Last updated on June 12th, 2024
by Diana Leza Sheehan, founder and principal consultant, PDG Insights
From bustling cities to quaint coastal towns, the northeastern United States offers a broad array of cultures and lifestyles. This extends far beyond accents and historical landmarks.
Venture into a grocery store in the Northeast, and one encounters a retail landscape unlike any other in the country. Grocers have found an unparalleled way to incorporate the history and culture of their communities that is so indescribably “East Coast.”
At the same time, the stores still accurately reflect vast differences state by state and city by city. A visit to a store in Washington, D.C., will be drastically different than one in Manhattan, Boston or Baltimore.
In this report, part of Shelby Publishing’s Successfully Selling Regional Grocers series this month, we take a look at the Northeast grocery store market.
Complexity of consumers
From Maine to Maryland (D.C. included), the Northeast accounts for 19 percent of the U.S. population – about 65 million people. However, with 11 states, the potential for growth differs drastically.
While the region’s net population is stable, major cities such as New York, Philadelphia, Baltimore and Boston continue to see declines, as residents move to suburbs and less densely populated areas that offer lower cost of living, more affordable housing and additional job opportunities.
In fact, the two most populous states – New York and Pennsylvania – which represent 50 percent of the total region’s population, are shrinking slightly, driven by people leaving New York City and Philadelphia for suburbs and rural areas in neighboring states such as New Jersey, Delaware and Maryland.
Looking at the demographic makeup of the Northeast grocery region is quite different than in other regions of the country. U.S. Census data shows that states such as Maine, New Hampshire and Vermont skew older and Caucasian. Delaware, Pennsylvania, Massachusetts,and Rhode Island have strong diverse populations in the major cities, but suburbs and rural areas tend to be significantly less diverse.
New York and New Jersey boast thriving Latino, Black and Asian populations, while more than one-third of the Maryland and Washington, D.C., populations identify as Black or African American. Combined with a strong Latino population, this makes both markets majority-minority.
[RELATED: Independent Grocers Building Strong Customer Relationships In Connecticut]This shift from urban to suburban and rural areas, paired with varied diversity of the population and how widely it changes from state to state and city to suburb creates interesting opportunities and challenges for grocery retailers. National grocery chains may struggle, but independents that effectively operate in these markets have a clear advantage.
Realm of regional dominance
Unlike the national chains that dominate grocery shelves in other parts of the U.S., the Northeast boasts a thriving network of strong regional players.
Ahold Delhaize Americas competes effectively with its Stop & Shop, Hannaford and two Giant banners dispersed across all states in the region. Independent retailer cooperatives thrive, including Wakefern, with over 350 stores led by its ShopRite and Price Rite banners across New Jersey and New York and more.
Wegmans consistently serves as a best-in-class retailer innovating in perimeter categories and foodservice throughout the region. Roche Brothers out of Massachusetts operates with a similar strategy. Big Y, Market Basket, Giant Eagle, Weis Market, Price Chopper and Tops all have captured pieces of the grocery market throughout the region with assortment, pricing and store format strategies tailored to local markets and consumers.
In addition, there are hundreds of independent family-owned players, such as Stew Leonard’s, that break through with unique offers, innovative services and notable customer service to capture grocery consumers’ dollars and loyalty.
Despite its unique character, the Northeast grocery sector is not immune to national competitors. Discount grocery chains such as Aldi and Lidl are making in-roads in the region, appealing to budget-conscious shoppers. In addition, major national players including Whole Foods, Walmart and Costco have carved out market share.
Kroger has a limited presence in the region but does compete in Pennsylvania under the Gerbes banner and in Delaware and Maryland with Harris Teeter. Albertsons-owned banners Shaw’s, Acme and Star Market also hold a significant share of the grocery market throughout the Northeast.
While approaches may differ, all these players attempt to cater to the specific tastes and preferences of their local customer base, offering a curated selection of products alongside national brands.
What shoppers want: Exploring critical consumer themes
Consumer trends in the grocery space tend to be consistent throughout the country. Consumers continue to lean into natural and organic brands and products. Value is a function of convenience, price and the X-factor that is tied specifically to a retailer’s ancillary offers and customer support.
Private label demand is strong across categories and states. The role of digital engagement drives loyalty for shoppers regardless of where they shop. And the role of technology – both shopper-facing and behind the scenes to improve operational efficiency – continues to differentiate independent and national retailers.
However, regardless of region, there are some variations on how themes translate to retailer and brand preferences and consumer preferences. Age, income, race and ethnicity – and even the access to specialty retailers versus national players across channels, – will impact what matters most to consumers.
When looking explicitly at the Northeast, consumers prioritize similar things to the average U.S. consumer.
According to a 2023 survey by PDG Insights, consumers living in the Northeast are slightly more likely to favor retailers that promote eco-friendly or sustainably sourced practices or locally sourced products.
Six of 10 shoppers in the region say they prefer grocery stores that emphasize sustainable and environmentally friendly practices, even if it means higher prices. In fact, when thinking specifically about products with eco-friendly packaging, 38 percent of Northeast consumers say they are willing to pay more for that product. More than half say they would like to see initiatives like reduced or eco-friendly packaging and food waste reduction practices implemented.
Additional research by PDG Insights explored the role of local sourcing to consumers. In the region, 89 percent of consumers intentionally bought local products in at least one category or department in their grocery store. This was most important in perimeter categories including produce, dairy, meats and seafoods.
More than half (52 percent) of Northeast consumers feel grocers need to prioritize sourcing local produce and products as part of broader sustainability initiatives, and they personally prioritize local brands to help build up the local economy and lessen their environmental impact. This is consistent with what we see among consumers in other regions in the U.S.
As with other regions, private label is a critical piece of consumers’ product portfolio today, and shoppers in the Northeast illustrate similar preferences. Nine of 10 shoppers say they purchase private label products at least occasionally. In the Northeast, 77 percent say they purchase these products often or occasionally, suggesting a strong pattern of use.
More importantly, 64 percent of shoppers in the region believe they are buying more private label products this year versus last year, significantly higher than other regions. More than 41 percent plan to replace some national brands with private label alternatives in the future.
When deciding what retailer to shop, 89 percent of Northeast consumers say that exclusive and unique private label products influence their decision on where to shop. This creates a tremendous avenue for differentiation for retailers.
Look ahead: Embracing change while preserving identity
The future of grocery retailing in the Northeast promises to be an exciting blend of innovation and tradition. As technology continues to evolve, we can expect to see further integration of online and offline shopping experiences. However, the region’s strong emphasis on local brands, fresh produce and community engagement is likely to remain a cornerstone.
With 65 million consumers, the Northeast grocery industry is too large not to be attractive to national players. Yet, large regional retailers and growing independents will continue to demand shopper loyalty and lead innovation throughout the Northeast.
The Northeast region, more than others, expects its grocers to understand the nuances of a highly fragmented market landscape with a more diverse shopper base that is different by state, city and zip code.
Beyond the focus on local, key themes such as sustainable, eco-friendly and natural and organic products continue to provide meaningful opportunities for retailers, driven by consumer demand. Private label growth will continue to evolve and could provide a path for emerging brands to build relationships with retailers while driving scalable growth.
Diana Leza Sheehan, CEO of Evanston, Illinois-based PDG Insights, empowers emerging brands and retailers to make more effective strategic decisions. By leveraging data, she unlocks cost-effective consumer insights to craft retail sales narratives and brand strategies. Her 25-plus year career in the industry across sales, insight and strategy provides a unique perspective for clients.
