A new report from Consumer Edge suggests the competitive gap in grocery is widening, with specialty and discount retailers outperforming traditional supermarket chains.
The firm’s U.S. Grocery Outlook 2026 found overall grocery spending declined approximately 3% year over year for the 12 months ending Feb. 28, 2026. Despite that contraction, certain retailers, particularly in the specialty segment — are gaining share and strengthening customer loyalty.
Trader Joe’s emerged as the strongest performer in the category, delivering more than 3% year-over-year growth, outperforming the broader grocery sector by six percentage points. The chain is gaining traction across demographics, including double-digit growth among Gen Z shoppers.
It also leads on retention, with 35% of customers still shopping there four quarters after their first purchase — ahead of rivals like Aldi and Wegmans.
Cross-shopping data reinforces its position. Customers who shop at competitors still allocate a meaningful share of their grocery spend to Trader Joe’s, including 48% of specialty spend from Sprouts Farmers Market shoppers and 47% from Wegmans customers.
The report highlights that specialty grocers, including Trader Joe’s, Whole Foods Market and Wegmans, are attracting shoppers across all income brackets.
Growth is being driven not just by affluent consumers but also by low- and middle-income households, signalling wide-ranging appeal.
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In contrast, traditional supermarket operators such as Publix and Safeway are seeing declines across every income group, with the steepest drop-off among lower-income shoppers.
While discount grocers saw strong share gains between early 2022 and mid-2024, that momentum has slowed. Retailers including Aldi, Lidl, Food 4 Less and Grocery Outlet have seen their market share plateau since mid-2025, suggesting the peak of trade-down behaviour may have passed.
“What’s happening in grocery isn’t just about price,” said Michael Gunther, senior VP of research and market intelligence at Consumer Edge.
“Shoppers are making more deliberate choices about where they spend their money, and they’re gravitating toward retailers that give them a clear reason to be loyal — whether that’s unbeatable value at a hard discounter or a curated, private-label experience at a specialty grocer.”
He added that traditional supermarkets face ongoing structural pressure. “The grocery retailers best positioned for 2026 are those with a distinct identity and a customer base that keeps coming back.”
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