Regional Grocery Update: Consumers Seeking Out Lower Prices

It was hard to read anything related to retail this week without seeing something about inflation, including several stories about the consumer price index (CPI) jumping 9.1% in June, representing the highest level in almost 40 years. We wanted to take a look at food at home CPI (a proxy for grocery store prices) and see if we could identify any changes at a regional or local level that CRE executives with grocery store exposure should be monitoring.

• Food at home inflation has impacted grocery store visits across most markets. We reviewed food at home CPI data for 10 major markets (Atlanta, Chicago, Houston, Los Angeles, New York City, Phoenix, Philadelphia, San Francisco, Seattle, and Washington DC) from January 2022 through June 2022 and compared these figures to YoY grocery store visitation trends over the same period. While food at home inflation has clearly influenced grocery store visitation trends, the magnitude of food at home inflation doesn't appear to be a strong indication of grocery store visits. In other words, just because food at home inflation in Atlanta is running slightly below the national average in June (11.0% versus the national average of 12.2%) doesn't mean that it will see higher grocery visitation trends relative to the rest of the country.    

• Consumers trading down to value-oriented grocers nationwide. While June YoY grocery store visitation trends declined in each of the markets we looked at, we also analyzed what grocery chains were doing well in these regions. Not surprising, we've seen visitation trends at value-oriented grocery stores like Aldi, Lidl, Walmart Neighborhood Market, Save-A-Lot, and Grocery Outlet outperform category averages in each of these markets. We discussed the shift to value-oriented grocers in May, but it's clear that this trend has continued into June and July with many consumers trading down.