Inflation Deflates Grocery Visits, But 3 Chains Are Ascending

The U.S. grocery store sector, which enjoyed strong foot traffic during the worst of the coronavirus pandemic, is seeing that trend go in reverse, according to a new report by Placer.ai. But discount grocers aren't slowing their growth.

Inflation is a primary culprit discouraging shoppers from making as many visits to grocery stores as before, though grocers are also beset by labor shortages and supply chain issues, according to Placer.ai, which tracks foot traffic at retailers nationwide.

In March, overall grocery store visits were roughly back down to March 2019 levels and only slightly higher than March 2021, according to Placer.ai. That is in contrast to 2020 and 2021, when expanding foot traffic was the order of the day as people increasingly prepared their own food. 

The industry capitalized on its pandemic success by expanding, with about a 200% increase in new grocery store leases in 2021 as compared to the total in 2019, according to the report.

"In areas where the local inflation was below the national inflation rate, superstore visits increased while grocery visits decreased," the report says.

Superstores include the likes of Walmart and Costco.

On the other hand, when the local inflation rate was above the national rate, superstore visits dropped while grocery store visits rose, so the picture wasn't entirely bleak for grocery stores. 

That was especially true for discount grocers, as rising costs are driving shoppers to seek lower prices. The report notes that Aldi, Lidl and Grocery Outlet, which are all discount chains, are "expanding aggressively."

Rising gas prices are also having an impact, Placer.ai reports. The supermarket chain Albertsons reported that customers are returning to mission-driven shopping habits of making fewer grocery trips (though buying somewhat more each time), likely in an effort to cut down on driving.

"Should current trends continue, the rise in retail gas prices may well continue to weigh on grocery traffic — particularly on retailers that have greater exposure to lower-income consumers," the report says.