According to Coresight Research, the U.S. grocery retail market is expected to experience sales growth of almost six percent in 2023, driven by lower inflation, an ongoing consumer shift toward foodservice and share gains by nontraditional grocery retailers.
Its report, “Market Navigator: U.S. Grocery Retailing,” Coresight projects total U.S. grocery retail sales to rise 5.6% to $1.5 trillion this year, down from an inflation-bolstered 9.2% increase to $1.42 trillion in 2022.
Inflation is expected to be less of a factor for 2023 as food-at-home pricing continues to recede. The report noted in the first eight months of 2022, food-at-home inflation climbed steadily over, peaking at 13.5% year-over-year growth in August 2022, which was the largest increase in 43 years. Recently the inflation rate has eased, dropping to 8.4% in March 2023 and reaching 5.8% in May.
“As such, we expect a moderate real-term (volume) retail sales decline in the grocery market in 2023, as consumers remain judicious with their spending,” Coresight said in its analysis but warned there could be unseen facts ahead.
“Although we expect food-at-home inflation to slow significantly in the second half of the year, grocery retailers may continue to experience unexpected cost increases from consumer-packaged goods vendors, which will likely be passed along to consumers,” Coresight noted.
Beyond this year, Coresight forecasts U.S. grocery retail dollar-sales growth to slow, up 4.2% year over year to $1.56 trillion in 2024 and later up 3.3% to nearly $1.74 trillion in 2027.
Coresight also highlighted consumers might be dining out more. Of total U.S. food spending, food-at-home held a 47% share in 2022, but the company projects that to slide to 44.8% in 2027, based on USDA data. Meanwhile, the food-away-from-home share of 53% in 2022 stands to expand to 55.2% in 2027.