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Americans are buying less groceries. Grocery product purchases were flat in 2025, then declined about 2% year over year in most months since February of 2026. That's according to a report by Nielsen IQ and Bain and Company that was shared exclusively with CNBC.
This is surprising because rarely does the grocery market see full decline across the entire sector. Consumers are facing higher grocery prices and Snap benefit changes, as well as other inflationary pressures, which is impacting the grocery industry.
Years of elevated grocery prices are forcing retailers like Walmart and Kroger to spend more, keeping prices low even as shoppers buy fewer items. Now that combination is making it harder to turn a greater profit. So that big grocery stock up trip that costs you $300 in 2019, now costing you $400. Even that upper income consumer, you're talking a big enough absolute dollar change that people start to feel a little bit of that sticker shock and start to shop around more.
28% of consumers say they are actively trying to reduce how much they spend on groceries. Among those shoppers, more than half are trading down to lower priced brands, including private label, and more than 40% are leaning on coupons and discounts. And as more people adopt GLP-1s, they are, on average buying less groceries.
This shift is changing which retailers are winning value players, discount and club stores are gaining shoppers. So it's not just about being the absolute lowest price on shelf. The edge goes to grocers that are priced sharply on the products that customers notice most. Things like ground beef, chicken, milk, eggs. And they're using a combination of promotions, loyalty programs, personalization, private label to stitch together an overall value proposition that customers can understand and trust.
But people are still buying less items and new changes to Snap benefits in 2026 across dozens of states restrict participants from buying sugary drinks and food, which is also reducing grocery baskets. Pepsico, which makes snacks like Doritos and Gatorade, is feeling a shift. Demand in North America weakened in its recent second quarter earnings reported this month. North America food revenue fell 2% while volume was flat, executives said. U.S. food and beverage performance moderated and trailed the company's expectations. They also noted that the company has increased promotions as consumers became more price sensitive.
Recently, retailers including Walmart and Kroger have tried emphasizing price cuts and promotions to attract more shoppers, including some PepsiCo products. One Telsey Advisory Group analyst I spoke with said that grocers have been pushing back on the suppliers to reduce prices where possible. Other grocers could expand their private label or enhance their loyalty programs, but other financial strains like gas prices and inflation will likely need to ease in order for the industry growth to return back to normal.