The importance of the Price, Promo, Rewards pillar is trending up. There are several levers that compose this pillar, but the most important one is “store already has low prices, without using lots of coupons or special sales”, a measure of base price perception. Depending on geography, this base price attribute drives 40% - 60% of variation in overall price perception. The rest of the attributes – advertising/comms, private brand, promotion volume, promotion depth, loyalty/rewards, presence of value/large packs – altogether make up the other half.

The spread between product quality perception for the U.S. grocery industry and base price perception is as wide in 2025 as it was at the height of inflation in 2023. For the average U.S. grocer, 72% of customers agree that the retailer offers the highest quality products, but only 43% agree that the retailer already has low prices without relying on promotions or other savings mechanics. This is a 29 point gap between what is essentially quality and base price satisfaction.

While actual inflation has been relatively tame since the beginning of 2024, customers remain frustrated with grocery industry everyday prices, and the industry hasn’t recovered any goodwill this year that was lost when inflation first started to take hold in 2022. The uncertain economic environment of 2025, creeping inflation in the back half of 2025, and pockets of spiking unemployment have not made it any easier for the industry or customers.

At the same time, the degree of perceived differentiation in base prices between retailers has risen, while the perceived differentiation in quality has declined.

This means that customers are seeing clearer and clearer differences in the market between retailer options, in terms of overall value (the quality/savings equation). Certainly, outlier retailers are driving better price perception while the market in general is declining, and certainly outlier retailers are also narrowing quality gaps they might have had to market leaders.

This means we have a quality convergence occurring in the industry, at the same time we have a savings divergence. The retailers leading this charge are the ones likely to win out.

Quality Convergence and Price Divergence

In an earlier section of this report, we detailed the 7 retailer segments in the market, on the Value Core. Different degrees of convergence and divergence are happening between these segments:

• Divergence: The increasing differentiation in base price perception is happening because, since 2023, we’ve seen Quality-First and those Leaning Quality getting noticeably worse on base price perception. So the base price perception gap is widening between these groups and those on the Savings side of the equation.
• Divergence: The true heroes in the market, at least for consumers, are the Savings-First retailers. They are the one group driving better base price perception while the rest of the market fails to meet the contextual headwinds.
• Convergence: More worryingly for everyone else, Savings-First retailers are improving product quality perceptions at an even higher rate. They are also, therefore, largely responsible for the Quality convergence we are seeing. For customers, this means that retailers good at saving them money are getting even better, and they feel like they are having to trade-off less on quality to get those savings. In other words, Savings-First retailers are clearly improving their Value Core, while others are not clearly doing so. The best examples of this are Walmart, Aldi, and Smart & Final. They are all Savings-First retailers, and each of them has driven both product quality perception and base price perception improvements since 2023. What’s more impressive is that these same retailers are among only 7 in the entire U.S. market to be in the same or better place on base price perception, compared to 2020, before inflation took hold. The market can look to these retailers for a masterclass in navigating this complex environment.
• Convergence: On the Quality-side of the equation, our Quality First Non-Conventionals have seen their product quality perception slide, while at the same time their regional supermarket strategic neighbors have been driving quality perception improvements. So, for customers focused on Quality, they are seeing a convergence happening between Non-Conventionals and the better regionals – a worrisome trend for retailers like Whole Foods, Sprouts, or Fresh Market.
• Left Out: The Undifferentiated have become even more so over the past few years. They are starting, generally, from a better place on quality perception than Savings-First retailers, so they’ve seen this lead slip, which is hindering their growth. They also started from a better place on base price perception than Quality-First retailers, but they’ve seen this lead slip, too. Before the events of the past 5 years, they were getting squeezed on both ends, and the pressure has only increased.