Gain fresh consumer-led insights into the US grocery retail market. How can retailers improve the grocery shopping experience for consumers? What factors influence consumer behaviors when grocery shopping? Answer these questions and more with this comprehensive market report.
Key Insights Covered in this Report:
- State of inflation and its continuing impact on the grocery sector
- Sales predictions including breakouts for key sectors
- Opportunities for retailers/brands to improve the grocery shopping experience
- How consumers shop for groceries (eg store, online) and what drives these decisions
- Who’s winning in grocery and how supermarkets can compete with other multi-outlet retailers
- Grocery shopping behaviors throughout the purchase journey
- Factors influencing brand switching
- Features, services and promotional tactics consumers are interested in
- The role of corporate social responsibility in grocery
US Grocery Retailing Market – Current Landscape
Due to the importance of groceries, the US grocery retail market is somewhat shielded from broader economic risks and continues to see sales growth. However, escalating costs are squeezing consumers across income levels, prompting changes in shopping habits.
US Grocery Retail Trends – What consumers want and why?
Price still paramount
While heightened costs are beginning to ease, many customers don’t feel the full impact yet; more than three in four believe grocers can do more to lower prices. Shoppers who switched to budget-friendly options may stick with them, avoiding retailers that didn’t support their financial or nutritional goals.
Sustainability growing in importance
Consumers will prefer grocers who focus on the community and planet at large. Now is the time for retailers to lean in to sustainability efforts, with a number of consumers willing to pay more for sustainable grocery options.
Purchase the full report for a complete analysis of the US grocery retail market, including market dynamics and consumer insights. Readers of this report may also be interested in Mintel’s US Online Grocery Retail Market Report.
More About this Report
This report focuses on all retail channels that provide grocery products including traditional supermarkets, warehouse clubs, natural markets, drug stores, dollar stores, and internet retailers.
Groceries are defined as products such as food, beverages, household goods (eg cleaning products, toilet paper, garbage bags), and/or personal care products. The primary focus of the research is on food and beverages.
Meet The Expert
This report is written by Diana Smith. Diana joined Mintel in 2014, and is Associate Director of Retail & eCommerce. Diana brings a unique background and perspective having previously spent her career in advertising agencies, specializing in media planning and strategy. Diana is naturally curious, highly analytical and enjoys helping clients realize untapped opportunities.
The grocery retail landscape is evolving due to inflation, tech, personalization, and shifting consumer tastes, all shaping the future of grocery shopping.
Diana Smith
Associate Director, Client Advisor – Retail & eCommerce
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EXECUTIVE SUMMARY
- What you need to know
- Consumer trends: key takeaways
- Market size & forecast
- Market predictions
- Product-oriented opportunities
- Product-oriented opportunities, cont’d
- Experience-oriented opportunities
- Experience-oriented opportunities, cont’d
- Presentation: Shaping the US Retail Grocery Landscape
- Shaping the US Retail Grocery Landscape
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MARKET DYNAMICS
- Market context
- State of inflation and its impact on grocery
- Consumer prices rose by 3.3% in May, down for the second consecutive month
- Graph 1: headline CPI and shelter CPI, 2021-24
- Food costs have been sitting well above the 20-year average
- US: changes in food CPI, 2021-24
- Despite some progress, Americans remain very concerned about inflation
- Graph 2: concerned about inflation, 2022-24
- Concerns translate to loss of confidence
- Graph 3: consumer sentiment index, 2021-24
- In times of uncertainty, consumers reevaluate their finances; two thirds describe their financial situation as something other than “healthy”
- Graph 4: financial situation, 2024
- Consumers don’t have room to keep paying more for groceries
- Graph 5: average annual household spending on groceries, 2018-23
- All of this leads to spending behavior shifts
- Graph 6: inflation behaviors in past two months, 2023 versus 2024
- The picture changes dramatically when factoring in finances
- Graph 7: inflation behaviors in past two months, by financial situation, 2024
- Consumers are loyal to prices over stores and brands
- As economic volatility persists, grocers could face more threats
- Graph 8: household budget changes, 2024
- Consumers’ tolerance is wearing thin, particularly given the accusations of price gouging against top grocery chains
- Some retailers have already been trying to showcase a commitment to low prices
- These same retailers and more respond again with price cuts
- Additional market drivers
- Americans’ desire to eat healthier is significantly influencing the US grocery industry
- Americans’ desire to eat healthier is significantly influencing the US grocery industry, continued
- Grocers will likely expand more into foodservice
- Food at home sales outpace food away from home sales, but gap narrows
- Graph 9: sales of food at home and away from home, 2014-24
- Flavor and ingredient trends continually influence the American taste buds, consequently shaping the products on grocery store shelves
- Some key trends in food and drink
- Hold the sugar please
- Avian flu threatens poultry industry
- Industry braces for Kroger/Albertsons merger
- Market size and forecast
- Decelerating sales growth expected through 2028 as industry normalizes
- Decelerating sales growth expected through 2028 as industry normalizes, continued
- 13% growth expected in next five years (2023-28)
- Grocery sales and forecast, at current prices, 2018-28
- Grocery sales and forecast, at inflation-adjusted prices, 2018-28
- eCommerce is also set to further grow, but the significant pandemic surge has now subsided
- Market segmentation
- Majority of grocery sales do not occur in supermarkets
- Competition within the grocery sector is intense, as supermarkets face the threat of losing more market share to other channels
- Graph 10: multi-outlet sales and forecast of groceries, by sector, at current prices, 2018-28
- Retail sales of grocery, by sector
- Combined, health and beauty care and household goods represent significant sales volume
- Grocery sales, by category
- Supermarkets’ challenge in a nutshell
- Graph 11: share of market and supermarkets’ share, by category, 2024
- Majority of food/drink sales occur in supermarkets, but other outlets are encroaching on supermarket territory
- 80% of health and beauty care sales occur outside the supermarket channel
- Nearly three quarters of household good sales also occur in outlets other than supermarkets
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CONSUMER INSIGHTS
- Consumer fast facts
- Grocery shopper profile
- Nearly everyone is involved in the category; majority are solely responsible
- Graph 12: grocery shopping responsibility, 2020-24
- Graph 13: percentage who take sole grocery shopping responsibility, by gender, 2020-24
- More people in the household means more points of influence impacting purchases
- Graph 14: grocery shopping responsibility, by key demos, 2024
- Most people shop weekly, even more so in 2024
- Graph 15: grocery shopping frequency, 2023 versus 2024
- Graph 16: grocery shopping frequency – heavy shopper (net), by generation; household income, 2024
- Boomers more likely to consolidate trips, explaining their lower shopping frequency levels
- Graph 17: trip consolidation behavior, by generation; household income, 2024
- On average, most consumers visit two retailers during a typical grocery trip
- Influence of others in the household impacts purchasing decisions
- Graph 18: ask others for input before grocery shopping, by number of children, people and generations in the household, 2024
- Grocery shopping is primarily a solo task
- Graph 19: shop with others who influence purchases, by key demos, 2024
- Approach to shopping method
- Consumers weigh practical tradeoffs when deciding how to shop
- Most consumers grocery shop using a combination of stores and sites
- Stores are still preferred, but dramatic increase in online shopping seen since pandemic
- Graph 20: shopping method, 2020 versus 2024
- Graph 21: shopping methods – nets, 2020 versus 2024
- Boomers’ habits contribute largely to stores’ preferred status
- Graph 22: shopping method, by generation, 2024
- Consumers are split when it comes to which channel delivers a better experience based on key shopping aspects
- Type of shopping occasion is also a major determinant of channel preference
- Graph 23: preferred shopping method, by shopping situation, 2024
- Delivery narrowly preferred over pickup options
- Graph 24: preferred fulfillment method for online orders, 2024
- Speed of delivery continues as a battleground
- Walmart tests Drone Up delivery stations
- Free, fast and choice of delivery window represent some of consumers’ wishes
- A physical store’s appearance and ambience play a major role in forming customers’ opinions and perceptions
- Store layout and employee attitudes create memorable impressions
- Graph 25: noticeable store aspects – any rank, 2023
- While online grocery shopping has many pros, some of the barriers keep customers coming back to stores
- Shopping by category
- Many food/beverage categories are now occurring across both channels
- Beverages edge ahead of food categories when it comes to online shopping
- Graph 26: shopping method, by category nets, 2024
- Graph 27: shopping method – net, by category nets, 2024
- Multichannel shopping incidence increases
- Graph 28: shopping method by food/beverage categories, 2024
- Role of online channel will only continue to expand
- Graph 29: shopping method – nets, by food/beverage categories, 2024
- Consumers are getting more comfortable buying more items online
- Graph 30: online shopping incidence – net, by select categories, 2023 versus 2024
- Gen Z and Millennials exhibit little fear about buying fresh and other items online
- Graph 31: online shopping – nets, by select categories, by generation, 2024
- The picture changes when looking at non-food categories; multichannel shopping much more prominent
- Graph 32: shopping method – nets, by non-food versus food/beverage category nets, 2024
- Graph 33: shopping method, by non-food categories (net), 2024
- Only three categories purchased exclusively in-store by a majority
- Graph 34: shopping method, by non-food categories, 2024
- Store still dominates, but online shopping averages much higher than food categories
- Graph 35: shopping method – nets, by non-food categories, 2024
- Home goods and kitchenware represent opportunities to attract new customers
- People don’t think about buying beauty at grocery… but they could
- Graph 36: shopping method for beauty items, by gender and age, 2024
- Consumers are receptive to buying beauty items at supermarkets, but need incentives and reminders
- Hy-Vee trying to cash in on beauty
- Other retailers, inside and outside grocery sector, compete for beauty share
- Shopping for natural and organic products
- What about natural and organic products? Is there still a market for that?
- Brands across categories can look to expand into natural/organic space
- Graph 37: natural/organic buying tendency, by category, 2024
- Plant-based, functional and clean label sub-categories are seeing rapid growth
- Grocers can look to offer more brands with claims like these to appease consumer demand
- Wellness trend should prompt more brands to launch natural/organic products; grocers can capitalize on this trend by showcasing such brands
- Who’s buying natural and organic foods?
- Natural/organic eating becomes a lifestyle choice
- Graph 38: repertoire of natural/organic tendency, 2024
- Natural and organic shoppers are more likely than all to favor the online channel for such items
- Graph 39: preferred shopping method when buying natural/organic items, by natural/organic buyers, 2024
- Natural/organic shoppers can help boost ecommerce for fresh categories
- Graph 40: shopping method (net) for produce, by repertoire of natural/organic tendency, 2024
- Graph 41: shopping method (net) for fresh meat, poultry or seafood, by repertoire of natural/organic tendency, 2024
- Natural/organic shoppers don’t need to go to a specialty store to find what they want
- Graph 42: any shopping (net) at traditional supermarkets versus natural/organic supermarkets, by repertoire of natural/organic tendency, 2024
- Natural/organic markets may face challenges ahead as traditional grocers expand their own natural/organic assortments
- Natural/organic brands have many future opportunities to enhance their offerings and shelf space, thereby appealing to more shoppers
- Retailers shopped and key drivers of retailer preference
- Walmart is winning overall, but other merchants have a place too
- Consumers have their favorites, but they will shop around
- Graph 43: retailers shopped, 2024
- Supermarkets are not where a majority of consumers shop for groceries
- Graph 44: retailers shopped – nets, 2024
- On a net basis, same key players rise to the top
- Graph 45: retailers shopped – any shopping (net), 2024
- Dollar stores are a lifeline for financially struggling consumers
- Graph 46: retailers shopped – any shopping (net), by financial situation, 2024
- Two times as many consumers shop at their primary retailer’s store as opposed to digitally
- Physical stores remain vital, but mobile shopping dominates retail landscape
- Graph 47: method of shopping, by primary retailers shopped, 2024
- Consumers are not loyal to grocers, they are loyal to price advantages
- Graph 48: reasons for selecting primary grocer, 2024
- Grocers can use various tactics to win over different shopper demographics
- Price is paramount, but many other factors have appeal too, depending on demographic
- Graph 49: reasons for selecting primary grocer – index versus all, by gender and age, 2024
- Indeed, a quarter of consumers have switched their primary grocer in the past year
- Graph 50: primary grocer switch in past 12 months, by key demographics, 2024
- Consumer loyalty at risk as inflation drives shopping behavior shifts
- Graph 51: switching to lower-cost retailer behavior, 2023-24
- Consumers discuss what would motivate them to switch their primary grocer and again, many factors beside price hold weight
- Promotional incentives can lead to retailer switching and serve as retention tools
- Graph 52: influencing promotional tactics, 2024
- Older consumers gravitate toward financial incentives, while younger consumers value convenience and fun
- Graph 53: motivating promotional tactics, by generation, 2024
- Consumers who are financially strapped naturally gravitate toward promotions that deliver value in dollars and cents
- Graph 54: motivating promotional tactics, by financial situation, 2024
- Aldi promotes Easter deals
- Shopping behaviors
- Many steps precede the actual act of grocery shopping
- Many steps precede the actual act of grocery shopping, continued
- Graph 55: pre grocery shopping behaviors, 2024
- Level of shopping responsibility influences behaviors
- Graph 56: grocery shopping responsibility, by pre grocery shopping behaviors, 2024
- The planning and research process doesn’t change much when considering consumers’ self-reported financial situation
- The planning and research process doesn’t change much when considering consumers’ self-reported financial situation, continued
- Graph 57: pre grocery shopping behaviors, by financial situation, 2024
- Grocers’ marketing outreach must include social media
- Social media can be a discovery tool for new recipes, flavors, ingredients and brands
- Many factors influence decisions at point of purchase
- Graph 58: behaviors while grocery shopping, 2024
- Nearly three in 10 consumers buy on impulse
- Graph 59: impulse purchasing while grocery shopping, 2024
- While driving impulse buys online remains challenging, brands can approach it as an opportunity
- Consumers are split on checkout method
- Graph 60: checkout method, by age, 2024
- The future of self-checkout is poised to undergo significant advancements
- Consumers talk about cashierless tech
- What consumers want is already available at large; grocers need to expand offerings and increase awareness
- Aldi explores Aldigo checkout-free shopping
- Navigating the store
- Most consumers follow a regular pattern as they shop through a grocery store, but the patterns vary by individual
- Graph 61: in-store shopping navigation, 2024
- Two thirds of Boomers either shop all aisles or only those necessary
- Graph 62: in-store navigation, by gender and generation, 2024
- Store layout can influence consumer shopping behavior
- Variances in shopping patterns exist by type of store
- Graph 63: in-store shopping navigation, by primary retailer shopped, 2024
- Shopping with purpose
- Consumers also discuss their own behavior shifts
- Brand loyalty and switching
- Consumers tend to exhibit greater loyalty towards products linked to their individual preferences and routines
- Graph 64: brand loyalty, by product category, 2023
- Brand loyalties are stronger for some food/beverage categories where risk is lower and affinity is higher
- Coffee and snacks top the loyalty list
- Graph 65: brand loyalty by category, 2024
- Natural/organic shoppers demonstrate even stronger loyalties, regardless of category
- Graph 66: brand loyalty by category, by natural/organic buyers and non-buyers, 2024
- Still, consumers face a perpetual deluge of brand options, posing a challenge to their brand loyalty
- Consumers switch brands mostly when they are prompted to, and when the stakes are low
- Graph 67: influencers of food/beverage brand switching, 2024
- Out of stock inventory is a major source of frustration
- Lack of trust, coupled with cost hikes can prompt brand switching
- Components of value can encourage consumers to stay, just as the lack thereof can cause them to leave
- Graph 68: select reasons that would encourage brand switching, 2023
- Another major factor in brand switching is the growth of private label
- Leading grocery retailers expand private label brands
- Retailers can build loyalty with reliable, affordable store brands
- Graph 69: top five ways that consumers save money on food and drink, 2023*
- Private label growth is a threat to national brands. Here are six strategies that can mitigate brand switching to private label:
- Strategies for national brands to mitigate brand switching to private label, cont’d
- Interest in features and services
- Consumer preferences can fuel grocery transformation
- Opportunity areas revolve around themes of convenience, fun and freshness
- Opportunity areas revolve around themes of convenience, fun and freshness, continued
- Graph 70: desired in-store features/services, 2024
- Younger shoppers lean toward experiences and convenience; older shoppers are more practical in their shopping approach
- Graph 71: desired in-store features/services – index versus all, by gender and age, 2024
- Indoor-grown produce presents greener pastures
- Across the industry, retailers are investing to add convenience through meal solutions and provide a better store experience
- Grocers enhance foodservice options to compete with restaurants
- Freshly made meals taking over shelves
- Grocers elevate ready-to-eat offerings to cater to modern lifestyles
- Retailers can boost online shopping through personalized sampling and shoppable recipes, among other tactics
- Graph 72: top five online desired features, 2024
- Consumers are asking grocery retailers for help
- Grocers look to personalize the shopping experience
- Enhancements in consumer experience stem from advancements in technology
- Graph 73: interest/experience with tech while grocery shopping, 2024
- Here come the smart carts
- Amazon enables pay-by-palm functionality; no wallet needed
- Another way to ensure freshness is to alert customers of approaching expiration dates
- Too Good To Go, a marketplace for surplus food, offers US grocers new tool to sell foods nearing expiration
- By leveraging generative AI, Walmart seeks to improve operational efficiency and customer satisfaction
- Schnucks rolls out “smart salad bars” in select stores after 2023 test
- Hellmann’s Meal Reveal helps reduce food waste
- Role of corporate social responsibility in grocery
- Consumers are shopping with their values
- Graph 74: retailer drivers, 2023
- Younger consumers care even more about a company’s moral compass
- Graph 75: select retailer drivers, by generation, 2023
- Kroger promotes employee welfare…and receives accolades for it
- Sustainability is a hot button; consumers express willingness to pay more for sustainable options
- Graph 76: willingness to pay more for sustainable food/beverages, 2023
- Graph 77: importance of price versus sustainability, by generation, 2024
- Consumers look to grocers to help the planet and reduce food waste
- Across the industry, grocers step up sustainability efforts
- Localism still alive and well
- Giant Foods’ “Find Your Local” campaign highlighted company’s tie to local businesses, workers and vendors
- Aldi supports community with efforts that revolve around children’s health, food insecurity and DEI
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APPENDIX
- Market definition
- Consumer research questions
- Consumer research methodology
- Consumer qualitative research methodology
- Generations
- Abbreviations and terms
- Forecast methodology
- Forecast fan chart methodology
- Supermarket grocery sales forecast, at inflation-adjusted prices
- Other MULO grocery sales forecast, at inflation-adjusted prices
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