April 22, 2026
Photo courtesy of Trader Joe’s
Can Traditional (and Discount) Grocery Stores Survive an Ongoing Squeeze?
While persistent news headlines since the dawn of the COVID-19 era have been touting the grocery business, as essential as it is, as being resistant to consumer spending pullbacks, it appears that winners and losers — both in terms of individual retailers and in terms of overall categories — are emerging in the aftermath.
The major claim made by Consumer Edge via its latest U.S. Grocery Outlook 2026 report is that specialty grocers — Trader Joe’s most notably, as well as Whole Foods and Wegmans — are outperforming traditional grocers such as Publix and Safeway, who are experiencing a decline in consumer appeal. A secondary point, that discount grocers who experienced significant growth of the past few years (including Aldi, Lidl, Food 4 Less, and Grocery Outlet) were actually seeing their growth pattern disrupted in 2025 and beyond after years of consecutive improvement, was also made.
Some of the more interesting findings included:
- Specialty grocers are gaining share across income cohorts as overall grocery normalizes: Specialty grocers saw a 20 basis point increase with low-income shoppers (judged as those earning up to $40,000 annually), a 0.3% increase with middle income shoppers ($40,000 to $100,000 annually), and a 0.4% increase in spend from high-income shoppers ($100,000-plus in annual income) since early 2025. By contrast, traditional supermarkets shed share across all demographics, most significantly from lower-income shoppers (down seventy basis points).
- Trader Joe’s showing strength within specialty grocery, and grocery writ large: Not only is Trader Joe’s showing resilience within its own specialty grocery category — earning 44% of wallet from its own shoppers, 48% from Sprouts shoppers, and 47% from Wegmans shoppers, cementing “its unique position as the default secondary destination for specialty grocery shoppers regardless of where they primarily shop,” per the study authors — but it’s also experiencing growth versus the overall grocery sector. For the 12-month period ending February 28, 2026, Trader Joe’s grew by 3% as the overall grocery sector tumbled by the same percentage.
- Discount grocery share is leveling off: Aldi, Lidl, Food 4 Less, and Grocery Outlet saw sharp gains from early 2022 all the way through the middle of 2024, attributable to consumers trading down. However, a plateau is in evidence since the mid-point of last year. “Whether that trend continues will depend on the trajectory of food inflation and whether shoppers continue to shift spending toward specialty grocers,” the study authors wrote.
Expansion of specialty grocers into traditional home markets of competitors is also increasing, with Sprouts moving heavily into a Texas where Whole Foods is headquartered. Sprouts has so far improved its Texas store count by 12% annually over the course of the past three years, hitting a total of 60 locations, and seven locations in Austin, where Whole Foods has its HQ. Further, Sprouts is seeing shift in its direction in what is shaping up to be a bit of a turf war, with the overlap of Whole Foods shoppers who also visit Sprouts jumping from under 29% (as of March 2024) to 33% by February 2026, and Sprouts shoppers who also patronize Whole Foods dipping from 53% to 49% in the same time frame.
Loyalty, Whatever That Means To Shoppers Today and in the Future, Could Be the Hinge Point for Grocery
Overall, it appears that loyalty is the battleground grocers need to be fighting for, whatever the differentiator.
“What’s happening in grocery isn’t just about price. Shoppers are making more deliberate choices about where they spend their money, and they’re gravitating toward retailers that give them a clear reason to be loyal – whether that’s unbeatable value at a hard discounter or a curated, private-label experience at a specialty grocer,” said Michael Gunther, SVP, Research & Market Intelligence, for Consumer Edge.
“Traditional supermarkets are caught in the middle, and the data suggests that pressure isn’t going away. The grocery retailers best positioned for 2026 are those with a distinct identity and a customer base that keeps coming back,” Gunther added.
BrainTrust
Brad Halverson
Principal, Clearbrand CX
Doug Garnett
President, Protonik
Jeff Sward
Founding Partner, Merchandising Metrics
Recent Discussions
Discussion Questions
Is there a place for the traditional grocery store or supermarket in tomorrow’s marketplace? Are consumer expectations higher than previously, in your opinion?
With so much competition in the traditionally low-margin grocery space, how can businesses drive loyalty beyond price? What’s not being seen in the data?
Poll
Loading …
Traditional supermarkets (which includes hypermarkets, but not Walmart) accounted for about 43% of the food and grocery market in 2025. In monetary terms that equates to $759 billion. Given this scale, the idea that this channel as a whole won’t survive is absurd. The proper question is whether the channel will shrink. It will. And, indeed, it has been doing so for a long time. The reason is consumer defection to alternative channels like club, Walmart, dollar stores, and online. This puts pressure on certain players in traditional grocery – mostly those that have weak and undifferentiated propositions. Others, like Wegmans, Publix, etc., are doing just fine.
I’m curious on the inclusion of hypermarkets, but the exclusion of WalMart, from the “traditional” description (but relieved it isn’t the other way around, lest WM’s inclusion be seen as propping up the category.)
I noted it simply for accuracy/completeness because some traditional supermarkets, like Kroger, have some large hypermarket formats in their portfolio. The same goes for Meijer. In reality, for the US it’s not a huge segment – unlike Europe where the concept is more developed. So the short answer is, no, it doesn’t really prop up the numbers all that much. The bulk of that number is made up of supermarket sales.
Traditional and discount grocers can survive the squeeze, but only if they stop competing on price alone.
Low price gets the first trip. Trust, speed, in-stock reliability, and simplicity are what keep customers coming back. When every household is watching spend, experience friction matters as much as price.
The winners will be operators who stay ruthlessly efficient while upgrading the experience in practical ways: cleaner stores, faster checkout, smarter assortments, better private label quality, and localized merchandising. Shoppers do not need luxury. They need confidence that the trip will be worth it.
From the CX Group perspective, this is where customer experience becomes a growth lever. The discount model has always been about value. The next chapter is proving that value can still feel human, easy, and dependable. That is how discounters survive, and how they take share.
There’s a serious problem in the question — what IS traditional grocery as opposed to specialty? My local Kroger (Fred Meyer) carries an extensive set of goods we used to expect only at speciality grocery.
Grocers are experienced adapting as customer interests adapt around them. I don’t see it as a “either/or” question — but how quickly traditional grocery will adapt to bring in ideas from all these types of competitors.
In the long run, then, there is no question that what we call “traditional” today will continue. Perhaps a more critical question is what new specialties will replace those which disappear as their goods or approaches become part of “traditional” grocery.
Convenience is the number one factor in deciding where people shop, so, yes traditional grocers can survive – assuming, of course, they’re currently most convenient – but the margin for error, if you will, is diminishing. Poorly-run stores in areas where there are a large concentration of stores – i.e. there are lots of “convenient” stores – will particularly find it tough going. As for loyalty, just as “patriotism is the last refuge of soundrels”, “loyalty” is the last refuge of the inefficient.
Hambleton Resources for years had identified the “Big 6” store selection motivators in trade area survey work to help grocers grow marketshare. Convenience was one of them, along with Quality, Customer Service, Variety, Price, Ad Values. And each trade area might prioritize different ones due to income levels etc. Ironically, having your store known for high Convenience was often a mark (primarily as a good parking lot, quick checkout) given to grocers who weren’t good at either quality food or low prices. And so, yes… “convenience” is the danger spot, and operating there is the last spot to exists before you might not make it in the trade area.
I agree almost entirely with Jeff Hall: “Low price gets the first trip. Trust, speed, in-stock reliability, and simplicity are what keep customers coming back….”
Here’s what I like about Trader Joe’s:
- Trust – I don’t feel like I’m getting gouged and have to engage in espionage to protect my wallet.
- Respect my time – I love self-checkout. My Trader Joe’s does not have self-checkout. I don’t care because they seem to add checkers with reckless abandon (thank you).
- Quality and Choice – They don’t have everything but I like and use what they have.
- Helpfulness – I’ve always been able to find someone to help me, fast!
- Valued – I feel valued like everyone there understands that paying customers are not an inconvenience.
It seems like a simple formula for the specialty types like Trader Joe’s and In N Out.
Like Jeff said, at those two places, “value can still feel human.”
Aldi and Trader Joe’s understand that grocery is emotional as much as functional. The merchandising is edited. The marketing is clear. The energy feels intentional. Even the flowers signal care. You walk out feeling like the trip was easy, smart, and somehow better than expected. That is not accidental. That is what happens when merchandising, brand, and experience work together. Traditional grocery has real opportunity when it creates that same kind of confidence, rhythm, and relevance for the customer. Loyalty is built in how the trip feels.
Loyalty is fleeting in the grocery business as shoppers in any given trade area almost never give 100% of their shopping dollar to one store, rather, two to four stores over 30 days. Loyalty is really just a simple moving byproduct of which grocer delivers daily on the focused promises they’ve made to shoppers, assuming its really what they want in that community. Whichever store fulfills this best, earns a primary shopper.
Both specialty/upscale and price/value formats will continue to see growth not only because the middle class has shrunk, but because making a clear promise and delivering on it is easier, cleaner. Middling chain grocers of the past will continue seeing their marketshare erode, because they continue embracing being everything to everyone (variety + selection + quality + low prices + convenience + customer service), often not being good at any one thing.
Traditional and discount grocery stores aren’t going away, but the pressure is real and structural. Competing only on price is no longer enough when consumers are spreading their spend across formats and channels. Discounters need to stay disciplined on efficiency, while traditional grocers must differentiate on experience, assortment, and convenience.
I don’t see this as one format replacing another. Shoppers are increasingly mixing formats based on need — value, convenience, or quality.
The bigger risk isn’t competition between them, but losing relevance in how customers choose to shop.
Yes. Traditional supermarkets, in addition to low margin super markets all have their place in our grocery future. The key to their success is providing the right mix of product selection, price, promotion, and of course store location to appeal to their particular customer. So long as each of these grocers continues to do this they will perform well enough to have a thriving business in their future.
Whether traditional grocers survive tomorrow’s marketplace is largely up to each grocer. Declaring an entire class of trade irrelevant because specialty and discount chains are having a moment is an alarmist generalization.
Retail is always changing and morphing based on consumer preferences, food trends, and health trends. We’ve been studying the consumer black box for 100 years and still have more questions than answers. Retailers who read the signals and adapt surf the change. Those who ignore consumer shifts, or write them off as fads, do not survive. Stagnation in retail is a death sentence.
Wegmans and HEB make that case better than any report can. Wegmans has seen store traffic soften but digital sales have grown to 12 to 18 percent of total volume. HEB is coming off a monster year. Both companies demonstrate why great operators win: laser focus on customer preferences, great experiences, and products that match customer needs at the store and neighborhood level. The category doesn’t make you. The execution does.
Three things are reshaping grocery that the data underweights: grab-and-go is now a key shopping mission, digital commerce is a critical operational component and not a feature, and broad massive assortments are becoming a liability. Consumers appreciate fewer choices of higher quality items, or a much clearer value story on discounted goods.
Traditional grocery has a future. But “traditional” can’t be the operating model.
Shifting consumer expectations and habits directly impact grocers.
Inflation, tariffs, layoffs and uncertainty have led many consumers to spend less, wait for deals and buy only essentials. Return to office mandates will make e-grocery more appealing to time-starved workers. GLP-1 users buy less junk food and alcohol, and more nutrient-dense foods.
More than ever, grocers need to be aware of emerging consumer needs and agile when they shift.
Sounds like staid traditional grocery stores are the staid department stores of their genre. And that they are and will continue to lose market share. No surprise. But Doug Garnett makes a great point. Where is the line drawn between traditional and specialty grocery? Seems to me that traditional grocers can work a lot harder at evolving their competitive positioning. It’s funny how loyalty can work. In my case, I am loyal to my (traditional) grocer’s sourdough bread. Stop&Shop has better sourdough bread than Whole Foods or Trader Joe’s. So that’s where I start. But Whole Foods has a much better selection of coffee. Veggies are a toss up. And then there’s location and convenience. Whole Foods is another 2 minute drive, but let’s call that a toss up. If Whole Foods had a better sourdough bread or if Stop&Shop had a better coffee selection, I’d spent a bigger share of wallet in the store that ‘fixed’ their product mix. It only has to be special to me.
First, the concept of customer loyalty is backwards. Customers can be loyal to their country, church, school, etc. Retailers need to be loyal to their customers. How? By consistently delivering on their promises.
For traditional grocery stores or supermarkets, a unique & defensible promise is to be the community store. Start with vast, often empty parking lots. Use them for the following: a weekly practice by the local high school band, with refreshments after practice; invite local vets to do a clinic once a month; invite local businesses to participate in a community market once per month.
Inside, invite local chefs to hang in the produce & meat sections to discuss their favorite ingredients; invite chiropractors to do 10 minute seated chair massages once a month; guess the weight of a huge pumpkin.
These are a few examples of what can be done for the supermarket to own the “community supermarket” moniker. Be creative, focus on the wants & needs of the community. These are things the big box & online retailers will have difficulty in copying.
More Discussions
As Aldi and Target Push Blind Box Culture in New Retail Categories, Will This Trend Grow?
Blind boxes have been a significant attraction for consumers in the collectibles space for some time…Is Unilever’s ‘An Influencer in Every ZIP Code’ Approach to Modern Retail Marketing a Smart Play?
Is Unilever’s large-scale engagement of influencer marketing a turning point in retail marketing?What Can Amazon Prime Day Results Tell Us About the Current State of Shoppers?
What can the third-party results issued around Amazon Prime Day tell us about the current state…
Traditional supermarkets (which includes hypermarkets, but not Walmart) accounted for about 43% of the food and grocery market in 2025. In monetary terms that equates to $759 billion. Given this scale, the idea that this channel as a whole won’t survive is absurd. The proper question is whether the channel will shrink. It will. And, indeed, it has been doing so for a long time. The reason is consumer defection to alternative channels like club, Walmart, dollar stores, and online. This puts pressure on certain players in traditional grocery – mostly those that have weak and undifferentiated propositions. Others, like Wegmans, Publix, etc., are doing just fine.
I’m curious on the inclusion of hypermarkets, but the exclusion of WalMart, from the “traditional” description (but relieved it isn’t the other way around, lest WM’s inclusion be seen as propping up the category.)
I noted it simply for accuracy/completeness because some traditional supermarkets, like Kroger, have some large hypermarket formats in their portfolio. The same goes for Meijer. In reality, for the US it’s not a huge segment – unlike Europe where the concept is more developed. So the short answer is, no, it doesn’t really prop up the numbers all that much. The bulk of that number is made up of supermarket sales.
Traditional and discount grocers can survive the squeeze, but only if they stop competing on price alone.
Low price gets the first trip. Trust, speed, in-stock reliability, and simplicity are what keep customers coming back. When every household is watching spend, experience friction matters as much as price.
The winners will be operators who stay ruthlessly efficient while upgrading the experience in practical ways: cleaner stores, faster checkout, smarter assortments, better private label quality, and localized merchandising. Shoppers do not need luxury. They need confidence that the trip will be worth it.
From the CX Group perspective, this is where customer experience becomes a growth lever. The discount model has always been about value. The next chapter is proving that value can still feel human, easy, and dependable. That is how discounters survive, and how they take share.
There’s a serious problem in the question — what IS traditional grocery as opposed to specialty? My local Kroger (Fred Meyer) carries an extensive set of goods we used to expect only at speciality grocery.
Grocers are experienced adapting as customer interests adapt around them. I don’t see it as a “either/or” question — but how quickly traditional grocery will adapt to bring in ideas from all these types of competitors.
In the long run, then, there is no question that what we call “traditional” today will continue. Perhaps a more critical question is what new specialties will replace those which disappear as their goods or approaches become part of “traditional” grocery.
Convenience is the number one factor in deciding where people shop, so, yes traditional grocers can survive – assuming, of course, they’re currently most convenient – but the margin for error, if you will, is diminishing. Poorly-run stores in areas where there are a large concentration of stores – i.e. there are lots of “convenient” stores – will particularly find it tough going. As for loyalty, just as “patriotism is the last refuge of soundrels”, “loyalty” is the last refuge of the inefficient.
Hambleton Resources for years had identified the “Big 6” store selection motivators in trade area survey work to help grocers grow marketshare. Convenience was one of them, along with Quality, Customer Service, Variety, Price, Ad Values. And each trade area might prioritize different ones due to income levels etc. Ironically, having your store known for high Convenience was often a mark (primarily as a good parking lot, quick checkout) given to grocers who weren’t good at either quality food or low prices. And so, yes… “convenience” is the danger spot, and operating there is the last spot to exists before you might not make it in the trade area.
I agree almost entirely with Jeff Hall: “Low price gets the first trip. Trust, speed, in-stock reliability, and simplicity are what keep customers coming back….”
Here’s what I like about Trader Joe’s:
It seems like a simple formula for the specialty types like Trader Joe’s and In N Out.
Like Jeff said, at those two places, “value can still feel human.”
Aldi and Trader Joe’s understand that grocery is emotional as much as functional. The merchandising is edited. The marketing is clear. The energy feels intentional. Even the flowers signal care. You walk out feeling like the trip was easy, smart, and somehow better than expected. That is not accidental. That is what happens when merchandising, brand, and experience work together. Traditional grocery has real opportunity when it creates that same kind of confidence, rhythm, and relevance for the customer. Loyalty is built in how the trip feels.
Loyalty is fleeting in the grocery business as shoppers in any given trade area almost never give 100% of their shopping dollar to one store, rather, two to four stores over 30 days. Loyalty is really just a simple moving byproduct of which grocer delivers daily on the focused promises they’ve made to shoppers, assuming its really what they want in that community. Whichever store fulfills this best, earns a primary shopper.
Both specialty/upscale and price/value formats will continue to see growth not only because the middle class has shrunk, but because making a clear promise and delivering on it is easier, cleaner. Middling chain grocers of the past will continue seeing their marketshare erode, because they continue embracing being everything to everyone (variety + selection + quality + low prices + convenience + customer service), often not being good at any one thing.
Traditional and discount grocery stores aren’t going away, but the pressure is real and structural. Competing only on price is no longer enough when consumers are spreading their spend across formats and channels. Discounters need to stay disciplined on efficiency, while traditional grocers must differentiate on experience, assortment, and convenience.
I don’t see this as one format replacing another. Shoppers are increasingly mixing formats based on need — value, convenience, or quality.
The bigger risk isn’t competition between them, but losing relevance in how customers choose to shop.
Yes. Traditional supermarkets, in addition to low margin super markets all have their place in our grocery future. The key to their success is providing the right mix of product selection, price, promotion, and of course store location to appeal to their particular customer. So long as each of these grocers continues to do this they will perform well enough to have a thriving business in their future.
Whether traditional grocers survive tomorrow’s marketplace is largely up to each grocer. Declaring an entire class of trade irrelevant because specialty and discount chains are having a moment is an alarmist generalization.
Retail is always changing and morphing based on consumer preferences, food trends, and health trends. We’ve been studying the consumer black box for 100 years and still have more questions than answers. Retailers who read the signals and adapt surf the change. Those who ignore consumer shifts, or write them off as fads, do not survive. Stagnation in retail is a death sentence.
Wegmans and HEB make that case better than any report can. Wegmans has seen store traffic soften but digital sales have grown to 12 to 18 percent of total volume. HEB is coming off a monster year. Both companies demonstrate why great operators win: laser focus on customer preferences, great experiences, and products that match customer needs at the store and neighborhood level. The category doesn’t make you. The execution does.
Three things are reshaping grocery that the data underweights: grab-and-go is now a key shopping mission, digital commerce is a critical operational component and not a feature, and broad massive assortments are becoming a liability. Consumers appreciate fewer choices of higher quality items, or a much clearer value story on discounted goods.
Traditional grocery has a future. But “traditional” can’t be the operating model.
Shifting consumer expectations and habits directly impact grocers.
Inflation, tariffs, layoffs and uncertainty have led many consumers to spend less, wait for deals and buy only essentials. Return to office mandates will make e-grocery more appealing to time-starved workers. GLP-1 users buy less junk food and alcohol, and more nutrient-dense foods.
More than ever, grocers need to be aware of emerging consumer needs and agile when they shift.
Sounds like staid traditional grocery stores are the staid department stores of their genre. And that they are and will continue to lose market share. No surprise. But Doug Garnett makes a great point. Where is the line drawn between traditional and specialty grocery? Seems to me that traditional grocers can work a lot harder at evolving their competitive positioning. It’s funny how loyalty can work. In my case, I am loyal to my (traditional) grocer’s sourdough bread. Stop&Shop has better sourdough bread than Whole Foods or Trader Joe’s. So that’s where I start. But Whole Foods has a much better selection of coffee. Veggies are a toss up. And then there’s location and convenience. Whole Foods is another 2 minute drive, but let’s call that a toss up. If Whole Foods had a better sourdough bread or if Stop&Shop had a better coffee selection, I’d spent a bigger share of wallet in the store that ‘fixed’ their product mix. It only has to be special to me.
First, the concept of customer loyalty is backwards. Customers can be loyal to their country, church, school, etc. Retailers need to be loyal to their customers. How? By consistently delivering on their promises.
For traditional grocery stores or supermarkets, a unique & defensible promise is to be the community store. Start with vast, often empty parking lots. Use them for the following: a weekly practice by the local high school band, with refreshments after practice; invite local vets to do a clinic once a month; invite local businesses to participate in a community market once per month.
Inside, invite local chefs to hang in the produce & meat sections to discuss their favorite ingredients; invite chiropractors to do 10 minute seated chair massages once a month; guess the weight of a huge pumpkin.
These are a few examples of what can be done for the supermarket to own the “community supermarket” moniker. Be creative, focus on the wants & needs of the community. These are things the big box & online retailers will have difficulty in copying.