Grocers Enter New Affordability Era

Grocers have entered a ‘new affordability era,’ according to a report by Acosta, a consulting firm. This era is characterized by consumers’ value-focused shopping habits, which show no signs of changing anytime soon.

Historically, consumers’ grocery spending habits have tracked with economic indicators like falling inflation and rising wages. However, this is no longer the case in the current spending environment.

Changing Consumer Behavior

The price of a large basket of groceries measured by Acosta increased nearly 27% between 2020 and 2026, to $366. During the same period, consumers’ median hourly earnings increased 29%, to nearly $31, and food inflation moderated after rapid acceleration between 2021 and 2023.

Despite these changes, consumers are still using promotions, closely scrutinizing products, and showing low brand loyalty — similar to their behavior in 2023. Separate research has shown that unit sales have slowed significantly over the past year.

Related: Federal Review Intensifies Over Retail Pricing Practices

These results indicate that traditional economic data and models may struggle to predict consumer behavior in this new affordability era. Acosta noted that shoppers are no longer responding to rapidly changing affordability conditions. Instead, they are beginning to settle into routines shaped by the lessons learned during the previous several years.

Cost Pressures and Consumer Response

Acosta’s report acknowledged that consumers’ spending behavior isn’t just a continuation of years-long habits. It’s also a response to cost pressures in other areas of their lives, like healthcare and housing.

In this environment, grocers would do well to address consumers’ affordability concerns and help them feel confident in their purchases. The report noted that affordability will always matter, and consumers will continue responding to changes in prices, wages, and broader economic conditions.

Grocers seem to be hearing this message, rolling out freshness guarantees, health initiatives, and new meal offerings in addition to savings programs. Some retailers, like Walmart and Kroger, are addressing both affordability and value by updating their loyalty programs and private label brands.

Related: Grocers face consumer pushback over dynamic pricing

One key aspect of this new affordability era is the importance of helping consumers feel confident about their spending decisions, regardless of the economic environment.

Adapting to the New Affordability Era

As consumers continue to prioritize value and affordability, grocers must adapt their strategies to meet these changing needs.

By understanding the lessons learned by consumers during the previous several years, grocers can develop effective strategies to address their affordability concerns and build long-term loyalty. The report noted that the more enduring opportunity may lie in helping consumers feel confident about their spending decisions, regardless of the economic environment.

Grocers are taking steps to address these concerns.