Are Grocery Stores Still Focused on Legacy Stationary Business—And Missing the Boat?

 

For more than 70 years the U.S. supermarket was built around one assumption: consumers would buy ingredients and cook dinner at home.

That assumption is collapsing.

Today’s consumer doesn’t necessarily cook dinner—they assemble dinner. Meals are increasingly built from a mix of restaurant takeout, grocery prepared foods, frozen entrees, snacks, and delivery orders. The dinner table has evolved into a multi-channel food ecosystem.

Yet many legacy grocers still operate using merchandising strategies designed in the 1970s and 1980s, when center-store packaged goods drove traffic and the deli counter was simply an add-on.

The marketplace has moved on.

 

A $2 Trillion Food Industry Is Being Rebalanced

The U.S. food economy now exceeds $2 trillion annually, split between food consumed at home and food consumed away from home.

According to the U.S. Department of Agriculture, food-away-from-home spending now regularly captures roughly 55% of total food expenditures, compared with just 25% in 1955.

Restaurants have dominated that shift for decades, but the growth of prepared foods inside grocery stores and convenience retailers is blurring the lines between retail and foodservice.

Consumers increasingly expect restaurant-quality food wherever they shop.

That expectation is driving the next phase of the Grocerant Economy—the intersection of grocery and restaurant retail.

 

Consumers Have Redefined Dinner

The typical dinner decision is no longer based on recipes or meal planning.

It is based on speed, convenience, and flavor.

Consumer research from Foodservice Solutions® Grocerant Guru® shows:

·       84% of family meals now include at least one pre-purchased prepared food component

·       Most dinner decisions occur after 3 p.m.

·       Consumers increasingly prioritize Ready-2-Eat and Heat-N-Eat solutions

Restaurant behavior reflects the same pattern.

Industry data from the National Restaurant Association indicates approximately 70–75% of restaurant traffic now occurs off-premises, including takeout, drive-thru, delivery, and curbside pickup.

Consumers want restaurant-quality food on their own schedule.

 

Prepared Foods Are Becoming Grocery’s Growth Engine

The fresh prepared foods manufacturing sector now includes more than 800 U.S. companies generating roughly $17 billion annually, supplying supermarkets, convenience stores, and specialty retailers.

At the same time, grocery retailers are expanding in-store kitchens, chef programs, and prepared meal assortments designed to compete directly with restaurants.

Leading examples include:

·       Wegmans, widely viewed as the benchmark for chef-driven prepared foods and international cuisine programs inside grocery retail.

·       H-E-B, particularly its premium banner Central Market, which blends grocery retail with culinary theater and restaurant-quality meals.

·       Metropolitan Market in the Pacific Northwest, known for high-quality prepared foods that drive destination shopping.

·       99 Ranch Market, which integrates large in-store food halls and restaurant stalls into the grocery environment.

These retailers understand that prepared foods are not a department—they are a strategic traffic driver.

 

Convenience Stores Are the Fastest-Moving Competitors

While many supermarkets debate strategy, convenience retailers are rapidly expanding foodservice operations.

Chains such as:

·       Wawa

·       Sheetz

·       Casey's General Stores

have invested heavily in fresh kitchens, made-to-order meals, and proprietary menu items.

Prepared food sales now account for 40% or more of in-store revenue at some convenience chains, dramatically improving margins compared with traditional packaged goods.

The result is a new competitive reality.

Consumers who once stopped at supermarkets for dinner solutions now frequently stop at convenience retailers instead.

 

Grocerant Experiments Are Not Easy

Despite strong consumer demand, hybrid grocery-restaurant concepts face operational challenges.

A notable example is Green Zebra Grocery, a Portland-based grocery-convenience hybrid that attempted to reinvent the neighborhood market with healthy grab-and-go meals and locally sourced products.

After operating for nearly a decade, the company closed its remaining stores in 2023 after rising costs—including labor, packaging, insurance, and freight—made profitability difficult.

The lesson for the industry is clear:

Prepared foods generate traffic—but operational discipline determines profitability.

 

Why Many Legacy Grocers Continue to Struggle

Despite the demand for fresh prepared foods, many supermarkets remain constrained by structural challenges.

Common barriers include:

Operational inconsistency
Prepared foods quality varies by location, staffing, and time of day.

Departmental silos
Prepared foods are often treated as a deli function rather than a strategic business unit.

Center-store dependency
Retailers remain heavily reliant on packaged goods categories that generate low margins and declining traffic.

Limited culinary leadership
Many chains lack professional chefs or culinary development teams capable of competing with restaurant innovation.

Without culinary leadership, grocery prepared foods rarely match restaurant flavor or consistency.

 

The Future Grocery Store Will Look More Like a Food Hall

Retailers that understand the shift are redesigning stores around meal solutions rather than ingredient inventory.

Future grocery formats are likely to feature:

·       Larger prepared foods kitchens

·       Global street-food inspired menu items

·       Modular meal components rather than fixed meal kits

·       Restaurant partnerships and branded food concepts

·       Food hall-style environments

In other words, the grocery store is evolving from a warehouse of ingredients into a culinary solutions center.

 

Four Insights from the Grocerant Guru®

1. Dinner Is Now a Multi-Retail Experience

Consumers assemble meals from multiple sources—restaurants, grocery prepared foods, convenience stores, and delivery platforms.

 

2. Prepared Foods Are the Most Important Traffic Driver in Food Retail

Retailers that invest in culinary-driven prepared foods gain higher trip frequency, stronger loyalty, and improved margins.

 

3. Modular Meals Beat Traditional Meal Kits

Consumers want flexibility. Proteins, sides, sauces, and snacks that can be mixed and matched outperform rigid pre-bundled meal offerings.

 

4. The Next Grocery Winners Will Think Like Restaurants

Retailers that combine culinary innovation, speed of service, and strong food culture will dominate the next era of grocery competition.

Those who remain focused on legacy stationary grocery models risk becoming irrelevant in the Grocerant Economy.

Tap into the Foodservice Solutions® team for greater understanding of New Electricity or for a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Why Amazon Should Buy Kroger: A Historical, Strategic, and Brand-Centric Case for Grocery Domination

 

The Historical Pattern: Scale Wins in Grocery

Retail history reveals a stark truth: scale in grocery equals dominance—until it doesn’t.

Take A&P, the once-great American grocer that in the 1930s operated over 16,000 stores, pioneering vertical integration and private label branding. A&P commanded nearly 10% of all U.S. grocery sales, a feat unmatched even today. But as consumer preferences shifted and competitive dynamics evolved, A&P failed to modernize, falling into irrelevance before filing for bankruptcy in 2010.

Now, Kroger, with over 2,700 stores across 19 regional banners (including Ralphs, King Soopers, Fred Meyer, and others), risks becoming a 21st-century A&P. Despite $150+ billion in annual revenue and the country’s largest supermarket footprint, Kroger is fragmented in brand identity and lacks cohesive national consumer resonance.

Amazon, on the other hand, doesn’t need to be the next Kroger. It needs to own it.

 

Amazon + Whole Foods ≠ Grocery Scale

In 2017, Amazon’s $13.7 billion acquisition of Whole Foods was hailed as the beginning of a grocery revolution. However, nearly a decade later, Whole Foods has only ~530 locations—a rounding error compared to Walmart’s ~4,600 U.S. stores, or even Aldi’s 2,300.

Amazon's grocery sales still represent less than 3% of the total U.S. grocery market, which surpassed $1.5 trillion in 2024. Compare that to Walmart’s commanding 25% market share. The simple truth: Amazon can’t win in grocery without vastly more physical locations.

Kroger’s thousands of stores offer Amazon the national footprint Whole Foods never could.

 

Whole Foods: Still Fighting the ‘Whole Paycheck’ Legacy

Whole Foods has fought valiantly to shed its “Whole Paycheck” reputation. But even with Amazon’s technology, pricing tweaks, and Prime integration, perceptions have barely budged.

·       A 2024 Ipsos study found 72% of consumers still consider Whole Foods “expensive”, compared to just 18% for Walmart and 34% for Kroger.

·       Internal Amazon grocery data suggests that basket sizes at Whole Foods remain flat, especially among value-conscious consumers aged 25–45—a crucial demographic for grocery growth.

The premium image is both a blessing and a curse: great for niche organic buyers, terrible for price-sensitive families that drive volume.

 

The Kroger Conundrum: 19 Banners, No Unified Identity

Kroger’s decentralized approach—operating under 19 separate regional banners—hinders its ability to compete in the era of omnichannel brand loyalty and algorithmic shopping behaviors.

·       Consumer research shows 65% of shoppers under 40 do not realize Ralphs or Fry’s is owned by Kroger.

·       In the age of app-driven shopping, voice ordering, and subscription-based replenishment, consistency matters.

Kroger’s brand fragmentation makes it invisible in national conversations, even while it leads in transactions. It lacks the unified narrative that drives modern consumer touchpoints—a must-have for relevance in an Amazon-shaped retail world.

 

Enter the Grocerant Guru®: The Power of the One Amazon Grocery Vision

Foodservice analyst and industry thought leader Grocerant Guru® Steven Johnson emphasizes that the future of grocery isn’t just about price or convenience—it’s about integrated experience.

According to Johnson, rebranding the combined Kroger–Whole Foods network under "Amazon Grocery" could fundamentally reshape consumer expectations:

“Amazon has the tech, the logistics, the pricing algorithm, the brand trust. What it lacks is touchpoints—physical, emotional, culinary. Buying Kroger and unifying under one brand gives it all.”

Imagine:

·       One Amazon Grocery app, merging Whole Foods' organics, Kroger’s mass appeal, and Amazon’s backend efficiency.

·       Automated dynamic pricing, with Prime perks personalized in real-time.

·       Grocery meets grocerant: prepared meals, micro-kitchens, AI-driven product mix.

·       Same-day delivery not in 30 cities, but 400+ metro areas.

In a consumer environment where 66% of shoppers blend online and in-store experiences, a unified Amazon Grocery brand could become the most trusted name in food retail—period.

 It's Time Too Build A

Larger 

Share of Stomach

Amazon’s Core Advantage: Price + Trust + Convenience

Amazon built its empire on price competitiveness, supply chain mastery, and customer-centricity. The acquisition of Kroger allows Amazon to bring these superpowers to the last frontier of mass retail: the weekly grocery trip.

·       Amazon can immediately scale grocery presence to over 40 states.

·       It gains over 400 million monthly transactions across Kroger stores.

·       It inherits logistics infrastructure, labor contracts, and local brand familiarity—then rebrands it into a unified powerhouse.

With scale and data, Amazon Grocery can undercut Walmart, local grocers, and even Aldi, while offering a better digital and in-store experience.

 

Think About This: The Time Is Now

Kroger is a legacy titan, increasingly trapped by its own decentralized structure.

Whole Foods is a premium player with strong niche appeal but limited growth runway.

Amazon is the tech and logistics giant missing only one thing: a national grocery presence.

The solution? Rebrand all as one Amazon Grocery. Reinvent the experience. Own the future.

History shows that grocery dominance doesn’t last forever—but with the right move, Amazon could define the next era.

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The High Cost of Customer Acquisition: Food Marketing Realities Across Grocery, Restaurant, and C-store Channels

 

In today’s fragmented food marketplace, the cost of acquiring customers is rising while loyalty remains elusive. From grocery stores to restaurants to convenience stores, all foodservice channels are spending more to win customers who may never return. According to the latest Upside report, 72% of grocery revenue comes from uncommitted customers, yet half of new shoppers disappear after just one month. The reality: a visit does not equal loyalty.

Drawing from the Grocerant Guru’s® Price Value Service® Equilibrium, retailers must create a holistic brand experience that aligns price (affordability), value (perceived quality and relevance), and service (speed, convenience, digital accessibility) in order to reduce churn and elevate the return on every customer acquisition investment.

 

Grocery Channel: Churn Challenges in the Land of Choice

The Upside report, “Winning the Uncommitted Customer,” analyzed 75 million grocery transactions and found:

·       50% of new grocery shoppers do not return after 30 days.

·       Just 7% of grocery customers are fully loyal, contrary to grocers’ belief that 53% are committed.

·       Securing one extra trip per month from an uncommitted shopper can increase revenue by 84%.

·       Loyalty program users churn at 14%, compared to 31% for non-participants.

 Grocerant Guru® Insight: Grocery retailers often focus too heavily on price. But without balancing that with relevant value (meal solutions, time savings) and service (personalized offers, fast checkout), they fall short of the Price Value Service® Equilibrium—leading to high CAC and low return.

 

Restaurant Channel: Digital Dollars vs. Loyalty Realities

Restaurants, especially QSRs and fast casuals, are funneling increasing resources into customer acquisition:

·       CAC ranges from $5–$40, depending on format and media strategy.

·       Only 20–30% of first-time diners return, underscoring the retention issue.

·       Loyalty members visit twice as often, yet adoption remains under 40%.

·       App fatigue and platform overload are eroding digital loyalty gains.

Grocerant Guru® Insight: Restaurants that skew too heavily toward service (speed, digital delivery) without anchoring value (food quality, uniqueness) or price (perceived affordability) often see fleeting gains. Only equilibrium across all three pillars fosters sustainable loyalty and lowers CAC long-term.

 

C-store Channel: Impulse Without Insight?

Convenience stores enjoy high traffic, but the race to win repeat trips is increasingly complex:

·       CAC is low ($1–$5 per new customer), but basket sizes are smaller, and margins are tighter.

·       Fewer than 20% of visits are linked to loyalty programs, but users spend 33% more per visit.

·       The opportunity lies in pairing fuel rewards with fresh food solutions, a growing trend among c-store leaders.

 Grocerant Guru® Insight: C-stores thrive when they integrate price-sensitive promotions (fuel discounts), value-driven food offerings (ready-to-eat, fresh bundled meals), and service enhancements (mobile pay, pre-order). Aligning these delivers equilibrium that enhances profitability per visit and lifetime customer value.

 

Five Strategic Takeaways from the Grocerant Guru®

1.       Price Value Service Equilibrium Is Not Optional: Today’s customer isn’t choosing based on one factor—they are judging the complete value chain. Balance is mandatory to earn repeat business and reduce churn across all channels.

2.       Win the Second Visit, Not Just the First: Acquisition should be measured not by foot traffic alone, but by conversion to habitual usage. Each successive transaction builds toward brand embedment.

3.       Dynamic Personalization Is Loyalty 2.0: One-size-fits-all rewards don’t drive behavior. Brands need real-time personalization, powered by data, to maintain relevance and close the CAC-revenue gap.

4.       Channel Blending Boosts Retention: Grocery stores offering restaurant-quality prepared meals and c-stores offering family dinner bundles are living examples of the Grocerant trend—meeting customers where they are in their daypart decision journey.

5.       Remove Friction Everywhere: The best loyalty loop is the one that’s invisible. Frictionless technology, instant savings, and clear benefits create habitual return behavior—even for formerly uncommitted customers.

 

Think About This

As food inflation flattens and consumer mobility increases, retailers can no longer afford to overspend acquiring customers who vanish. The solution lies in executing the Grocerant Guru’s® Price Value Service Equilibrium—delivering the right product, at the right price, with seamless service at every turn. Whether you're a grocer, restaurateur, or c-store operator, sustainable success will go not to the biggest advertiser, but to the operator who wins the second, third, and fifteenth transaction.

Quote from the Grocerant Guru® Steven Johnson:
"The consumer today is dynamic, not static. Food retailers must stop measuring success by transaction counts and start focusing on transaction continuity. The Price Value Service® Equilibrium isn't a theory—it's the roadmap to sustainable brand growth in a world of uncommitted consumers."

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