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Commercial real estate’s reputation as a technology laggard is not entirely undeserved. At its core, CRE is a see-touch-and-feel industry, as much art as science. Local knowledge, intuition, and long-standing relationships continue to shape how deals get done, and that reality isn’t likely to change. Boots on the ground matter, as firsthand market insight and trust between brokers, landlords, and tenants, remain central to the business.
That context is essential when thinking about technology’s role in CRE. Tech can support and enhance decision-making, but it cannot replace the fundamentals. AI, for example, can make processes faster and more efficient, but it will not change the core of how CRE works. It will never be the tool that says, “I know a landlord who’s about to bring this space to market, and I’m getting the first look because of our relationship.”
That said, technology does have an important role to play. During COVID, when activity slowed dramatically, many organizations finally had the time to look inward and ask how technology could support faster, more resilient decision-making once the market returned. As the industry continues to invest in digital tools, three principles stand out.
Technology delivers the most value when it is guided by well-defined questions. One of the most persistent challenges in CRE’s use of technology is data fragmentation and fatigue. The industry generates enormous amounts of data, much of it spread across spreadsheets, emails, platforms, and institutional knowledge. And without knowing what you want to accomplish, that volume can quickly become overwhelming.
As shown in the chart above, for example, even when a national trend appears relatively modest, the underlying regional variation can be significant. Without a clear question guiding the analysis, it’s easy to walk away with a generic conclusion that misses where performance is actually diverging. Framed correctly, the same data becomes a tool for understanding where demand is strengthening, where it’s softening, and how strategy should differ by market.
Once the right questions are defined, the next challenge is selecting the right tools. Here again, clarity matters. There is no universal technology stack for commercial real estate. Organizations operate across different markets, asset types, and strategies, and technology needs to reflect those differences.
Thinking in terms of a recipe provides a more useful framework. The questions define the goal, and technology becomes a set of ingredients chosen to achieve it. Some tools add context, others improve precision, and others help scale insights across teams by surfacing distinct metrics and perspectives. The objective is not to find a single solution or data point that does everything, but to assemble the right combination that supports how the organization actually works.
The graph below highlights the value of layering multiple signals to understand performance. Topline visit trends offer a baseline, but adding context around visitor profile and travel patterns helps clarify what’s actually driving change. When analyzed together, these signals move analysis beyond surface-level conclusions and toward insight that can inform real decisions.
The technology best positioned to help CRE is shaped by how people actually use it. Companies that consistently learn from their users, refine inputs, expand data sets thoughtfully, and stay focused on real decision-making are far more likely to deliver lasting value.
The true test of any technology is whether it helps professionals make better decisions faster and with greater confidence while reducing risk. When insights surface quickly and are paired with on-the-ground experience and market context, data reinforces what CRE professionals already see and understand. Used this way, technology becomes a decision-support tool that facilitates de-risking and enables organizations to act at the right speed without losing sight of the fundamentals.
When analyzing mall properties, for instance, sustained weekday and weekend visit growth, paired with a broadening and increasingly family-oriented audience, can signal traffic that is more likely to endure. Identifying these deeper patterns in visit behavior helps validate assumptions, align strategy, and move forward with greater confidence, especially when paired with local market context.
As technology adoption continues, CRE leaders face an additional challenge: distinguishing between tools that meaningfully support these principles and those that generate attention without lasting value. Some technologies – like foot traffic and demographics – will become table stakes, while others will struggle to move beyond experimentation.
One area to watch is Virtual AI, including remote site visits and digital building tours. These tools may streamline early-stage evaluation and expand access, even as final decisions continue to rely on boots on the ground. Ultimately, their impact will depend on whether they reinforce the fundamentals of CRE – clear questions, practical workflows, and faster paths to confident decisions.
Since taking the reins in 2023, Gap Inc. CEO Richard Dickson has pursued a turnaround strategy aimed at reinvigorating the legacy apparel retailer, with promising results so far. Did that positive momentum carry through the end of the year? And what can location analytics reveal about the role of each of Gap Inc.’s largest banners in powering the company’s recovery?
Recent foot traffic data points to solid traffic momentum at Gap Inc. With the exception of a brief dip in December – likely driven by holiday demand pulling forward into November, along with one fewer Sunday compared to 2024 – year-over-year (YoY) company-level visits remained consistently positive over the past six months.
Throughout the period, same-store visits slightly outpaced total traffic, reflecting a more optimized fleet following the closure of several underperforming stores over the past year. Gap Inc’s robust traffic patterns also align with recent earnings commentary showing positive company-level in-store comparable sales in Q3 2025 and improving execution across Gap’s leading brands, as the company continues its strategic reset.
Looking at the company’s two largest brands shows that each is contributing to the company’s rebound in a different way. In Q4 2025, Gap slightly outperformed Old Navy on a quarterly basis, with banner-level traffic up 1.6% YoY, compared with 1.2% at Old Navy. However, Old Navy delivered more consistent monthly gains throughout the analyzed period – including in September, when Gap experienced a modest decline.
Gap’s traffic trends were notably more variable, with a stronger YoY lift in November, likely reflecting the brand’s greater sensitivity to seasonal storytelling and early holiday demand. This responsiveness was especially apparent on Black Friday, when Gap visits surged 504.4% above its 2025 daily average, compared with a still-robust but more measured 436.4% increase at Old Navy.
Old Navy’s smoother monthly performance likely reflects its role as the portfolio’s stability engine, with value-driven and replenishment trips supporting steady traffic throughout the year. Gap, on the other hand, appears to fulfill a more discretionary function, with visits responding more sharply to merchandising, marketing, and holiday timing.
Visitor behavior data for Gap and Old Navy further reinforces the two brands’ distinct positionings. Old Navy attracts longer, more frequent visits that skew toward weekdays, signaling habitual shopping tied to browsing, value-seeking, and building everyday wardrobe essentials. Gap, meanwhile, sees shorter, less frequent visits that are more likely to occur on weekends – consistent with more discretionary trips tied to seasonal needs, inspiration, or occasional splurges.
These differences between the two banners may help shape how Gap Inc. approaches its next phase of growth. In January 2026, the company leaned into “fashiontainment” with the appointment of former Paramount executive Pam Kaufman as Chief Entertainment Officer. At the same time, it has begun expanding into beauty and accessories, including the launch of Beauty Co. at 150 Old Navy locations nationwide.
As these strategies roll out, allowing them to express themselves differently across Gap and Old Navy could help maximize the strengths of each banner. At Gap, fashiontainment may lend itself to high-impact cultural moments and narrative-driven campaigns that tap into the brand’s strengths in nostalgia and storytelling – such as last year’s Better in Denim campaign featuring Katseye. At Old Navy, the same idea may be most effective through large-scale, family-friendly partnerships that reinforce its role as a dependable, mass-market destination – like the Disney collaboration launched last May. A similar dynamic could emerge in beauty, with Old Navy’s Beauty Co. supporting frequent, routine visits, and beauty at Gap reinforcing fashion authority and cultural relevance rather than driving habit.
For more insights into the consumer patterns shaping retail strategy, follow Placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
The home improvement space has faced sustained pressure from macroeconomic headwinds – including persistent inflation and a cooling housing market – prompting many consumers to delay major projects and defer big-ticket purchases. But is a category turnaround in the works? An AI-powered foot traffic analysis of the sector’s largest players – The Home Depot and Lowe’s – offers insight into whether momentum has shifted and a period of growth is on the horizon.
Both The Home Depot and Lowe's reported sales growth alongside an uptick in big-ticket purchases in fiscal Q3 2025, indicating that consumers were investing in significant upgrades despite many bigger renovations remaining on the back-burner. And the latest foot traffic data suggests that this momentum likely carried forward into the subsequent months.
In November 2025, both chains saw visit and same-store visit growth of roughly 3% year-over-year (YoY) – a sign of meaningful Black Friday traffic and a healthy start to the holiday shopping season.
And while December 2025 saw modest visit gaps, these likely stemmed in part from tough YoY comparisons to December 2024’s storm-related demand.
Traffic to both chains rebounded in the new year, with preparations ahead of Storm Fern likely accounting for some of January 2026’s YoY visit gains.
Overall, the past several months of foot traffic data paint a picture of continued positive momentum for The Home Depot and Lowe’s through fiscal Q4.
Large-scale projects may not yet be at hoped-for levels, but the data suggests consumers are still investing in their homes. And with mortgage rates trending lower, housing activity showing early signs of a turnaround, and the potential for abundant home equity to fund renovations, the home improvement sector appears poised for continued growth.
Will the home improvement space build on its successes in 2026? Visit Placer.ai/anchor to find out.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
E-commerce distribution centers outpaced brick-and-mortar retail chains in year-over-year (YoY) foot traffic growth throughout the 2025 holiday stretch. This pattern aligns with broader holiday-season data showing that e-commerce sales growth exceeded brick-and-mortar growth in 2025.
Still, physical retail continued to account for the majority of total holiday spending, and in-store visits also saw steady, positive YoY growth throughout the season. The data points to a retail environment where digital and physical channels are not competing for relevance but operating in parallel, each capturing different dimensions of consumer demand. That dynamic carried into the new year as well: January 2026 visits remained above year-ago levels for both e-commerce distribution centers and brick-and-mortar retail, rising 2.6% and 1.8% YoY, respectively.
Visits to Placer.ai’s Industrial Manufacturing Index, on the other hand, softened in January 2026, following stronger YoY momentum in December. At first glance, this decline may seem surprising: January marked a clear improvement in manufacturing sentiment, with the ISM Manufacturing PMI rising to 52.6% – its first expansionary reading in at least a year – and the Production sub-index also improving. While the ISM captures month-over-month shifts in sentiment rather than year-over-year change, a sharply improving outlook may seem inconsistent with such a steep YoY decline following a positive month.
But a closer look at the weekly data helps explain the divergence. Sentiment surveys capture outlook, orders, and expectations, while foot traffic reflects physical, on-site activity. Winter Storm Fern, which caused widespread disruptions late in the month, weighed heavily on manufacturing visits and pulled down the overall January figure. Weather events like this can meaningfully suppress foot traffic even as underlying sentiment improves – and they tend to register far more clearly in mobility data than in survey-based indicators.
Calendar effects likely contributed as well. January 2026 had one fewer working day than January 2025, a difference that can have an outsized impact on visit-based measures tied to operational and industrial activity.
Overall, the data points to an economy that ended 2025 with solid momentum across consumer-facing channels, even as early-2026 manufacturing activity reflected short-term disruption. As weather normalizes, will on-the-ground industrial activity rebound?
Follow Placer.ai/anchor for more data-driven insights into the trends shaping retail, logistics, and manufacturing.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
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Traditional department stores aren’t going anywhere. But over the past several years, the balance of power has shifted decisively toward retailers like off-price chains with the clearest value story. The latest signal of that shift came as Saks Global – parent of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman – filed for bankruptcy and began closing stores.
How wide has the gap between department stores and off-price really become? And what lies in store for the two categories in 2026?
The chart below shows just how dramatically the category split has changed since 2019. Pre-COVID, department stores held a slight edge, capturing just over half of visits to the two segments. But by 2025, that relationship had fully reversed, with off-price claiming a remarkable 62.9% share of visits. As consumers grow more price-sensitive and the retail landscape becomes more bifurcated, traditional department stores have struggled to articulate a clear competitive edge – while off-price continues to benefit from a straightforward, discovery-driven model.
Year-over-year data reinforces the structural strength of the off-price model. In Q4, the segment once again delivered solid gains, extending a winning streak that’s become harder for traditional department stores to match.
Notably, all four major off-price players expanded their footprints over the past year, and in each case overall visit growth outpaced per-location gains. Ross Dress for Less led the group with per-location visit growth ranging from 11.5% to 7.5% between October 2025 and January 2026. Some of that strength reflects easier baseline comparisons, but the scale of the gain still signals durable demand. Burlington delivered 9.4% overall visit growth even as per-location visits were essentially flat at -0.3%, a pattern consistent with rapid store expansion paired with steady interest at existing locations.
Meanwhile, T.J. Maxx and Marshalls turned in low single-digit gains while lapping a strong prior year: T.J. Maxx grew 2.1% per-location and 2.8% overall, while Marshalls rose 1.6% and 3.3%, respectively.
Department stores, by contrast, faced a more challenging traffic environment, with several chains continuing to shrink their footprints. Yet even within the category, performance was mixed. And the brands with the clearest identities – whether rooted in regional loyalty or premium, service-led positioning – continued to thrive.
Regional players led the traditional segment, with Von Maur seeing the most pronounced and consistent per-location growth during the analyzed period. Repeatedly ranked “America’s Best Department Store” by Newsweek, the chain has built its reputation on a differentiated, service-first in-store experience. Boscov’s, another regional operator with a loyal customer base, delivered a solid Q4 as well, even though per-location traffic dipped slightly YoY in December and January.
Among national banners, several higher-end brands also showed relative strength. Nordstrom – long associated with standout customer service – grew per-location visits by 4.2% YoY in Q4, even as overall traffic slipped 0.6% amid store closures. Bloomingdale’s posted 1.9% per-location growth. And while Saks Fifth Avenue has faced well-publicized corporate headwinds, its traffic declines remained comparatively modest in Q4.
The pressure was most visible among mid-market chains without a sharply defined value or experiential proposition. Kohl’s saw per-location visits fall 3.2%, with overall traffic down 5.0%, while JCPenney declined 3.8% and 5.5%, respectively. Macy’s, meanwhile, saw overall traffic drop as it continued rightsizing – though per-location visits held relatively steady, suggesting its turnaround strategy is beginning to bear fruit.
The Q4 data underscores a defining theme in department store and off-price retail: Consumers are rewarding clarity. Off-price is winning on value and discovery, regionals are winning on loyalty, and premium banners are holding up where the experience is distinct. In a bifurcated retail environment, the middle is the toughest place to be.
For more data-driven retail insights, follow Placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
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The success of the dollar store category hadn’t been all too surprising in 2025. However, the ability for the category to shine so brightly during the holiday season was unexpected. Traffic to dollar and discount chains was up 4.5% year-over-year in the fourth quarter, mirroring the growth of categories like off-price and wholesale clubs and overperforming compared to traditional holiday staples like apparel, department stores, beauty, consumer electronics, and home.
The retail industry doesn't traditionally think of dollar stores as a holiday shopping destination, but 2025 proved that the definition might need to change in coming years. Dollar stores have done a fantastic job at expanding their assortments and becoming a staple in consumers’ weekly shopping rotation.
Each of the major retailers saw strong traffic trends during the elongated holiday timeframe. In particular, Five Below had a strong same store visit trend over the holidays, focusing on gifting categories, holiday decor, and wrapping supplies. Dollar Tree and Five Below tend to skew their assortments towards more discretionary items, which benefitted both chains over the holidays.
The inherent value proposition of dollar stores has built trust with consumers and aided retailers in winning with shoppers whose holiday budgets might have been more constrained last year, especially with lower income households. The median household income of the largest dollar chains is lower than the average across total retail visitors, indicating that despite higher economic concerns of lower income shoppers, consumers still wanted to ensure that their holidays weren’t impacted. Brands focusing on more discretionary items like stocking stuffers and smaller gift items helped price conscious consumers to round out their holiday shopping without having to abstain from gifting all together.
For more data-driven insights, visit placer.ai/anchor.
Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make estimations for visits to locations across the US. The data is trusted by thousands of industry leaders who leverage Placer.ai for insights into foot traffic, demographic breakdowns, retail sale predictions, migration trends, site selection, and more.
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1) Value Wins in 2025: Discount & Dollar Stores and Off-Price Apparel are outperforming as consumers prioritize value and the “treasure-hunt” experience.
2) Small Splurges Over Big Projects: Clothing and Home Furnishing traffic remains strong as shoppers favor accessible wardrobe updates and decor refreshes instead of major renovations.
3) Big-Ticket Weakness: Electronics and Home Improvement visits continue to lag, reflecting a continued deferment of larger purchases.
4) Bifurcation in Apparel: Visits to off-price and luxury segments are growing, while general apparel, athleisure, and department stores face ongoing pressures from consumer trade-downs.
5) Income Dynamics Shape Apparel: Higher-income shoppers sustain luxury and athleisure, while off-price is driving traffic from more lower-income consumers.
6) Beauty Normalizes but Stays Relevant: After a pandemic-driven surge, YoY declines likely indicate that beauty visits are stabilizing; shorter trips are giving way to longer visits as retailers deploy new tech and immersive experiences.
Economic headwinds, including tariffs and higher everyday costs, are limiting discretionary budgets and prompting consumers to make more selective choices about where they spend. But despite these pressures, foot traffic to several discretionary retail categories continues to thrive year-over-year (YoY).
Of the discretionary categories analyzed, fitness and apparel had the strongest year-over-year traffic trends – likely thanks to consumers finding perceived value in these segments.
Fitness and apparel (boosted by off-price) appeal to value-driven, experience seeking consumers – fitness thanks to its membership model of unlimited visits for an often low fee, and off-price with its discount prices and treasure-hunt dynamic. Both categories may also be riding a cultural wave tied to the growing use of GLP-1s, as more consumers pursue fitness goals and refresh their wardrobes to match changing lifestyles and sizes.
Big-ticket categories, including electronics, also faced significant challenges, as tighter consumer budgets hamper growth in the space. Traffic to home improvement retailers also generally declined, as lagging home sales and consumers putting off costly renovations likely contributed to the softness in the space.
But home furnishing visits pulled ahead in July and August 2025 – benefitting from strong performances at discount chains such as HomeGoods – suggesting that consumers are directing their home-oriented spending towards more accessible decor.
The beauty sector – typically a resilient "affordable luxury" category – also experienced declines in recent months. The slowdown can be partially attributed to stabilization following several years of intense growth, but it may also mean that consumers are simplifying their beauty routines or shifting their beauty buying online.
> Traffic to fitness and apparel chains – led by off-price – continued to grow YoY in 2025, as value and experiences continue to draw consumers.
> Consumers are shopping for accessible home decor upgrades to refresh their space rather than undertaking major renovations.
> Shoppers are holding off on big-ticket purchases, leading to YoY declines in the electronics and home improvement categories.
> Beauty has experienced softening traffic trends as the sector stabilizes following its recent years of hypergrowth as shoppers simplify routines and shift some of their spending online.
After two years of visit declines, the Home Furnishings category rebounded in 2025, with visits up 4.9% YoY between January and August. By contrast, Home Improvement continued its multi-year downward trend, though the pace of decline appears to have slowed.
So what’s fueling Home Furnishings’ resurgence while Home Improvement visits remain soft? Probably a combination of factors, including a more affluent shopper base and a product mix that includes a variety of lower-ticket items.
On the audience side, this category draws a much larger share of visits from suburban and urban areas, with a median household income well above that of home improvement shoppers. The differences are especially pronounced when analyzing the audience in their captured markets – indicating that the gap stems not just from store locations, but from meaningful differences in the types of consumers each category attracts.
Home improvement's larger share of rural visits is not accidental – home improvement leaders have been intentionally expanding into smaller markets for a while. But while betting on rural markets is likely to pay off down the line, home improvement may continue to face headwinds in the near future as its rural shopper base grapples with fewer discretionary dollars.
On the merchandise side, home improvement chains cater to larger renovations and higher-cost projects – and have likely been impacted by the slowdown in larger-ticket purchases which is also impacting the electronics space. Meanwhile, home furnishing chains carry a large assortment of lower-ticket items, including home decor, accessories, and tableware.
Consumers are still spending more time at home now than they were pre-COVID, and investing in comfortable living spaces is more important than ever. And although many high-income consumers are also tightening their belts, upgrading tableware or even a piece of furniture is still much cheaper than undertaking a renovation – which could explain the differences in traffic trends.
Traditional apparel, mid-tier department stores, and activewear chains all experienced similar levels of YoY traffic declines in 2025 YTD, as shown in the graph above. But analyzing traffic data from 2021 shows that each segment's dip is part of a trajectory unique to that segment.
Traffic to mid-tier department stores has been trending downward since 2021, a shift tied not only to macroeconomic headwinds but also to structural changes in the sector. The pandemic accelerated e-commerce adoption, hitting department stores particularly hard as consumers seeking one-stop shopping and broad assortments increasingly turned to the convenience of online channels.
Traffic to traditional apparel chains has also not fully recovered from the pandemic, but the segment did consistently outperform mid-tier department stores and luxury retailers between 2021 and 2024. But in H1 2025, the dynamic with luxury shifted, so that traffic trends at luxury apparel retailers are now stronger than at traditional apparel both YoY and compared to Q1 2019. This highlights the current bifurcation of consumer spending also in the apparel space, as luxury and off-price segments outperform mid-market chains.
In contrast, the activewear & athleisure category continues to outperform its pre-pandemic baseline, despite experiencing a slight YoY softening in 2025 as consumers tighten their budgets. The category has capitalized on post-lockdown lifestyle shifts, and comfort-driven wardrobes that blur the line between work, fitness, and leisure remain entrenched consumer staples several years on.
The two segments with the highest YoY growth – off-price and luxury – are at the two ends of the spectrum in terms of household income levels, highlighting the bifurcation that has characterized much of the retail space in 2025. And luxury and off-price are also benefiting from larger consumer trends that are boosting performance at both premium and value-focused retailers.
In-store traffic behavior reveals that these two segments enjoy the longest average dwell times in the apparel category, with an average visit to a luxury or off-price retailer lasting 39.2 and 41.3 minutes, respectively. This suggests that consumers are drawn to the experiential aspect of both segments – treasure hunting at off-price chains or indulging in a sense of prestige at a luxury retailer. Together, these patterns highlight that – despite appealing to different consumer groups – both ends of the market are thriving by offering shopping experiences that foster longer engagement.
> Off-price and luxury segments are outperforming, while general apparel, athleisure, and department store visits lag YoY under tariff pressures and consumer trade-downs.
> Looking over the longer term reveals that athleisure is still far ahead of its pre-pandemic baseline – even if YoY demand has softened.
> Luxury and off-price both are thriving by offering shopping experiences that foster longer engagement.
The beauty sector has long benefitted from the “lipstick effect” — the tendency for consumers to indulge in small luxuries even when discretionary spending is constrained. And while the beauty category’s softening in today’s cautious spending environment could suggest that this effect has weakened, a longer view of the data tells a more nuanced story.
Beauty visits grew significantly between 2021 and 2024, fueled by a confluence of factors including post-pandemic “revenge shopping,” demand for bolder looks as consumers returned to social life, and new store openings and retail partnerships. Against that backdrop, recent YoY traffic dips are likely a sign of stabilization rather than true declines. Social commerce, and minimalist skincare routines may be moderating in-store traffic, but shoppers are still engaged, even as they blend online and offline shopping or seek out lower-cost alternatives to maximize value.
Analysis of average visit duration for three leading beauty chains – Ulta Beauty, Bath & Body Works, and Sally Beauty Supply – highlights the shifting role but continued relevance of physical stores in the space.
Average visit duration decreased post-pandemic – likely due to more purposeful trips and increased online product discovery. But that trend began to reverse in H1 2025, signaling the changing role of physical stores. Enhanced tech for in-store product exploration and rich experiences may be helping drive deeper engagement, underscoring beauty retail’s staying power even in a more measured spending environment.
Bottom Line:
> Beauty’s slight YoY visit declines point to a period of normalization following a post-pandemic boom, while longer-term trends show the category remains stronger than pre-pandemic levels.
> Visits grew shorter post-pandemic, driven by more purposeful trips and increased online product discovery – but dwell time is now lengthening again, signaling renewed in-store engagement driven by tech-enabled discovery and immersive experiences.
Foot traffic data highlight major differences in the recent performance of various discretionary apparel categories. Off-price, fitness, and home furnishings are pulling ahead, well-positioned to keep capitalizing on shifting priorities. Luxury also remains resilient, likely thanks to its higher-income visitor base.
At the same time, beauty’s normalization and the slowdown in mid-tier apparel, electronics, and home improvement show that caution persists across discretionary budgets. Moving forward, retailers that align with consumers’ demand for value, accessible upgrades, and immersive experiences may be best placed to thrive in this era of selective spending.
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1) Broad-based growth: All four grocery formats grew year-over-year in Q2 2025, with traditional grocers posting their first rebound since early 2024.
2) Value grocers slow: After leading during the 2022–24 trade-down wave, value grocer growth has decelerated as that shift matures.
3) Fresh formats surge: Now the fastest-growing segment, fueled by affluent shoppers seeking health, wellness, and convenience.
4) Bifurcation widens: Growth concentrated at both the low-income (value) and high-income (fresh) ends, highlighting polarized spending.
5) Shopping missions diverge: Short trips are rising, supporting fresh formats, while traditional grocers retain loyal stock-up customers and value chains capture fill-in trips through private labels.
6) Traditional grocers adapt: H-E-B and Harris Teeter outperformed by tailoring strategies to their core geographies and demographics.Bifurcation of Consumer Spending Help Fresh Format Lead Grocery Growth
Grocery traffic across all four major categories – value grocers, fresh format, traditional grocery, ethnic grocers – was up year over year in Q2 2025 as shoppers continue to engage with a wide range of grocery formats. Traditional grocery posted its first YoY traffic increase since Q1 2024, while ethnic grocers maintained their steady pattern of modest but consistent gains.
Value grocers, which dominated growth through most of 2024 as shoppers prioritized affordability, continued to expand but have now ceded leadership to fresh-format grocers. Rising food costs between 2022 and 2024 drove many consumers to chains like Aldi and Lidl, but much of this “trade-down” movement has already occurred. Although price sensitivity still shapes consumer choices – keeping the value segment on an upward trajectory – its growth momentum has slowed, making it less of a driver for the overall sector.
Fresh-format grocers have now taken the lead, posting the strongest YoY traffic gains of any category in 2025. This segment, anchored by players like Sprouts, appeals to the highest-income households of the four categories, signaling a growing influence of affluent shoppers on the competitive grocery landscape. Despite accounting for just 7.0% of total grocery visits in H1 2025, the segment’s rapid gains point to a broader shift: premium brands emphasizing health and wellness are emerging as the primary engine of growth in the grocery sector.
The fact that value grocers and fresh-format grocers – segments with the lowest and highest median household incomes among their customer bases – are the two categories driving the most growth underscores how the bifurcation of consumer spending is playing out in the grocery space as well. On one end, price-sensitive shoppers continue to seek out affordable options, while on the other, affluent consumers are fueling demand for premium, health-oriented formats. This dual-track growth pattern highlights how widening economic divides are reshaping competitive dynamics in grocery retail.
1) Broad-based growth: All four grocery categories posted YoY traffic gains in Q2 2025.
2) Traditional grocery rebound: First YoY increase since Q1 2024.
3) Ethnic grocers: Continued steady but modest upward trend.
4) Value grocers: Still growing, but slowing after most trade-down activity already occurred (2022–24).
5) Fresh formats: Now the fastest-growing segment, driven by affluent shoppers and interest in health & wellness.
6) Market shift: Premium, health-oriented brands are becoming the new growth driver in grocery.
7) Bifurcation of spending: Growth at both value and fresh-format grocers highlights a polarization in consumer spending patterns that is reshaping grocery competition.
Over the past two years, short grocery trips (under 10 minutes) have grown far more quickly than longer visits. While they still make up less than one-quarter of all U.S. grocery trips, their steady expansion suggests this behavioral shift is here to stay and that its full impact on the industry has yet to be realized.
One format particularly aligned with this trend is the fresh-format grocer, where average dwell times are shorter than in other categories. Yet despite benefiting from the rise of convenience-driven shopping, fresh formats attract the smallest share of loyal visitors (4+ times per month). This indicates they are rarely used for a primary weekly shop. Instead, they capture supplemental trips from consumers looking for specific needs – unique items, high-quality produce, or a prepared meal – who also value the ability to get in and out quickly.
In contrast, leading traditional grocers like H-E-B and Kroger thrive on a classic supermarket model built around frequent, comprehensive shopping trips. With the highest share of loyal visitors (38.5% and 27.6% respectively), they command a reliable customer base coming for full grocery runs and taking time to fill their carts.
Value grocers follow a different, but equally effective playbook. Positioned as primary “fill-in” stores, they sit between traditional and fresh formats in both dwell time and visit frequency. Many rely on limited assortments and a heavy emphasis on private-label goods, encouraging shoppers to build larger baskets around basics and store brands. Still, the data suggests consumers reserve their main grocery hauls for traditional supermarkets with broader selections, while using value grocers to stretch budgets and stock up on essentials.
1) Short trips surge: Under-10-minute visits have grown fastest, signaling a lasting behavioral shift.
2) Fresh formats thrive on convenience: Small footprints, prepared foods, and specialty items align with quick missions.
3) Traditional grocers retain loyalty: Traditional grocers such as H-E-B and Kroger attract frequent, comprehensive stock-up trips.
4) Value grocers fill the middle ground: Limited assortments and private label drive larger baskets, but main hauls remain with traditional supermarkets.
5) Fresh formats as supplements: Fresh format grocers such as The Fresh Market capture quick, specialized trips rather than weekly shops.
While broad market trends favor value and fresh-format grocers, certain traditional grocers are proving that a tailored strategy is a powerful tool for success. In the first half of 2025, H-E-B and Harris Teeter significantly outperformed their category's modest 0.6% average year-over-year visit growth, posting impressive gains of 5.6% and 2.8%, respectively. Their success demonstrates that even in a polarizing environment, there is ample room for traditional formats to thrive by deeply understanding and catering to a specific target audience.
These two brands achieve their success with distinctly different, yet equally focused, demographic strategies. H-E-B, a Texas powerhouse, leans heavily into major metropolitan areas like Austin and San Antonio. This urban focus is clear, with 32.6% of its visitors coming from urban centers and their peripheries, far above the category average. Conversely, Harris Teeter has cultivated a strong following in suburban and satellite cities in the South Atlantic region, drawing a massive 78.3% of its traffic from these areas. This deliberate targeting shows that knowing your customer's geography and lifestyle remains a winning formula for growth.
1) Traditional grocers can still be competitive: H-E-B (+5.6% YoY) and Harris Teeter (+2.8% YoY) outpaced the category average of +0.6% in H1 2025.
2) H-E-B’s strategy: Strong urban focus, with 32.6% of traffic from major metro areas like Austin and San Antonio.
3) Harris Teeter’s strategy: Suburban and satellite city focus, with 78.3% of traffic from South Atlantic suburbs.
