Chart: The Year in Gross Margins

Supermarket companies realized higher gross margins in 2020, as the chart below illustrates.

Sprouts Farmers Markets and Grocery Outlet led the way among the 11 publicly reporting companies tracked through Sentieo, but all of them saw margins improve on the calendar year, even price-focused players like Walmart. See more detail here.

Generally, supermarkets benefitted from an industrywide slowdown in promotions, along with stronger penetration of private brands and higher overall volumes that came with the initial stock up behavior and subsequent shutdowns of restaurant competitors.

Sprouts’ particularly strong performance in this metric illustrated the possibilities of its new strategic direction. The Phoenix-based natural foods merchant virtually abandoned its historic reliance as a price leader in commodity fresh foods and focusing instead on improving its quality profile behind what it calls a more distinct offering.

“The reality is, we’re playing our own game in the middle of this pandemic,” CEO Jack Sinclair said while reviewing Sprouts’ third-quarter financial performance in October.