NGA Show 2023: Solomon Partners' Scott Moses' 12 Takeaways for 2023

At the NGA Show 2023, The mergers & acquisitions leader detailed what could be ahead for the grocery industry as non-traditional giants continue to gain market share.
Zachary Russell
Associate Editor
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Scott Moses, managing director of Grocery, Pharmacy and Restaurants, Solomon Partners
Scott Moses, managing director of Grocery, Pharmacy and Restaurants, Solomon Partners

It’s no secret that the last three years have been turbulent for the grocery world, despite growth for many retailers and their collection of private brands. High inflation, labor shortages and fuel costs have all impacted grocers of all sizes recently.

At the National Grocers Association’s recent NGA Show 2023 in Las Vegas, Scott Moses, managing director of Grocery, Pharmacy and Restaurants at investment firm Solomon Partners, detailed 12 takeaways for retailers to think about for the remainder of 2023.

“In the spring of 2020, we didn’t leave our apartment building in New York City for ten weeks,” Moses recalled. “I did see first-hand the extraordinary work my clients did all around the country to feed and help sustain their communities, in yet another crisis. There’s no overstating it: this industry really matters, so let’s talk about what’s happening to it.”

  1. Macro, Micro and Cost of Capital Challenges on Traditional Grocers
  2. Inflation Not Only Caused By Ukraine; Low Labor Participation and Immigration
  3. Non-Traditional "Grocery Giants" - Majority of US Grocery Sales
  4. 10 of 15 Top American Grocers are NOT Traditional Supermarkets
  5. Dollar Grocery Stores' and Club Stores' Meteoric Growth
  6. Non-Traditional Grocery Giants - "Primary Shop" >60% of Americans
  7. Grocery Giants' Very Low Cost of Capital Fueling Investment Arms Race
  8. Amazon's $1 Trillion Valuation Many Multiples Other Grocers; Huge Investments
  9. Supermarkets' EBITDA Margins Were 75% Higher 20 Years Ago vs. Pre-COVID
  10. U.S. Grocery Sector Today Looks Like Department Stores 30 Years Ago
  11. FTC Knows Amazon Impact on Grocery; Can Help Level Grocery Playing Field
  12. Millions of Americans Rely on Grocery Jobs - Pillars of Our Communities

“You probably know that food inflation didn’t start with Ukraine, and we had COVID supply challenges long before. Food inflation was 8.6% that month,” said Moses, speaking on the macroeconomic trends that impact the retail landscape. “You might not know that there are 11 million open jobs in the U.S. right now and only 6 million job-seekers. Irrespective of your politics… it is undeniable that more immigration would really help close that worker gap. It would alleviate some food inflation in stores, and it would help lower prices for consumers.”

In his keynote presentation, Moses described the grocery industry as fragmented, and cited the growth of non-traditional chains, such as Amazon, and dollar chain grocers as part of the cause. He said that 60% of Americans now shop at a non-traditional grocer, an increase from less than 20% 20 years ago.

Dollar General

“You might not know that in the last decade, there are almost 12,000 more dollar grocery stores, and there are absolutely, undeniably grocery stores,” Moses said. “They are really benefiting from the inflationary trade-down period that we are experiencing right now. Dollar General has 19,000 stores right now and they are actually planning 15,000 new stores. You might not know that the average Costco does $150 million in annual grocery sales. That's three-times an exceptional supermarket and seven-times the average.”

In closing, Moses compared what happened in the department store sector to what could be in store for the grocery sector: consolidation of smaller chains by grocery giants. He argued that scaling business and the adoption of new technologies by independent grocers can prevent what he described as “the ghost of supermarket’s future.”

“It [the department store sector] is the cautionary tale: thousands of dark stores no longer serving their communities or offering first jobs or careers for millions of young people,” said Moses. “That version of America doesn’t work for me. My job may be to maximize value, but I keep score on how many grocery stores or jobs our transactions save or strengthen.”