Last updated on December 12th, 2024
by Diana Leza Sheehan / founder and principal consultant, PDG Insights
The grocery retail landscape in the Northeast United States is dynamic and multifaceted, characterized by a complex mix of regional players and national competitors. From the bustling urban centers of Boston, New York and Philadelphia to the quaint coastal towns of Maine and Maryland, the Northeast offers a diverse array of consumer preferences and shopping behaviors.
For starters, the region accounts for 19 percent of the U.S. population – some 65 million people. However, with 11 states in the region, the potential for growth differs. While the region’s net population is stable, major cities such as Baltimore, Boston, New York and Philadelphia continue to see population 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 region’s total population are both shrinking slightly, driven by people leaving New York City and Philadelphia for Delaware, Maryland and New Jersey.
Looking at the demographic makeup of the Northeast 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, Massachusetts, Pennsylvania and Rhode Island have diverse populations in major cities, but their suburbs and rural areas tend to be much less so. New Jersey and New York have thriving Asian, Black and Latino populations, while more than one-third of Maryland and Washington, D.C., identify as Black. Combined with strong Latino population, this makes both markets majority-minority.
This shift from urban to suburban and rural areas, paired with varied diversity of the population and how widely it changes creates interesting opportunities and challenges for grocery retailers. National chains may struggle, but independents 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 USA competes with its Hannaford, Stop & Shop and two Giant banners dispersed across all states in the region. Independent retailer cooperatives, including Wakefern, thrive in the Northeast. Led by its ShopRite and Price Rite banners, Wakefern has more than 350 stores across New Jersey, New York and elsewhere.
Wegmans serves as a best-in-class retailer that innovates in perimeter categories and foodservice throughout the region.
Massachusetts-based Roche Brothers operates with a similar strategy. Big Y, Giant Eagle, Market Basket, PriceChopper, Tops Friendly Markets and Weis Markets 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, including Stew Leonard’s, that break through with innovative services and notable customer service.
Despite its unique character, the Northeast grocery sector is not immune to national competitors. The rise of discount grocery chains such as Aldi and Lidl are making in-roads in the region, appealing to budget-conscious shoppers. Major national players such as Costco, Walmart and Whole Foods all have carved out a significant 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 Acme, Shaw’s and Star Market also hold a significant share of the grocery market.
There is some interesting exploration in the natural/organic retail sector. The Fresh Grocer, one of Wakefern’s banners, opened its first New York store in the fall and has locations in Pennsylvania and New Jersey. Whole Foods continues to launch its Whole Foods Market Daily Shop in New York City, with a strong focus on local brands and products.
What shoppers want: Exploring critical consumer themes
Consumer trends in the grocery space tend to be similar throughout the country, not just in the Northeast. Shoppers continue to lean into natural and organic brands and products. Value is a function of convenience, price and the “X” factor, which is tied 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 go. And technology – both shopper-facing and behind the scenes to improve operational efficiency – continues to differentiate independent and national retailers.
However, some variations exist from region to region as we look at emerging themes that translate to retailer and brand preferences and consumer preferences. Age, income, race and ethnicity – and access to specialty retailers versus national players across channels – will impact what matters most to consumers.
When looking at the Northeast, consumers prioritize similar things to the average U.S. consumer. The definition of value, however, is somewhat interesting for the region. When asked, 57 percent of Northeast regional consumers believe that value is about what you get, not about what you pay. This suggests there is more to value than price.
Yet just 45 percent say they will spend more to shop at a retailer that provides the best shopping experience. This doesn’t mean that store experience isn’t important for consumers but there is some prioritization that happens.
About 61 percent of shoppers in the Northeast say they will spend more for a product that reflects their values, which indicates they want personal connection to the brands they buy.
[RELATED: Midwest Grocery: How Rural Nuance Allows Regional Independents To Thrive]
When looking at what drives Northeast region consumers to choose a specific grocery store, retailer prices and promotions, as well as location, lead the list. That is consistent with what we see in other regions. However, 46 percent of consumers state the quality and freshness of products is a driving factor, much higher than in any other region.
While slightly lower, these consumers also are more likely to say they prefer online shopping and delivery options (25 percent vs. 19 percent), which perhaps reflects the region’s urban concentration.
Private label also is a critical piece of the consumer product portfolio today, and shoppers in the Northeast are no different. Nine of 10 shoppers say they purchase private label products on occasion, with about two-thirds (68 percent) defining their frequency as at least several times a month.
More importantly, 35 percent of shoppers in the region say they buy private label in six or more categories – much higher than other regions. Northeast shoppers say they believe private label provides good value and high quality.
More than half (55 percent) say they are buying more private label than they did last year, and 50 percent say they will choose a store based on its private label assortment. This creates a tremendous avenue for differentiation for retailers.
Diana Leza Sheehan, CEO of Evanston, Illinois-based PDG Insights, helps emerging brands and retailers make more effective strategic decisions. By leveraging data, she shares cost-effective consumer insights to plan 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.
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