In this blog, our ongoing analysis of grocery chains by region stays out west. And since California is an exceptionally large market – by population and area – this deep dive focuses solely on the Golden State, drawing on demographic and psychographic data to uncover how multiple grocers are finding foot traffic success.
Sharing is Caring
California is a high-value grocery market due to its robust visitation. Since January 2023, year-over-year (YoY) grocery visits in the state have consistently outperformed the nationwide average. It could be that the return of mission-driven shopping behavior – which has curtailed visits in the grocery space as a whole – is less prevalent in California where consumers are heavily car-dependent. Therefore, when it comes to habitual grocery stops, consumers in some of the state’s biggest cities likely haven’t taken their foot off the gas.
Unlike states in other regions, California’s visit share winners lead the pack by a thin margin. This is likely to do with the fact that the grocery space in California has some distinctive geographic divisions, with different brands taking the top spot in different regions within the state. But the state’s large population means even a small percentage of total grocery visits has big implications for brands.
Safeway – the dominant grocer in the state with 11% of the grocery visit share – has its locations concentrated in Northern California, while Ralphs – the second-place contender, with 9% of the state’s grocery visits – serves Southern California. Still, there are exceptions to California’s regional grocery dynamics. Trader Joe’s – with 7% of the grocery visit share – has locations statewide.
Zooming in on the grocery brands that are driving California’s YoY visit growth shows that while multiple chains had a generally positive first half of 2023, Food 4 Less punched well above its weight. While the chain only claimed 5% of the state’s grocery visits share in June 2023, Food 4 Less’ YoY visit growth outperformed the top three chains in the state for the majority of H1 2023.
Food 4 Less may be finding success due to its value perception among consumers looking to stretch their grocery budgets in the face of food inflation. Still, June 2023 saw an improvement in YoY visits from the previous month for all four of the grocers analyzed. And since food inflation is finally showing signs of cooling, this could indicate that some consumers are returning to grocery stores across the board.
Demographic Deep-Dive: Food 4 Less and Trader Joe’s
A closer look at the demographic characteristics of visitors to Trader Joe’s and Food 4 Less – the two California grocers analyzed with YoY visit growth every month of H1 2023 – reveals how multiple chains can find success in a dynamic economic landscape. Trader Joe’s has been able to drive visits from more affluent consumers – some of whom may have traded down from premium grocers – and Food 4 Less is resonating with consumers from large households that are likely to continuously replenish their supplies.
In H1 2023, the median household income (HHI) of Food 4 Less’ California visitors was 28% below the state average, while the median HHIs of visitors to Trader Joe’s was 23% above. Food 4 Less’ visitors also came from households that were – on average – 21% larger than the California average while Trader Joe’s visitors came from households with 11% fewer persons per household than the state average.
This suggests that Trader Joe’s has benefitted from higher-income consumers that have either been more resilient to the effects of inflation or traded down from premium grocers, while Food 4 Less has capitalized on larger households whose demand for food-at-home means they simply can’t cut back on grocery trips. Due to the rising cost of eating out, these multi-person households are also likely to be cutting back on restaurant visits – compounding the need for more grocery runs.
Bagging it Up
Competition for grocery visits in California is fierce with no one brand claiming a significantly larger visit share than the others. Still, with California’s large population, garnering even a small share of total grocery visits amounts to hefty foot traffic. Ralphs and Safeway do well by taking the number one and two spots, splitting the state’s largest population centers – Northern and Southern California.
California’s grocery foot traffic has proven its resilience in the face of inflation as value-oriented chains like Trader Joe’s and Food 4 Less come up big with both high-income consumers and large households.
For updates and more data-driven foot traffic insights, visit Placer.ai.