ARLINGTON, Va. â€” Independent retailers saw overall pre-tax profits decline 20 basis points over the past year due to reduced gross margins, according to the 2010 Independent Grocers Survey, a joint study by the National Grocers Association here and FMS Solutions, Baltimore.
According to the study, average net profits before taxes fell to 1.68% this year, compared with 1.88% among 2009 respondents â€” â€śa solid showing, considering the economic environment,â€ť Robert Graybill, FMS president, pointed out. Despite the decline, â€śit is amazing to see the ability of independents to compete against the big-box retailers with such a price-sensitive consumer.â€ť
Graybill said the decline in profits was mainly attributable to lower gross margins, which averaged 26.94% among respondents, compared with 26.28% a year ago. Retailers made up some of the losses with reduced expenses in supplies, labor and benefits, and advertising, he noted.
The survey said 41% of respondents were impacted by a lack of available capital though 2009. In addition, it said 12% of respondents plan layoffs this year, and 13% felt the government stimulus helped speed the recovery.