by Diana Leza Sheehan
The grocery retail landscape in the western United States is as diverse and dynamic as the region itself. Across states, we find one of the most varied geographic landscapes in the country. The region presents a diverse range of climates and terrains, from deserts throughout Arizona, Nevada and California to rainforests in Washington and Alaska.
This diversity plays a crucial role in influencing food production, logistics and, ultimately, what ends up on grocery store shelves.
With nearly 71 million residents, according to the U.S. Census Bureau, the West is highly populated. In fact, it accounts for 21 percent of the nation’s total population. While its most populous state, California, has seen a minor decline in residents, it still accounts for 56 percent of the region’s total – 39 million people.
The region has seen steady growth in eight of its 11 states, led by population gains in Arizona, Utah, Washington and Idaho. With four of 10 of the largest cities in the U.S. – Los Angeles, Phoenix, San Diego and San Jose – the region has a strong urban population. However, growth is also occurring in smaller rural and suburban areas. In fact, more than half of the top 15 fastest-growing large cities in 2021 were in Arizona and Idaho. Each of the cities listed had populations less than 150,000, but growth of 5 percent or higher.
Demographically, the West is a fusion of cultures and ethnicities. The Hispanic and Asian populations, which already are a significant force, continue to grow rapidly, driving demand for unique ingredients and brands.
For context, Latinos account for 30 percent of the West’s population (more than 21 million) and 73 percent of them live in California. In addition, more than 8 million Asians live in the region, accounting for over one-third of the nation’s entire Asian population.
These factors create a dynamic market where traditional American grocery stores must compete with specialty stores catering to specific ethnicities and dietary preferences.
Beyond the big box: Multifaceted grocery landscape
National grocery chains such Albertsons/Safeway, Kroger, Costco and Walmart boast a strong historical presence in the West, offering familiar brands and competitive prices. In addition, dollar stores have strong footprints in both rural and urban markets throughout the region.
Aldi’s presence is limited to California and Arizona; however, the retailer has been clear that the West will be an area of focus in the coming years.
In the discount spacer, Grocery Outlet has a strong competitive presence in the region with some 350 stores.
While large national players are a critical element of the grocery retail landscape, it is the diverse and effective regional and independent grocers that differentiate the region from other parts of the US.
Some of the premier regional retailers focused on the Hispanic market are based in California, Arizona and Nevada. Heritage Grocers operates Cardenas Markets in California, Arizona and Nevada and Los Altos Ranch Markets in Arizona.
In the Golden State, Northgate Gonzalez Markets and Vallarta Supermarkets each have dozens of stores in major metropolitan areas. Superior Grocers continues to expand in southern California.
In addition, some of the best-in-class retailers focused on the Asian market are headquartered in the West. While national retailers such as H Mart have a strong presence in California, regional players such as 99 Ranch Market have a solid footprint. Smaller players such as Uwajimaya and Grand Asia Market also are illustrating best practices in assortment and execution.
When looking at the natural/organic retail landscape, as well as regional players focused on upscale demographics, Sprouts Famers Market, Gelson’s Markets and Bristol Farms are just a few examples of chains drawing a diverse set of shoppers.
While Sprouts is a growing, national chain in the natural and organic sector, Gelson’s and Bristol Farms have been strong regional retailers that use their perimeter and prepared foods to differentiate themselves. Natural Grocers is another retailer in this space that has broken through in the region.
This large segment of the grocery landscape is fragmented and often one of the areas where we see smaller retailers thrive and drive innovation. Take, for example, New Seasons Market in Oregon.
Finally, smart independent regional chains have built portfolios customized to meet the needs of multiple audiences in the region. Food City in the Phoenix market is a banner owned by The Raley’s Companies, which also operates Raley’s Supermarkets and Bashas’. They focus more on mainstream consumers, while AJs Finer Foods targets higher-income shoppers.
[RELATED: Wild West Of Grocery: A Look At Dynamic Landscape Of Western U.S.]
What shoppers want: Exploring critical consumer themes
Consumer trends in the grocery space tend to be similar throughout the country.
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 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 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 West, consumers prioritize similar things to the average U.S. consumer.
When considering where to shop for groceries, factors that influence their decision include pricing and promotional strategy, the quality and freshness of products and the broader product assortment. However, West consumers do seem to be more focused on price as a value driver.
According to an August 2024 survey by PDG Insights, consumers within the region were more likely than their counterparts elsewhere to say they shop where they get the best prices, even if it’s not the best shopping experience. And more than half (58 percent) say they tend to buy lower quality products, provided they work. Yet, 57 percent also are willing to spend more on products that reflect their values.
Private label is a critical piece of U.S. consumers’ product portfolio today, and shoppers in the West are no different. Nine of 10 say they purchase private label products at least occasionally. In addition, 68 percent say they always or often buy private label products, second only to shoppers in the Southwest.
Three out of four shoppers report buying private label at least several times a month, higher than any other region. More than half of consumers in the West believe that private label is innovative, while 52 percent will choose one grocery store over another based on private label assortment.
It also is important for retailers and brands to understand that shoppers in the West are significantly more likely to be shopping with specific dietary parameters in mind, including for high protein or organic products, as well as lactose-free alternatives. In fact, 67 percent of consumers in the region report that at least some type of special dietary component is important to them, compared to 58 percent elsewhere.
Diana Leza Sheehan, CEO of Evanston, Illinois-based PDG Insights, helps emerging brands and retailers make more effective strategic decisions. By leveraging data, she unlocks 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.
Curious as to how you failed to mention WinCo in your article on the West. WinCo does over $10b in sales with just over 140 stores. It would be difficult, if not impossible, to find those kind of volume / per store numbers from any of the retailers you mentioned.
JR