What's happened
Grocery volumes have declined while prices stay elevated, signaling that higher costs are shifting consumer behavior. Retailers and manufacturers are using promotions and value-focused tactics to regain unit growth, with Bain’s data showing volume declines despite inflation aiding sales in the sector.
What's behind the headline?
Perspective
- The narrative shifts from pure price-driven sales to volume-driven growth.
- The data point to a market where inflation has bolstered sales dollars but not volumes, pressuring retailers to pivot towards volume growth.
Drivers
- Sticker shock and weaker consumer budgets are dampening unit sales even as prices stay high.
- GLP-1 weight-loss drugs and a shift toward healthier eating are complicating demand patterns for mainstream brands.
Outlook
- Grocers will increasingly rely on promotions, loyalty, and private labels to rebuild unit growth. The edge goes to retailers pricing sharply on in-demand items.
How we got here
Analysts point to sticker shock, higher fuel costs, and tighter SNAP benefits as drivers of softer demand. Bain & Company, using NielsenIQ data, shows volume declines across multiple months, while prices remain elevated from 2019 levels, shaping retailer strategies around promotions and value.
Our analysis
- CNBC reports on Albertsons, Domino’s, and Bain & Company analyses highlighting volume declines and pricing dynamics. - Axios coverage underscores a broader trend of volume compression in the grocery sector and the response through promotions and value strategies. - CNBC exclusive data from Bain & Company using NielsenIQ grocery data illuminates the decline in grocery units despite price inflation.
Go deeper
- How long can retailers sustain volume growth through promotions?
- Will lower-income households continue to reduce overall grocery purchases as SNAP benefits change?
- What items are driving the most price-driven shifts in consumer behavior?
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