Walmart, This Is What Happens When You’re Stuck in the Middle

 

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