U.S. grocery slowdown deepens as shoppers buy fewer items, raising pressure on food companies

• Grocery unit sales declined 1.8% year-over-year in June, reversing from 0.1% growth the prior year, as price increases of 2-3% no longer offset volume declines
• 80% of Americans are trying to spend less according to Bain's May survey, with 56% of grocery cutters trading down to cheaper brands, 49% buying fewer items, and 44% relying more on promotions
• PepsiCo reported North America food revenue fell 2% in Q2 with flat volume, while Walmart announced price cuts on beef, ice cream and other items as the industry shifts focus from dollar growth to volume growth

Market Summary: U.S. Grocery Slowdown Intensifies

Key Findings

U.S. grocery unit sales declined 1.8% year-over-year in June, according to Bain & Company analysis of NielsenIQ data, marking a sharp reversal from 0.1% growth in June 2025. While food prices continue rising 2-3% annually, this inflation cushion no longer offsets declining volumes, resulting in negative overall sales growth.

Consumer Behavior Shifts

Groceries now cost approximately 33% more than 2019 levels, with a typical $300 shopping trip now reaching $400. Bain's May Consumer Pulse survey revealed 80% of Americans are attempting to reduce spending, with 28% specifically cutting grocery budgets. Among these shoppers:

• 56% are trading down to cheaper brands
• 49% are buying fewer items
• 44% are increasing coupon and promotion usage

Lower-income households face additional pressure from reduced benefits and tighter program eligibility.

Company Impact

PepsiCo reported weakened North American demand in Q2, with food revenue down 2% and flat volumes. CEO Ramon Laguarta cited gas prices as a primary consumer concern, while executives noted increased promotional activity to address price sensitivity.

Walmart and Kroger have announced price cuts across categories including beef, ice cream, and private label products, partnering with suppliers like PepsiCo and Coca-Cola.

Market Implications

The industry is pivoting from dollar growth to volume growth strategies. Telsey Advisory Group analyst Joe Feldman notes grocers are pressuring suppliers for price reductions, while retailers focus on competitive pricing for staples like ground beef, milk, and eggs. Success increasingly depends on value propositions through promotions, loyalty programs, and private label offerings to rebuild consumer trust and drive unit sales.