Study: Specialty and discount grocers outperforming traditional competitors
Traditional supermarkets are losing ground as specialty and discount grocers continue to outperform the category overall.
That’s according to Consumer Edge’s new U.S. Grocery Outlook 2026 report, which found that while overall grocery spending declined approximately 3% year over year (on a 12-month basis ended Feb. 28, 2026), grocers such as Trader Joe’s are continuing to resonate with shoppers.
Trader Joe's stood out as the category's top performer, growing more than 3% year over year (outperforming the grocery sector by six points) while gaining traction across income levels and age groups, including double-digit year over year growth among Gen Z shoppers. Trader Joe’s also continues to outperform peers on customer loyalty, with a 35% retention rate four quarters after first purchase — higher than both Aldi and Wegmans.
Many shoppers who buy groceries at competitors still spend a significant portion of their grocery budget at Trader Joe's, according to Consumer Edge. Sprouts Farmers Market shoppers allocate 48% of their specialty grocery spend to Trader Joe's, while Wegmans shoppers allocate 47%.
The report found that specialty grocers are winning over shoppers across income levels. The subsector, including retailers such as Trader Joe's, Whole Foods and Wegmans, are seeing growth from low-, middle- and high-income households, signaling broad consumer appeal across income groups. This comes as traditional supermarkets, including names like Publix and Safeway, are seeing pullbacks from every income group, with the sharpest declines among lower-income shoppers.
Consumer Edge found that discount grocer share has leveled off after several years of gains. Retailers such as Aldi, Lidl, Food 4 Less and Grocery Outlet gained share of the overall grocery market from early 2022 through mid-2024 as shoppers traded down. However, that growth has flattened since mid-2025.
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"What's happening in grocery isn't just about price," said Michael Gunther, senior VP of research & 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."
"Traditional supermarkets are caught in the middle, and the data suggests that pressure isn't going away," Gunther added. "The grocery retailers best positioned for 2026 are those with a distinct identity and a customer base that keeps coming back."
