Grocery retailers and CPG brands are rethinking growth strategies as cost pressures, format shifts and changing shopper priorities converge. Recent moves by Amazon, discount grocers and natural chains underscore how value, access and differentiation, not just price, will shape competition in the year ahead.
Amazon pulls back from physical grocery formats
Retail giant Amazon announced it will shutter all Amazon Fresh grocery stores and Amazon Go convenience stores in the US and UK, citing challenges in finding a scalable model for its own branded brick-and-mortar formats.
The move follows years of experimentation with checkout-free tech and store redesigns and signals a shift toward strengthening online delivery and expanding its Whole Foods Market footprint, including new small-format concepts and potential supercenter formats.
The company also opened its digital doors to more than 40 million low-income shoppers using funds from the Supplemental Nutrition Assistance Program (SNAP) in the US. Amazon Access streamlines a variety of SNAP-eligible discounted foods and services for consumers shopping with Electronic Benefits Transfer (EBT) for either SNAP EBT cards or EBT cash - potentially expanding opportunities for brands with qualifying products to connect with shoppers. SNAP EBT cards allow for shoppers to purchase SNAP-eligible food items while EBT cash can be used similarly like a debit card where cash can be withdrawn from the account to purchase non-food items like diapers and toiletries.
Amazon Access does not require a Prime membership. Shoppers with a registered EBT card can qualify for the $4.99 Discounted Grocery Delivery Subscription. Amazon’s move to accept SNAP benefits allows it to compete with a similar program offered by Walmart called Walmart+, which provides discounted services and goods with a $98 annual membership.
Shoppers value more than just price
New data from NielsenIQ shows that while higher grocery prices worry consumers, shoppers are not just chasing the lowest dollar – they’re balancing budgets with quality, trust, health and values. Cautious households across the economic spectrum are trading up, down or out across categories depending on perceived overall value, not just price. This focus on value extends to premium products as well, where more at-home cooking sparks interest in packaged foods that elevate the dining experience, according to Nielsen analyst Sherry Frey.
Additionally, ‘better-for-’ products – those aligned with sustainability or social values – maintain sales momentum, underscoring that messaging matters beyond discounts and price cuts. The products that highlight third-party certifications and include creative copy that explains provenance will win consumers’ trust and loyalty.
Tariff pressures could soon squeeze consumers’ wallets
Industry analysts warn that tariff-related costs largely have been absorbed so far through promotions and strategic pricing by manufacturers and retailers, but full cost pass-through to the consumer is likely in mid-to-late 2026. When that happens, brands and grocers may have to lean on tactics like reduced promotions, especially in value-oriented categories with thin margins, that are likely to impact lower-income shoppers.
Retailers may start leaning more on their US-produced private label products, competing directly with brands, analysts noted. Companies like AI-platform Keychain, which launched its operating system Keychain360, helps retailers cut their product launch time by up to 30% and streamline sourcing, compliance and vendor management, according to the company.
Discount grocers expand while legacy chains trim stores
Aldi plans to open roughly 180 new US stores in 2026, even as Kroger and Albertsons continue to close underperforming locations. Aldi’s strategy, which is led by small format, lean operations, value pricing and private-label expansion, is resonating with budget-sensitized shoppers.
Natural grocers, which typically offer higher prices than traditional retailers, are grabbing consumers’ attention for unique, wellness-forward products, according to 2025 data from Placer.ai. Sprouts Farmers Market and Natural Grocers are outperforming their mainstream counterparts – albeit these shoppers are typically less price sensitive than the average shopper. However, tariffs and rising process could derail this growth in the coming year, according to Placer.ai.
Healthy food affordability is still a structural challenge
Healthier products often cost significantly more – in some cases 18%–59% higher – compared to less nutritious options at major US retailers, and promotions disproportionately favor “unhealthy” categories, according to a recent report from Access to Nutrition initiative (ATNi). For lower-income households, this price gap remains a structural barrier to accessing nutritious diets.
ATNi’s assessment of Kroger, Walmart and Ahold Delhaize USA found that most of its promotions are reserved for “unhealthy” options like refined grains, baked goods, sweets, ice cream and sugar-sweetened beverages. However, Ahold Delhaize’s banner stores use displays and checkout areas specifically for products under the Guiding Stars nutrition scoring system, according to the report. Guiding Stars rates products from one to three stars based on the overall nutritional profile.
