Food inflation was a major retail story in 2023, with many consumers looking for ways to reign in their grocery spending in the face of higher prices. But within every challenge lies an opportunity – and even as overall grocery foot traffic dipped slightly, some value-priced supermarkets saw their visits soar.
We dove into Grocery Outlet Bargain Market, Market Basket, and Aldi – all known for their low prices – to see what these companies have in common and what sets them apart.
Visits to Aldi, Grocery Outlet Bargain Market & Market Baskets continue to Rise
With grocery inflation making headlines again, many consumers are still looking for ways to stock their pantry for less. And three grocers famous for their low prices – national chain Aldi, and regional chains Grocery Outlet Bargain Market and Market Basket, based on the West Coast and in New England, respectively – are reaping the benefits. Monthly visits to the three chains were consistently up on a year-over-year (YoY) basis over the past two years – and with consumers expected to continue operating with constrained budgets in 2024, next year is likely to be just as strong.
What’s Driving the Growth?
Aldi, Grocery Outlet Bargain Market, and Market Basket all opened new stores recently, which explains some of their strong visit numbers over the past two years. But location analytics reveals additional drivers to these chains’ success.
Looking at data from the past 12 months (December 2022 to November 2023) reveals that average visits per venue increased YoY across the three chains analyzed. So even as the companies were opening new stores, visits to existing stores continued trending up – meaning that the new openings did not cannibalize business from legacy locations. And the number of unique visitors to all three chains rose as well, which indicates that all three chains expanded their shopper base over the past year – likely a result of consumers trading-down and seeking out more affordable retailers for their grocery needs.
Who Visits Value-Priced Grocery Chains?
Analyzing the largest market for each chain – Illinois for Aldi, California for Grocery Outlet Bargain Market, and Massachusetts for Market Basket – reveals similarities and differences between the audience bases.
In all three markets, the leading affordable grocery brand seems to attract visitors from trade areas with a median household income (HHI) just slightly lower than the state’s median HHI. So while the chains do seem to attract a more budget-conscious consumer than traditional grocery chains, the difference in spending power between the affordable grocers’ audience and typical grocery shoppers is not very significant.
Aldi in Illinois and Market Basket in Massachusetts also seem to attract a relatively large share of households with children, but Grocery Outlet Bargain Market’s trade area in California is slightly under-indexed for that segment relative to the Golden State average. This data indicates that affordable groceries appeal both to consumers shopping in smaller volumes and to parents looking to feed their families on a budget.
Where Else do Grocery Bargain Hunters Shop?
Diving into the cross-shopping data for the three chains indicates that many visitors to these affordable grocers also shop at their local traditional grocery chain. In all three markets, a large share of consumers who shopped at the value-price grocer in the past three months (September to November 2023) also visited the traditional grocery visit share leader in the state. Aldi visitors also shopped at Jewel-Osco, Grocery Outlet Bargain Market patrons visited Safeway, and Market Basket shoppers headed to Stop & Shop.
A much smaller share of visitors also visited the runner-up cross-shopping leader. It seems, then, that grocery bargain hunters are also willing to visit traditional chains to complement their grocery shopping – but they won’t necessarily visit a large number of chains to get the best prices on every item.
The grocery space in 2023 was marked by increasingly budget-conscious consumers, and chains that focused on affordability saw their popularity surge. What does 2024 have in store for the industry?
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