Dive Brief:
- Sales at U.S. grocery stores will increase 3.1% this year to $1.6 trillion — a notable increase from the 1.1% sales growth the sector recorded last year, according to a new forecast from Coresight Research.
- The firm said food inflation, which it expects will average 2.1% in 2025, will drive sales. However, unit sales will continue to be a challenge for retailers, growing just 1% as consumers closely guard their spending.
- Store openings hit a five-year high as chains like Aldi, Sprouts Farmers Market and Trader Joe’s pushed ahead with their ambitious expansion plans, according to Coresight.
Dive Insight:
Although Coresight Research expects annual sales growth will rebound this year for U.S. grocers, it believes that growth will level off in the years ahead. In 2029, the firm estimates yearly growth will still be at 3.1%.
This forecast reflects a few countervailing trends shaping the industry right now. While discount and specialty grocers are rapidly expanding their store count, conventional grocers have slowed their unit growth considerably as they struggle to connect with price-conscious shoppers.
“Brick and mortar growth is occurring at the extremes, with value and niche or specialty grocers growing their footprints while conventional grocers struggle to remain relevant,” the report stated.
The same narrative holds true for store traffic, with specialty and discount chains seeing notable increases while supermarket chains recorded declines or modest growth, according to the report. Costco’s store traffic grew 7.1% last year while Albertsons’ traffic declined 2.6%, Coresight noted, citing data from Placer.ai.
And while inflation should put some wind in conventional grocers’ sales, those retailers continue to struggle with boosting baskets among shoppers that are carefully watching their spending.
Conventional grocers that don’t modernize their stores are at risk of becoming "obsolete," Coresight noted. To that end, chains like Stop & Shop, Kroger and Publix have invested millions in store updates and new formats.
Competitors like Walmart, Amazon and Aldi, however, are also investing in store improvements and new models. Coresight noted small-format stores from Whole Foods Market and Sprouts Farmers Market are helping unlock opportunities in population-dense markets, while Amazon’s omnichannel investments in Amazon Fresh, including piloting online shopping across its retail properties, could continue to strengthen that brand.
