• The grocery industry is becoming more dynamic with lots of announcements of new partnerships with DoorDash, Uber Eats, and Instacart. Kroger is the latest as it pivots from large robotic warehouses to 3P delivery and more stores. Kroger, Walmart, Costco, and Aldi are also accelerating their new store programs. Joining the scrum, Amazon is rapidly expanding served markets with same-day grocery delivery.
  • The consumer hunt for value, combined with the increased access to the value of Walmart, Costco, Aldi, etc. is moving more and more market share (especially of center-store panty items) their way and away from regional grocers, creating a lot of financial pressure on national CPG brands. The consumer shift to good-for-you and less calories (GLP-1 drugs) are additional headwinds for the CPG brands.

Last week we were lost in NYC attending ICSC vs. adding Advan Insights stories to our blog (you can find our ICSC take-aways here ). Nevertheless, the past two weeks have brought a lot of news from the food-at-home industry, including quarterly results from Costco, Kroger, Campbell’s, and reiterated news, Amazon same-day delivery of perishables hit the 2300 cities target, with more expected in 2026. Lastly, Aldi reiterated that it will add 200 stores for each of ’26, ’27, and ’28, with the focus still on the east half of the US. For perspective, Aldi’s locations average around $18M in sales annually (excluding 3P delivery services) per Advan as of Q3. As such, 200 new locations, at the chainwide average sales productivity, is $3.6B in sales growth / market share – that is equivalent to the grocery sales volume from 50 new Walmart stores. 50 new locations is also Walmart’s 2026 plan.

For Q3, Advan estimates that Aldi added +$1B in sales (+11% YoY), or +$2B if we gross-up their footprint to cover both the East and West; for comparison, Walmart added +$2.4B in sales, i.e. similar to Aldi. By contrast, Costco added +$1.7B in grocery. Sam’s Club added +$0.8B in grocery for its fiscal Q3, and Amazon, per our estimate, added $4B-$5B. We’ll call the five retailers the “Mighty-5.” All total, the Mighty-5 added $10.4B in growth; the entire food-away-from-home category added +$12B (BEA), or said differently, the aggregation of everyone else grew **modestly **in $-sales, and when excluding inflation, volume declined.

Another side wrinkle to the growth in food-at-home, is the impact of fewer calories eaten and the shift to better-for-you produce resulting from GLP-1 drugs. This is a substantial impact; for example, Walmart’s fiscal Q3’s sales-volume growth ($2.4B) was nearly matched by growth in its “health & wellness” category of +$2B, which is principally driven by growth in GLP-1 new prescriptions. (We estimate a similar split for Kroger.)

The shift in share-of-stomach to the Mighty-5 and better-for-you has been brutal for national packaged food brands given the 5’s buying might vs. regional grocers and their strong private brand offerings. Campbell’s Aug-Oct quarterly volume fell -3% and profits fell -11%. Management’s outlook for the full fiscal-year was also dour, with adjusted EPS expected to decline mid-teens. Part of the pressure on its margins was mix, which includes the mix of customers, and the shift from smaller-regionals to the Mighty-4 (Aldi stocks little to no Campbell’s brands). As it relates to GLP-1s and Campbell’s snack portfolio (Milano, Goldfish, Snyder’s, Kettle, etc.), CEO Mick Beekhuizen said, “People are still snacking… however, snacking is evolving… whether that’s elevating the experience or people want an exciting experience, which comes back to premiumization or flavor exploration, or the focus on health and wellness… We just need to make sure that when we innovate, we’re very conscious of what the consumer is looking for. So that allows us to continue to evolve our portfolio.” (Said differently, more investment to stay in the game.)   Turning to Kroger’s quarterly results, comp-sales increased +2.6%, with half due to increased grocery sales (+$380M) and half due to more GLP-1 scripts (+$380M), per our estimate. Yes, it is striking that the largest conventional grocer’s sales growth was only 16% that of Walmart’s (380 / 2400); in 2019, the ratio was over twice that at 32%. Interim CEO Ron Sargent said on its customer, “Spending from higher-income households continue strong, while middle-income customers are feeling increased pressure, similar to what we’ve seen from lower-income households over the past several quarters… They’re making smaller, more frequent trips to manage budgets, and they are cutting back on discretionary purchases… Customers are turning to promotions and Our Brands as smart ways to save without sacrificing quality. Ready-to-eat and other meal solutions are providing another way for households to get quality and convenience at a great value.” (The ongoing share-of-stomach going from fast food to ready-to-eat is one of the headwinds facing the limited-service industry.)

Advan estimates that visitor count to brand Kroger’s cash registers has declined at a low-to-mid single digit rate over the past few months, part of that was the SNAP break and comping against Hurricane Helene, part of it is the strong growth of delivery, but the largest headwind is shift in spend to the Mighty-5. Advan estimates that the Kroger’s grocery comp sales growth (the +$380M) was driven by digital orders (+$500M), which skew to the higher-income households, whereas the stores’ cash register comp-sales declined (thus aligning with our visitor count when considering inflation). Management shared that “We did see a slight deceleration in our unit trends in Q3.” Given this dynamic, Kroger’s has meaningfully increased its messaging around value, promotions, and lowered prices – “re-investments” that have eaten into its sales rate and merchandise margin. 2026 is expected to see more of that with Kroger’s pivot from Ocado CFCs to 3P delivery (DoorDash, Uber Eats, and Instacart) they will free up $400M+ with the closures of Pleasant Prairie, Frederick, and Groveland, “[and] the benefits from these decisions will be primarily used to reinvest in our business to increase value for customers and improve the shopping experience as we look to accelerate sales.”

On new stores Sargent said, “We expect to break ground on 14 new stores in the fourth quarter, marking a meaningful acceleration in activity. Earlier this quarter, we announced expansion plans for Harris Teeter, one of our strongest and most successful banners. These plans include opening additional new stores in the Southeast and entering Jacksonville, Florida, which is an important adjacent geography that positions us to grow households and gain share. Looking ahead**, we plan to accelerate capital investment in new stores beyond 2025** to strengthen our competitive position, expand into high potential geographies and support long-term growth… We think we’ve got a great long runway to grow stores… And when you look at 2026, we expect to increase new store builds by 30%.”

Lastly, turning to Costco’s quarter results, what struck us as “incremental” was its plans to bolster its new store team to support its plans for 30 new openings annually and the strong statement about new locations, “With fiscal year ‘25 openings generating an annualized $192 million per warehouse of sales in the year of opening, that is up from $150 million for new warehouses opened just two years earlier.” Moreover, Costco had 39.7 million paid Executive Memberships, up +9.1% versus last year, and taking the Executive Membership level to over double its pre-pandemic total (pre-pandemic the growth rate was generally in the mid-single-digits). The doubling reflects the actions taken by households to find ways to cut costs to get the “great tasting / high quality” calories that they need. The +9% current rate also demonstrates that there’s been no diminution in the consumer trend of seeking out lower priced calories, and the like. CFO Gary Millerchip said, “Fresh sales were up mid- to high single digits, led by double-digit growth in meat. We saw strong growth in higher cost cuts of beef and even greater unit growth in lower-cost proteins like ground beef and poultry.”

On the extended hours for Executive Members (recall management said this added 1 pt to comp-sales LQ), CEO Ron Vasos said, “[W]e’ve been very pleased with the membership response to the extended operating hours. And also, you may remember, we added $10 per month as an extra benefit for executive members who shop on Instacart. The extended opening hours that we did was certainly a major benefit for our executive members, having an extra hour in the morning on most days to shop the warehouse. But we also added an extra hour on a Saturday evening for all of our members. And if you think about the earlier hours, it often extends the total shopping members in the warehouse. So it spreads out the traffic, if you like, to make the experience better for all our members. So we felt very positive about the change that we’ve seen. It’s certainly been well received by members. We’ve seen a really nice uptick in executive upgrades… [W]e still think that sort of 1% lift was a reasonable kind of view of what we think the impact was.”

Clearly the economic / consumer environment of ’23 – ’25 was in Costco’s favor; with a large number of new clubs planned for ’26 (20 vs. the historic pattern of mid-teens), management is signaling that they expect that environment to persist. Vasos, “Next year’s openings will be a good mix of some infills in established markets, and we still have some opportunities in some new markets… And then the new markets that we’ve done several of those this year, and we have a few more slated for next year of markets that we may have been a little reluctant to go into, we’ve got much greater confidence at this point and we’ll garner a much better new sign-up approach in those markets as well.”