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
Nicholas Morine
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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?
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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.)
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.”
There is absolutely still a place for the traditional grocery store—but only if it evolves. The data is clear that consumer expectations are higher than ever, and competition is intensifying from every angle: mass merchants, discounters, specialty grocers, and digital platforms. Traditional grocers have already lost share as shoppers migrate toward formats that deliver better value, more convenience, or more differentiated assortments.
That said, grocery remains an essential, high-frequency category. The question isn’t whether traditional supermarkets survive—it’s how they stay relevant.
The biggest shift is that price alone is no longer enough. While affordability remains critical, it’s no longer a differentiator—especially when players like Walmart, Aldi, and club stores have reset price expectations. In fact, many traditional grocers have struggled because they’ve leaned too heavily on promotions instead of building a compelling everyday value proposition.
Where grocers can win—and where the opportunity is often underappreciated—is in the combination of:
- Fresh quality and perishables leadership (still the #1 driver of perception)
- Convenience across channels (delivery, pickup, frictionless in-store)
- Unique and differentiated assortment (private brands, local, specialty, health-forward)
- Service and store experience (cleanliness, speed, knowledgeable staff)
- Omnichannel and digital integration (loyalty, personalization, seamless journeys)
In many ways, what’s “not being seen in the data” is that grocery is becoming a portfolio decision for consumers. Shoppers are no longer loyal to one store—they are splitting trips across multiple formats based on mission: value at one store, fresh at another, convenience online. This means loyalty isn’t won with a single lever—it’s earned across multiple touchpoints.
That’s also where omnichannel becomes critical. The rise of e-commerce and hybrid shopping has permanently changed expectations. Consumers now expect seamless integration between digital and physical experiences, and grocers that fail to deliver this risk becoming irrelevant—even if their stores are strong.
So yes, there is absolutely a future for traditional grocery—but it belongs to those who recognize that:
- Price gets you in the game
- Quality, convenience, and differentiation keep you there
Ultimately, the winning grocers will be those who stop trying to compete on price alone and instead build a holistic value proposition—one that reflects how consumers actually shop today, not how they shopped ten years ago.
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.”
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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.)
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.”
There is absolutely still a place for the traditional grocery store—but only if it evolves. The data is clear that consumer expectations are higher than ever, and competition is intensifying from every angle: mass merchants, discounters, specialty grocers, and digital platforms. Traditional grocers have already lost share as shoppers migrate toward formats that deliver better value, more convenience, or more differentiated assortments.
That said, grocery remains an essential, high-frequency category. The question isn’t whether traditional supermarkets survive—it’s how they stay relevant.
The biggest shift is that price alone is no longer enough. While affordability remains critical, it’s no longer a differentiator—especially when players like Walmart, Aldi, and club stores have reset price expectations. In fact, many traditional grocers have struggled because they’ve leaned too heavily on promotions instead of building a compelling everyday value proposition.
Where grocers can win—and where the opportunity is often underappreciated—is in the combination of:
In many ways, what’s “not being seen in the data” is that grocery is becoming a portfolio decision for consumers. Shoppers are no longer loyal to one store—they are splitting trips across multiple formats based on mission: value at one store, fresh at another, convenience online. This means loyalty isn’t won with a single lever—it’s earned across multiple touchpoints.
That’s also where omnichannel becomes critical. The rise of e-commerce and hybrid shopping has permanently changed expectations. Consumers now expect seamless integration between digital and physical experiences, and grocers that fail to deliver this risk becoming irrelevant—even if their stores are strong.
So yes, there is absolutely a future for traditional grocery—but it belongs to those who recognize that:
Ultimately, the winning grocers will be those who stop trying to compete on price alone and instead build a holistic value proposition—one that reflects how consumers actually shop today, not how they shopped ten years ago.
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.”