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?
Key points
- The data show a persistent gap between rising prices and stagnant or falling volumes, suggesting that higher costs are eroding overall demand.
- Retailers are pivoting toward value, promotions, and private labels to stimulate unit sales, signaling a demand shift rather than a collapse in consumer spending.
- The impact is uneven across players; some manufacturers report flat or declining volumes even as profits from price increases linger.
What this implies
- Expect more price-focused promotions and aggressive discounting in the coming quarters as retailers chase volume.
- The profitability model for many food companies may hinge on regaining unit growth rather than relying on price alone.
- Consumers are likely to continue seeking value and coupons, especially in lower-income segments affected by SNAP changes and higher fuel costs.
How we got here
The stories center on a broader shift in the grocery sector: prices have risen markedly since 2019, but inflation has cooled recently. Consumers are trimming spending and trading down to cheaper brands. Major players like PepsiCo and Walmart are responding with price cuts and promotions to drive unit growth amid enduring cost pressures.
Our analysis
Axios reports on Bain & Company data showing year-over-year declines in grocery units; CNBC covers PepsiCo’s North American volume stability amid price promotions; CNBC’s broader retail sentiment highlights store-level promotions from Walmart and Kroger aimed at value. The synthesis underscores a sector-wide push to restore unit growth through price discipline and promotions.
Go deeper
- Will higher promotions stick once inflation cools further?
- Which brands are best positioned to regain unit growth?
- How long can retailers sustain aggressive price cuts without harming margins?
More on these topics
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Ramon Laguarta - Chief Executive Officer of PepsiCo
Ramon Laguarta is the chairman and chief executive officer of PepsiCo. He became CEO on October 3, 2018 after his predecessor Indra Nooyi stepped down.
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Kroger - Retail company
The Kroger Company, or simply Kroger, is an American retail company founded by Bernard Kroger in 1883 in Cincinnati, OH. It is the United States' largest supermarket by revenue, and the second-largest general retailer.
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CNBC - Television channel
CNBC is an American pay television business news channel that is owned by NBCUniversal Worldwide News Group, a division of NBCUniversal, with both being ultimately owned by Comcast.
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PepsiCo - Drink
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.