Grocery Stores: industry financial ratios benchmarking SIC code 5411

We analyzed the 86,955  tax returns that were filed in the grocery store industry to pull out some key statistics and insights to help our customers ensure that they are creating realistic financial projections for their grocery store. This article is a part of the Retail practice’s new annual report on the grocery industry, which summarizes major trends insights that are new and relevant for the grocery market, giving the reader a content edge and best practice guides. It is produced in collaboration with EuroCommerce, an organization representing the retail sector in the EU.

• The market is mainly driven due to significant growth in the food retail in the U.S. and Canada.
• One- to two-day delivery is becoming more widespread, and it has the propensity to elevate delivery expectations.
• The bankers will look at these industry benchmarks as they assess your store’s performance.
• Identifying what consumers value most and offering flexibility (for example, options for smaller pack sizes) will be critical to this effort.
• Seventy-three percent of consumers report that discounts for grocery items have become more important in their shopping decisions compared with a year ago.

Compares what the company “owes” creditors to what it “owns.” Measures the financial strength of the business. The top of each Retail Segment Page on The ROI site includes the NAICS code and the NAICS definition for that industry segment.

Five Year Trends, Benchmarks

About 40 percent of consumers expect to increase their focus on healthy eating and nutrition. Consumers intend to purchase more regional and local goods (41 percent), high-protein options (34 percent), and offerings that are free from certain ingredients (33 percent), along with other naturally healthy options (Exhibit 3). This combination of saving money and eating healthier, more nutritious foods is more prevalent among millennial and Gen Z consumers, in part because they are still waiting for their finances to return to normal. With continued uncertainty around the COVID-19 pandemic and grocery inflation the highest it has been in ten years, consumers have become more focused on shopping for the best value in an effort to stretch their dollars (Exhibit 2). Moreover, 90 percent of CEOs expect increasing pricing pressure from consumers to continue in 2022. When choosing where to shop in the year ahead, 45 percent of consumers indicate they plan to explore more ways to save money, a level virtually unchanged from the year before.

In the initial stages of the pandemic, grocery shoppers chose where to shop based on in-stock products, store hygiene, and cleanliness procedures. Furthermore, as consumers look ahead to their food consumption in 2021, they are leaning toward “better for you” options. According to our survey, the net intent to focus on healthy eating and nutrition is expected to be up 38 percentage points over 2020, with consumers specifically seeking out naturally healthy, high-protein, low-sugar, and low-calorie foods. Companies beyond those known for their environmental, social, and governance (ESG) policies—such as Ben & Jerry’s, FedEx, and LEGO—are increasingly making more decisions based on social and environmental issues compared with 2020.

Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections. I think we need to remember that this tax return data includes all sole proprietors that categorize themselves in the “Grocery Stores”. The most important key figures provide you with a compact summary of the topic of “Food retail in the United States” and take you straight to the corresponding statistics. Free report customization (equivalent up to 8 analysts’ working days) with purchase. Not every guideline will relate to every grocery; for help in determining which benchmarks are appropriate for you or to learn how Baker Tilly retail specialists can assist you, please contact our team.

According to Oracle’s Grocery Retail survey, carried out in 2020, 71% of customers exhibited speedy checkout as a top priority, followed by informed staff (57%). Asia Pacific accounted for the maximum share of 36.3% of the global revenue in 2021. The proliferation of supermarkets in developing countries in this region is the main factor leading to the dominance of this region. Increases in mobile usage and broadband penetration, particularly in developing countries, have also aided in the growth of online food purchases. A brand or retailer’s sustainability commitments continue to influence purchasing decisions, particularly among younger consumers (Exhibit 7). Shoppers increasingly expect companies to “walk the walk.” In fact, we see a clear link between consumer spending and a company’s ESG efforts.18“Consumers care about sustainability—and back it up with their wallets,” McKinsey, February 6, 2023.

The food cupboard segment held the largest market share of more than 37.5% in 2021. Consumers cooked food from the scratch due to the pandemic-induced lockdowns, which resulted in the temporary closure of bars, restaurants, and cafes. The surge in cooking and baking activities, predominantly noticed among Generation Z consumers has led to an increased demand for the food cupboard segment in recent years. However, the beverages segment is projected to register the fastest growth during the forecast period. The off-trade purchases of beer, wine, and non-alcoholic beverages shot up due to the closure of restaurants, bars, pubs, and cafes during the pandemic.

Specialty Stores

The grocery sector demonstrated an incredible amount of resiliency in 2020 and is poised to continue to serve the most urgent consumer needs, albeit against a drastically different set of imperatives from two years ago. As the world began to see the pandemic as a crisis measured in months, not days, behavior shifts continued to shape an evolving sector. This FREE sample includes market data points, ranging from trend analyses to market estimates solvency definition & forecasts. Grocery executives who can develop effective strategies across these five trends will position their organizations to not only restart growth but also weather an unpredictable landscape. Grocers are redefining their business models to capitalize on fulfillment opportunities and adapting their value propositions. They could extend their reach by embracing third-party marketplaces, dark stores, and microfulfillment centers.

Sustainability as part of core business operations

It requires people to find and purchase inventory and stock and sell the various products. Throughout the past year, medical professionals have consistently emphasized the increased risk of severe complications from COVID-19 faced by people with underlying health conditions. This awareness has, in turn, sharpened the focus on wellness that was underway prior to the pandemic, creating shifts in category demand within grocery (Exhibit 3).

Average net profit margin for a Grocery Store business

We partnered with STORY Pitch Decks to analyze the financial projections of 107 of our clients to get a clear idea of what tech startups are projecting in terms of revenue and profitability. StarterStory has an incredible database of over 2,600 startup case studies which include many in the D2C Product space, so we pulled together and analyzed a group of 99 D2C startups to learn more about what these companies actually generate in terms of revenue. Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning.

Shoppers are engaging in omnichannel across a variety of shopping missions—weekly grocery shopping and midweek top-ups, for example—and they expect similar assortments, pricing, and promotions, among other factors, across channels. The average sole proprietor grocery store spent roughly 4% of annual revenue on rent. In late 2019, e-commerce penetration in North America hovered around 4 percent of sales—an important channel for consumers but still niche with certain segments (for example, younger, urban consumers). By late spring in 2020, e-commerce penetration had reached 10 to 15 percent of sales overall, with some regions (such as high-density urban areas) topping 20 percent (Exhibit 1).

Consumers are increasingly adopting online shopping due to convenience, wider product selection, and home delivery options. Food & grocery retail market is anticipated to grow at a highest CAGR of 4.0% over the forecast period. The market is growing due to rising online food and grocery retailing in the country. Moreover Germany food & grocery retail market hold the largest share of 22.4% in 2021. Germany boasts a well-developed retail infrastructure, with a wide network of supermarkets, hypermarkets, discount stores, and convenience stores.

Top U.S. Companies

Indeed, two out of three CEOs believe growth will be slower this year than in 2022. Similarly, in our conversations, CEOs described the industry as “volatile,” “challenging,” “uncertain,” and “competitive”—sentiments that indicate the difficult road ahead. Sample
spreadsheet that includes breakdowns by total asset size can be viewed free online. Based on the tax returns of roughly 87,000 sole proprietors operating in the grocery store industry, the following were the 10 largest business expenses as a percentage of revenue. The average annual expenses for all sole proprietorship grocery store businesses in the U.S. was $281,159. Financial ratios are an important tool that managers and investors use to evaluate company performance.