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A new study from the Bank of America Institute found that Gen Z and millennial shoppers are increasing their share of grocery spending at value-tier stores, as inflation and “necessity spending” related to life changes spur them to seek savings.
Joseph Wadford, economist at the institute, told Retail Brew that these younger generations are now paying more for other expenses such as housing, automobiles, and children, which is pushing their value-tier grocery spending above the standard and premium tiers. This shift took place for millennials in 2022 and for Gen Z in 2023.
“They’re just aging into trading down to value-tier groceries,” he said.
- The trend is playing out against a backdrop of lingering inflation, especially in food. The institute found that grocery prices were still up nearly 30% in April 2024 compared to January 2020.
Overall, though, the shift toward trading down may be overstated, Wadford added.
He explained that while value-tier spending is higher than premium tier spending, “the majority of the spending, 60% of it, has been on the standard tier.”
The report also noted that percentage share changes (the ratio between value, standard, and premium) have been relatively small, “indicating that reports of large-scale trading down to value-tier grocery stores may be overstated.”
However, it said these share dynamics could budge as Gen Z and millennials continue to embrace value shopping as “prices for groceries remain significantly higher than pre-pandemic levels.”