Grocery Shoppers Are Trading Down to Lower-Priced Retailers, Report Finds

Why It Matters

The shift threatens incumbent supermarkets’ market share and accelerates the value‑gap battle, prompting retailers to rethink pricing, private‑label strategies, and store experience.

Key Takeaways

• 42% plan to switch to discount grocers, up from 31% last fall
• 68% view low‑price stores as equally clean as traditional supermarkets
• 63% say customer service at discount grocers matches conventional stores
• Higher‑income shoppers will increase food spend by 22%, lower‑income by 3%

Pulse Analysis

Inflation‑driven price pressure has nudged U.S. consumers toward a more deliberate shopping approach, and the latest Alvarez & Marsal survey of 2,100 shoppers confirms that trend. By spring, 42% of respondents say they will trade down to lower‑priced retailers, a jump of 11 points from the previous fall. While many intend to keep familiar brands, a sizable share will also switch to cheaper alternatives, underscoring a broader appetite for value across income brackets. The data highlights a pivot from brand‑level discounting to retailer‑level migration, reshaping the grocery landscape.

Traditional supermarkets are now facing a credibility challenge as discount grocers shed their “budget‑only” image. Sixty‑eight percent of consumers view low‑price chains as just as clean, and 63% rate their customer service on par with legacy stores. This perception shift, coupled with robust private‑label growth—two‑thirds of shoppers say store brands meet dietary and quality expectations—means discount players like Aldi, Lidl, and Walmart’s Neighborhood Market are no longer niche options but mainstream competitors. The erosion of the “value gap” forces incumbents to reassess shelf mix, pricing tactics, and promotional cadence.

For legacy grocers, the strategic imperative is clear: double down on price‑competitive private labels, enhance in‑store experience, and leverage data to target higher‑income shoppers who plan a 22% increase in food spend. Tailored loyalty programs, localized pricing, and streamlined checkout can help retain price‑sensitive customers while attracting those willing to spend more on premium assortments. As the value‑seeking wave continues, retailers that blend affordability with quality and service will be best positioned to capture both ends of the spending spectrum.