High gas prices prompt fewer trips to the grocery store

Consumers are consolidating their trips to grocery stores, and in some areas opting for bulk grocery retailers.

“Grocery stores had a difficult Q1, as a confluence of issues dragged foot traffic down,” says a new study from Placer.ai. The research shows overall grocery visits in March 2022 were roughly even to March 2019 levels.

Consumers have been opting to consolidate trips to the grocery store because of higher gasoline prices. Albertsons (ACI) management recently highlighted a similar trend as customer basket sizes increase.

"One of the things that we are observing is I think we've got customers consolidating shopping behavior that started during the pandemic. I think it's still sticking, where people have consolidated trips," Vivek Sankaran, CEO of Albertsons told analysts during the grocery chain's latest earnings call.

"The rise in gas prices may also explain superstores’ recent success. Superstores such as Walmart (WMT) and Costco (COST) supply a large share of the groceries bought in the U.S., and it appears that their contribution to household grocery shopping is growing even greater," reads the report.

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Inflation levels by region may also be having an effect on superstore visits.

“According to our findings, in areas where the local inflation was below the national inflation rate, superstore visits increased while grocery visits decreased. But when the local inflation rate was at or above the national rate, superstore visits fell and grocery visits rose,” according to the study.

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Meanwhile shoppers are looking for their dollars to buy more during these periods of high inflation. Moody's Analytics estimates shoppers are paying almost $300 more per month for their groceries compared to last year.

Discount grocers have been expanding and gaining market share. Aldi, which is a private company, Trader Joes, and Grocery Outlet (GO) are all examples of discount grocery store chains which are seeing high demand as consumer wallets get squeezed.

Several of the publicly traded grocer names have outperformed the broader markets. Grocery Outlet is up 14% year-to-date. The Kroger Co. (KG) is up about 21% during the same period. Albertson's is 2.69% higher since the start of the year. Costco is down 9% year-to-date, while BJ's Wholesale Club (BJ) is about 5% lower.

Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre

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