As Inflation Moderates, Discount Grocers Continue Expanding
Inflation is still a concern for many Americans, but the recently released Grocery Report 2024 from JLL revealed that prices for food at home grew at a lower rate over the last four months of 2023 then prices of all other items.
According to the report, interest rate hikes in 2023 led to inflation cooling and by August overall inflation (3.7%) was outpacing food at home inflation (3%). That gap through the fourth quarter of the previous year widened and food at home inflation fell below the Feds’ 2% inflation target, rising at an annual rate of 1.3%.
The slower pace of inflation for food at home was a dramatic shift from August of 2022, when food at home inflation hit a high of 13.5%.
The JLL report noted that higher prices in recent years led many consumers to turn to lower priced private label products, and retailers were at the ready and spent 2023 expanding their assortments of store branded products. For example, Kroger entered 2023 with its new Smart Way budget brand on store shelves, while Albertsons consolidated its Signature Farms, Signature Care, and Signature Cafe products under the Signature Select brand.
Perhaps coincidentally, as consumers sought money saving options for their weekly grocery needs, discount grocer Aldi and its broad selection of private label products led the store opening charge in 2023. The company added nearly 2.5 million square feet of store space this past year as it opened 109 stores across the U.S. Aldi’s store count continues to rise organically through the first two months of 2024, and will expand further once its acquisition of Winn-Dixie and Harveys Supermarkets from Southeastern Grocers is complete.
In terms of store count, Publix (38), Sprouts Farmers Market (30), and Grocery Outlet (29), rounded out the Top-4 for expansion in 2023. Each offers a broad assortment of private label products with the latter two recently discussing efforts to further expand their own brand assortments in the coming months.
