over year. Same-store sales grew 0.4%, modest but positive against intense competition for value-conscious consumers. Operators achieved these results through careful cost management, promotional execution, inventory management and operational efficiency.
Shoppers changed how and how much they spent. Grocery inflation moderated compared with previous years, but consumers continued feeling the cumulative effects of several years of higher food prices. Shoppers made more frequent trips while buying fewer items per visit, leaning heavily on promotions, private brands and value-focused strategies. Independent grocers responded with stronger loyalty initiatives, digital engagement and a continued emphasis on fresh foods.
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Operational execution was a mixed picture. Out-of-stock levels improved, falling to 6.6%, and wholesaler service levels remained above 90%. However, total store inventory turns declined from 17.8 to 16.1, and shrink rose to 3.9% of sales, areas the study identifies as priorities for operators focused on closing the performance gap with industry leaders.
Labor remained the industry’s most persistent challenge. Store-level employee turnover averaged 44% in fiscal year 2025. Rising wages and benefit costs increased pressure across the industry, and only half of independent grocers have implemented self-checkout. When consumers become more price-conscious, food-at-home spending typically proves more resilient than restaurant spending, positioning well-run independents to earn long-term shopper loyalty.
Profit leaders separated themselves through operational discipline. Top-performing operators distinguished themselves through lower shrink, stronger inventory management, disciplined expense control and investment in fresh departments. Produce, meat, deli, bakery and seafood remained defining differentiators among the highest-performing independents.
E-commerce is a significant, underutilized opportunity. Online sales represented just 1.1% of independent grocers’ total revenue in fiscal year 2025. The average online basket was roughly three times the size of the typical in-store transaction, pointing to meaningful upside for operators willing to invest in their digital presence.
Regional performance continued to diverge. The South and West produced the strongest profitability results, while the Northeast continued to face higher labor and occupancy costs alongside intense competitive pressure.
Capital investment was measured. Capital expenditures averaged just over 2% of sales. Remodel activity reached one of the lowest levels on record, reflecting the wave of capital projects completed earlier in the decade. Consumer interest in health, protein, ingredient transparency and GLP-1-related eating patterns continued to create new opportunities in fresh foods and perimeter departments.
Artificial intelligence is moving from conversation to pilot. The 2026 study examines technology, including AI, as a key strategic theme. While only a small share of independent retailers currently use AI extensively, most are piloting or evaluating applications, primarily in marketing content, customer engagement and business analytics. Operators broadly view AI as increasingly important to competitiveness over the next several years, though adoption remains in its early stages.