As 2025 comes to a close, we reflect on this year’s results and look for ways to build on our success in 2026. The year-over-year rate of sales growth among NCG member co-ops continued to accelerate during the first half of 2025, peaking at 8.5% in April. We expect 2025 sales to exceed 2024 by 6%, but growth since August has averaged less than 4%. Our strong growth in 2024 and early 2025 was mostly driven by increases in the number of transactions, what we sometimes call customer count. We are still growing over last year, but at a lower rate.
Growth reported by our natural and organic retail competitors has also slowed, and natural and organic sales growth has fallen back in line with the growth rate of U.S. retail food sales, after exceeding that for the past two years. In short, our sales benefited from increased interest in natural and organic food during 2024 and 2025, but growth has now slowed — I believe due to fewer new customers “discovering” natural and organic and some affordability pressure for consumers.
Our system’s earnings as measured by EBITDA (earnings before interest, taxes, depreciation and amortization) grew to over 4% of sales in early 2025, but have fallen back to less than 3% in the second half of the year as sales growth slowed. System gross margin has held at 37% of sales this year, but personnel costs recently exceeded 25% of sales for the first time in over a year.
Focus Relentlessly on Customer Service and Excellent Operations Every Day
I believe we must increase our efforts to retain the recent growth in our business by delivering outstanding quality and service every hour of every day. Our customers have many choices, and we are grateful for those who have chosen to shop our stores, but we must continue to earn their business.
Our customer experience survey data consistently points to one glaring opportunity: the number of out of stocks in our stores. Co-ops’ product availability scores are much lower than our competitors’ and present a tremendous opportunity to improve customer satisfaction. I suggest counting the number of out of stocks in your store each Monday morning and track that over time in an effort to reduce it. You might also consider marking the top three or four selling items in each category with a red dot on the shelf tag — these are the items you never want to be out of. And finally, many NCG members stock too many products, preventing you from allocating more shelf space to the best sellers. Remember that 80% of your sales are derived from about 20% of the products you stock. Any reduction in out-of-stock levels will support higher sales and customer satisfaction.
I know that your co-op continues to be challenging to lead, and your market continues to be competitive. I encourage you to focus relentlessly on customer service and excellent operations every day — consistent delivery of quality and service is essential. Your members and customers want to be able to count on your co-op to deliver what they need every time they visit.
Our challenges will continue to test our commitment and dedication, but we know our cooperative business model provides better outcomes for every stakeholder. This work has never been easy. We don’t choose the cooperative form of business because it’s easier — we choose it because it’s better. I know of no other endeavor with greater potential to positively impact each community you serve. Your NCG team looks forward to supporting your growth and success in 2026, and beyond.
