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Grocery Roundup: More than Value Driving Visits to Aldi, Grocery Outlet, WinCo Foods, and Trader Joe’s

RJ Hottovy
Nov 4, 2022
Grocery Roundup: More than Value Driving Visits to Aldi, Grocery Outlet, WinCo Foods, and Trader Joe’s

The grocery category has been one of the busiest sectors in retail the past several months, with double-digit inflation driving a massive consumer shift to hard discounters like Aldi and other value-oriented concepts like Grocery Outlet and the announcement of one of the most potentially disruptive mergers that the category has seen (assuming the transaction goes through). Value-oriented grocers continue to lead the non-discretionary space, although visits are running flat on a YoY basis (below).

  • While inflationary headwinds certainly explain some of the migration to value-oriented grocers, we wanted to examine the category at the brand level to better understand how much execution and brand affinity played a part in the success of some of these chains. As such, we started by comparing 3Q22 change in visits for the largest grocery chains in the U.S. with trailing-twelve-month household income for these retailers’ aggregated trade areas (below).

  • For higher income households, Grocery Outlet Bargain Market saw the highest YoY change in visits during 3Q22, followed by Trader Joe’s. Among lower income households, Aldi saw the biggest boost, followed by WinCo Foods.
  • A confluence of factors such as inflation and associated costs such as higher gas prices and higher food prices may be one reason shoppers are choosing to consolidate their trips into fewer outings with more purposeful intent.
  • One thing shoppers might be looking for is to add a little bit more excitement into their lives that have been dampened by inflation. Grocery Outlet and its emphasis on eclectic finds (i.e., Mexican hot cocoa pork rinds) rewards its shoppers for frequent visits to score hauls and participate in GOBM tourism, which is all about finding hidden gems.


So what’s the profile of the Aldi shopper?  We utilized Spatial.ai's PersonaLive geosocial application – which launched on Placer.ai this week – to understand who is overindexing for shopping at Aldi. PersonaLive combines store visitation with digital behavior from social & web interactions to classify households into 80 segments that reveal which brands they follow, publications they read, topics they discuss, and more.
 

  • The top persona overindexing Aldi's consolidated trade area is "Suburban Boomers", who are usually middle-class empty nesters.  They also enjoy eating Mexican food, pizza, ices, and ice cream.  Interests include pets and painting.
  • The next largest persona is "Small Town Low Income" who generally live in lower-income households orbiting small towns. They have a penchant for Pizza King, JB’s, and American Deli.
  • Rounding out the Top 3 personas, we have "Rural High Income", which are prosperous ruralites who enjoy the great outdoors and work in white collar, farm, and blue-collar jobs.  Stores they like to visit include Tractor Supply Co, Rural King, and Camping World.


On the higher end of the income spectrum, the personas that gravitate toward Trader Joe’s are:

  • "Educated Urbanites", who are well-educated young singles living in dense urban areas working relatively high paying jobs.  They like visiting retailers like Paper Source, West Elm, and Apple.
  • "Sunset Boomers" have plenty of leisure time to stroll Trader Joes.  They are well-off, near or at retirement age, and live in picturesque locations.  They have the time and money to devote to shopping maritime retailers like West Marine, buy the latest anti-ageing products at Blue Mercury, or redecorate with inspiration from Restoration Hardware
  • "Ultra-Wealthy Families" round out the top 3 personas that are likely to overindex shopping at Trader Joe’s.  These are the nation’s wealthiest families with HHI $200K+ and they enjoy healthy eating like CAVA and Nekter Juice Bar.


While grocery stores are a bit of a mixed bag in terms of which ones have or haven’t had growth YoY, the fact that they are essential retailers has made the category as a whole slightly more immune to downturns when compared to lifestyle centers.  We started to see the dip in YoY visitation to shopping centers in June, but centers that are grocery-anchored have not seen quite as drastic a dip in visitation.

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RJ Hottovy

Head of Analytical Research, Placer.ai

R.J. Hottovy, CFA has covered the restaurant, retail, and e-commerce sectors for nearly 20 years as an equity analyst and strategist for Morningstar, William Blair & Co., and Deutsche Bank.

R.J. also brings a wealth of experience with early-stage investments as an investment committee member for the IrishAngels / Vitalize venture capital group. Over the past three years, he has advised over 50 foodservice and foodservice tech companies on more than $200 million in early-stage capital raises and M&A transactions.

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