Report: Grocers will push discounts for the remainder of 2024

Grocery retailers will continue to ramp up their promotional activities as 2024 comes to a close, and despite moderating inflation, shoppers will choose low price over quality and convenience, according to a new report from retail research group Coresight.

Online food and beverage retail sales growth have softened further over the past year, the report also notes, decelerating from 14.7% growth in 2023 to 10.2% growth in 2024.

“We expect that grocery ecommerce sales will remain under pressure through the rest of 2024 as the uncertain macroeconomic environment continues to push shoppers to prioritize costs over convenience,” the report said. “In 2025 and beyond, as the sector matures, we expect online growth to taper off further.”

The U.S. grocery retail market grew 1.1% in 2024, according to the report, easing from the 3.9% growth recorded in 2023. The growth will be supported by modest grocery inflation. However, the report expects a moderate real-term (volume) retail sales decline of 0.1% in 2024, and the market will likely continue to see positive growth in 2025 and beyond, recording low-single-digit percentage annual growth rates similar to those seen prior to the COVID-19 pandemic.

RR Donnelley, an integrated communications company headquartered in Chicago,  recently released its “CPG+ Grocery Consumer Report” for Q4 2024 which said 86% of shoppers are frustrated about grocery shopping overall, a feeling driven by the rising cost of food and beverages.

Non-traditional grocery retailers will continue to eat into the market share, the report says. From 2017 through 2023, food retailers saw their share of total grocery market sales slip from 69.7% to 66.0% while major mass merchandisers increased their share from 18.4% to 19.4%, according to the report.

The majority of brick-and-mortar shoppers rely on Walmart for their grocery needs, according to a proprietary Coresight Research survey conducted on April 8. Just under 73% of in-store grocery shoppers surveyed said they had purchased groceries from Walmart in the 12 months prior to the survey. Walmart also ranked as the most popular shopping destination among online grocery shoppers. Some 59% of online grocery shoppers surveyed said they had bought from Walmart in the 12 months ended April 8 versus 41% for Amazon.

Over the long term, grocery industry concentration will steadily increase, the report said, as major players like Kroger, Costco, and Walmart reap the benefits of greater scale, invest in online grocery offerings, compete aggressively on price and gain share at the expense of smaller rival grocery chains.

At the same time, discount grocers like Aldi will drive sector-wide margin pressure while rapidly expanding their brick-and-mortar fleets.