The Grocerant
Guru® on why Walmart, Kroger and Publix
are discovering that the middle of grocery retail is becoming the most
dangerous place to be.
Walmart
has a customer problem hiding inside what otherwise looks like a very large
success story.
It
is not that Walmart is losing shoppers. It is that the shoppers Walmart needs
most are increasingly deciding that they can get a better deal, a better
experience, better products—or all three—somewhere else.
That
is what happens when you get stuck in the middle.
New
Numerator data makes the point dramatically. Gen Z shoppers added 77 million
trips and $3.4 billion in spending at Walmart over the past year, including
nearly $1.2 billion more in beverages, snacks, candy and frozen foods.
Higher-income households added another 115 million trips and $8.9 billion in
spending, much of it online.
But
here is the problem: Walmart's historic customer base is moving in the opposite
direction.
Boomers
made 160 million fewer Walmart trips for CPG purchases, taking $6.2 billion in
spending with them. Walmart recovered only $3.5 billion of that through Boomer
online shopping. Amazon, meanwhile, captured another $5 billion in Boomer CPG
spending.
Lower-income
households moved $7.8 billion of spending away from Walmart stores, while
Walmart recovered $7.3 billion online.
The
numbers tell a much more interesting story than simply saying Walmart is
winning Gen Z.
Walmart
is replacing customers rather than simply growing customers.
And
replacement is not the same thing as loyalty.
The Middle Is Getting Squeezed
For
decades, Walmart owned an extraordinarily powerful position: good enough
products, very broad assortment, enormous scale and low prices.
But
grocery retail has changed.
Consumers
now have more choices, more information, more digital tools and more reasons to
shop multiple stores.
FMI's
2026 U.S. Grocery Shopper Trends research found that consumers visit more than
five grocery banners per month on average.
That
is the new competitive reality.
Consumers
don't necessarily choose one grocery store anymore.
They
choose the best retailer for the mission.
ALDI
can be the value mission.
Costco
can be the stock-up mission.
Whole
Foods can be the quality mission.
Trader
Joe's can be the discovery mission.
WinCo
can be the low-price bulk-and-basket mission.
Lidl
can be the value-plus-quality mission.
A
traditional supermarket can win the fresh-food mission.
And
Walmart can become the retailer consumers visit when it happens to be
convenient.
That
is a very different competitive position.
Look at ALDI
ALDI
isn't trying to be everything to everybody.
It
is aggressively defining what it stands for.
In
January 2026, ALDI announced plans to open more than 180 stores during 2026,
bringing its U.S. store count close to 2,800, with a goal of reaching 3,200
stores by the end of 2028.
Even
more telling: ALDI said 17 million new customers visited its stores in 2025,
and approximately one in three U.S. households shopped at ALDI during the year.
That
is not merely a price story.
It
is a positioning story.
ALDI
has made the shopping experience itself part of the brand.
WinCo Understands the Value Mission
WinCo
takes another route.
Its
proposition is remarkably simple: low prices without making customers jump
through loyalty-program hoops.
The
employee-owned retailer describes itself as the “Supermarket Low Price Leader,”
and its sales specials are available to everyone—no rewards card and no minimum
purchase required.
That
simplicity matters.
When
a consumer walks into a WinCo, the retailer doesn't need a complicated
explanation for why it exists.
Price
is the message.
And
when inflation has changed the psychological relationship consumers have with
food prices, that clarity becomes powerful.
Lidl Is Selling Value Without Apologizing for Quality
Lidl
is attacking the same middle from a different angle.
Its
U.S. stores are built around a curated assortment, private brands, fresh food
and imported products—while maintaining a value proposition.
Lidl
says approximately 80% of its products are private label, and its U.S.
footprint now exceeds 190 stores.
More
importantly, Placer.ai data cited by Grocery Dive showed Lidl visits increased 4.9%
year over year during the first half of 2025, compared with a 1.5% increase for
the overall grocery segment.
That
is what a differentiated proposition looks like.
Lidl
isn't merely saying, "We're another supermarket."
It
is saying:
You
can get quality here without paying supermarket prices.
That
is a much sharper message.
And Yes, Winn-Dixie Belongs in This Conversation
Winn-Dixie
is an especially interesting example because it is attempting to reclaim
relevance through neighborhood service, value and fresh food.
In
January 2026, Southeastern Grocers officially became The Winn-Dixie Company and
described the strategy as strengthening neighborhoods while delivering value
and service.
Meanwhile,
seven former Harveys locations were converted to Winn-Dixie stores in 2026 as
the company consolidated its banners around the Winn-Dixie identity.
The
lesson isn't that Winn-Dix has solved grocery retail.
The
lesson is that a legacy retailer has to stand for something.
Walmart, Kroger and Publix: Three Different Versions of the
Middle
This
is where the grocery industry's current story gets particularly interesting.
Walmart
isn't alone.
Kroger
and Publix are also facing an increasingly complicated consumer landscape,
although their situations are different.
Kroger's
first quarter 2026 identical sales, excluding fuel, increased only 1.0%, while
e-commerce sales grew 19%.
Publix
provides an even more revealing data point.
Its
2025 sales increased 5% to $62.7 billion, but comparable-store sales rose 3.5%,
with the company explicitly noting that inflation contributed to
comparable-sales growth.
Then
the environment changed.
In
the second quarter of 2026, Publix sales increased only 1%, while
comparable-store sales declined 0.5%. For the first six months, sales increased
1.5%, while comparable-store sales declined 0.3%. Publix said economic
conditions affecting consumer spending contributed to the decline.
So
I would not say Walmart, Kroger and Publix are all "failing."
That
would be lazy analysis.
I
would say something more important:
The
traditional supermarket model is finding it increasingly difficult to command
the center of the consumer's wallet.
The Data From 2024 to 2026 Tells the Story
In
2024, food-at-home prices increased just 1.2%, dramatically below the 5.0%
increase in 2023 and 11.4% increase in 2022. Yet consumers were still feeling
the accumulated effect of several years of food inflation.
And
the consumer's response was not simply "buy less."
Consumers
became better shoppers.
They
traded between brands.
They
increased private-label purchases.
They
changed stores.
They
changed channels.
They
changed basket composition.
By
2025, USDA data showed food-at-home prices increased 2.3%, while
food-away-from-home prices increased 3.8%.
And
the channel itself continued to fragment.
FMI
and NIQ reported in 2025 that more than 90% of grocery shoppers were shopping
both online and in stores, with online grocery sales projected to reach $388
billion, or nearly 25% of the market, by 2027.
By
2026, the omnichannel shift had become even more important: FMI and NIQ
reported that online sales generated nearly three-quarters of total grocery
dollar growth in 2025, with the U.S. online grocery market projected to reach $452
billion by 2028.
And
the price pressure isn't gone.
The
July 2026 CPI showed food-at-home prices were still 2.7% higher year over year,
with fruits and vegetables up 5.1% and nonalcoholic beverages up 4.1%.
USDA's
July 2026 forecast calls for food-at-home prices to increase 2.7% for the full
year, with beef and veal among the categories expected to rise faster than
their historical averages.
In
other words, consumers are still shopping in an inflationary environment—but
they have become much more sophisticated about where, what and how they buy.
Private Label Is No Longer a Backup Plan
This
may be the biggest warning sign for traditional supermarkets.
Circana
reported that U.S. private-brand sales had already surpassed $217 billion and
continued gaining momentum.
Then
NIQ reported in 2025 that 69% of global respondents viewed private label as
good value for money and 68% considered it a good alternative to national
brands.
In
2026, FMI found that 92% of U.S. grocery shoppers had store-brand products in
their homes, private-brand dollar sales were growing 2.8% year over year, and
94% said they would continue buying private brands even if grocery prices
declined.
And
here's the kicker:
59%
of Gen Z shoppers said they had purchased more private-brand products during
the past year.
That
means private label isn't simply an economic response anymore.
It
is becoming brand preference.
That
changes the game for Walmart.
It
also changes the game for Kroger.
It
changes the game for Publix.
And
it changes the game for every traditional grocer that still thinks the
consumer's decision begins with a national brand.
The Grocerant Guru® View: Walmart Has a Positioning Problem
Walmart
is still enormous.
The
company generated $713.2 billion in fiscal 2026 revenue, serves approximately
280 million customers and members each week and operates more than 10,900
stores across 19 countries.
Those
numbers are extraordinary.
But
scale is not a strategy.
And
here's where the Grocerant Guru® sees the problem.
Walmart
is simultaneously trying to become:
cheaper
than everybody, better than expected, more premium than before, more digital,
more convenient, more fashionable and more appealing to higher-income
consumers—while retaining its historic value shopper.
That
is a very difficult brand architecture.
The
latest results make the issue harder to ignore.
Walmart's
second-quarter U.S. comparable sales increased just 2.6%, its weakest
comparable-sales performance in six years, even as e-commerce grew 24%.
That
tells me Walmart is not facing a simple traffic problem.
It
is facing a relevance and mix problem.
The
retailer is gaining younger and wealthier consumers while losing significant
spending from some of its historic customers.
That
is not necessarily bad.
But
if Walmart simply keeps replacing yesterday's customers with tomorrow's
customers, it must continually reinvent the reason both groups should choose
Walmart.
And
that is where being stuck in the middle becomes dangerous.
Three Insights From the Grocerant Guru®
1. Stop Managing the Middle—Own a Mission
The
future isn't about being everything to everybody.
ALDI
owns value simplicity.
WinCo
owns low-price shopping.
Lidl
owns curated value plus discovery.
Winn-Dixie
is attempting to own neighborhood value and service.
Walmart
needs to determine what it uniquely owns in the consumer's mind beyond
"low prices."
Because
if low price is the entire proposition, ALDI, Lidl, WinCo and increasingly
sophisticated private brands will keep attacking it from below.
The
answer isn't more SKUs. It's more relevance.
2. Food Is Moving From Basket Size to Meal Solutions
The
old grocery metric was the basket.
The
new opportunity is the meal mission.
Consumers
don't wake up thinking, "I need to increase my grocery basket."
They
think:
"What's
for dinner?"
"What
can I eat right now?"
"What
can I take to work?"
"What
can I feed the kids?"
"What
can I make in 10 minutes?"
That
is precisely where the Grocerant intersects grocery retail.
Ready-2-Eat
and Heat-N-Eat fresh food can transform a commodity grocery trip into a food
experience.
Walmart
should not merely sell ingredients.
It
should own more solutions for eating.
3. Don't Chase Customers—Create Reasons for Consumers to
Choose You
This
is the biggest lesson.
Walmart's
Gen Z gains are encouraging.
Its
higher-income gains are encouraging.
But
the loss of $6.2 billion in Boomer CPG spending is not something a retailer
should simply explain away because another segment grew.
The
same principle applies to Kroger and Publix.
Consumers
are becoming portfolio shoppers.
They
will visit five or more grocery banners in a month.
The
winner will not necessarily be the retailer that captures every trip.
The
winner will be the retailer that captures the most important missions.
That
is the difference between a store that consumers occasionally visit and a brand
consumers intentionally choose.
The
Grocerant Guru® bottom line:
Walmart
doesn't have a traffic problem.
Kroger
doesn't simply have a price problem.
Publix
doesn't simply have an inflation problem.
The
industry has a relevance problem.
The
consumer has moved.
The
question is whether the supermarket has moved with them—or is still standing in
the middle, waiting for yesterday's customer to come back.
For international corporate
presentations, educational forums, or keynotes contact: Steven Johnson
Grocerant Guru®
at Tacoma, WA based Foodservice Solutions.
His extensive experience as a multi-unit restaurant operator,
consultant, brand / product positioning expert and public speaking will leave
success clues for all. For more information visit www.GrocerantGuru.com , www.FoodserviceSolutions.us or
call 1-253-759-7869
