For years, conventional wisdom suggested that grocery retail would eventually become a contest dominated by scale.
The largest chains would use their buying power, technology investments, data capabilities, and distribution networks to dominate the industry. Regional supermarkets? Well, they’d be forced to either consolidate or retreat into niche positions.
Yet, as we all know, that’s not what happened – not by a longshot. .
Instead, many of the Northeast and Mid-Atlantic’s most successful grocery retailers continue to grow, invest, and maintain and grow fiercely loyal customer bases, and all of this despite competing against Walmart, Costco, the big nationals, and, of course, Amazon.
A new report from McKinsey & Company that we’ve been looking at explains why.
The global consulting firm’s State of Grocery North America 2026 report argues that, while national retailers unquestionably benefit from scale, value investments, digital capabilities and innovation, regional grocers continue to perform very well where they can offer differentiated fresh departments, prepared foods, and distinctive in-store experiences.
In short, the report suggests that, at a regional level, competitive advantage comes from building a system of strengths. Single tactics, however well executed, don’t seem to cut it.
That observation should sound familiar to anyone in grocery retail in the Northeast.
These Regionals Are Playing to Their Own Strengths
Take Wegmans, for instance.
The Rochester, NY-based chain is hardly a small operator, but it doesn’t compete head-to-head with Walmart on price alone. Instead, it has spent decades building a reputation around fresh foods, prepared meals, bakery, cheese departments, culinary expertise and food culture in general.
In recent years, Wegmans has also shown how its basic proposition can translate into denser, mixed-use locations, including urban-style stores where prepared foods and meal solutions play a larger role. That’s different from Whole Foods Market’s Daily Shop concept, but it points to the same broader trend: retailers adapting store formats to capture smaller, more frequent, mission-driven trips without abandoning the fresh-food proposition that defines the brand.
Market Basket offers us a different example. The Massachusetts-based retailer has earned one of the most loyal followings in grocery by combining aggressive pricing with high-volume operations and strong execution. It’s been reported that its customers routinely sail past competing stores to shop there. While value is central to its appeal, the chain’s reputation extends beyond low prices. Consistency, service levels, and fresh offerings have helped build a following that its national competitors have struggled to replicate.
The same pattern appears throughout the Mid-Atlantic.
ShopRite operators have long relied on local ownership, merchandising flexibility and strong community ties. McCaffrey’s has differentiated itself through fresh foods, prepared offerings and service. Stew Leonard’s transformed grocery shopping into an experience – to put it mildly – decades before “experiential retail” became an industry buzzword.
This Is What Keeps ‘Em Coming Back
They’re geographically varied, they’re different sizes, but these retailers share a kind of clarity. They know why their customers choose them.
That sense of clarity is critical in 2026 because, as we’ve seen, shoppers are behaving quite a bit differently than they did just a few years ago. McKinsey found that grocery purchase frequency increased 5% year over year, while units purchased per trip declined 3.2% and spending per trip fell 1.5%. The upshot is that consumers are making more trips, but those trips are usually smaller and more mission-driven.
At the same time, approximately one-quarter of consumers report purchasing prepared foods from grocery stores instead of restaurants, while prepared-food purchase frequency increased 9% year over year.
That’s great news for regionals; the numbers play directly into their strengths.
When shoppers are making a quick stop for whatever reason, scale matters much less than execution. As we’ve seen time and again, the retailer that best satisfies that immediate need often wins the trip – and the repeat business.
McKinsey’s consumer research also found that 60% of shoppers say obtaining good value is more important today than it was a year ago, while 47% are purchasing more private-label products and 43% are comparing prices more carefully.
Now, that might seem like an advantage for the industry’s largest players, and in some ways, it is.
Where Regionals Go From Here
But the report’s broader message is that value alone is not enough. Retailers increasingly need multiple, systemic advantages working together. McKinsey found that 88% of grocers expect greater integration between promotions and loyalty programs, 88% anticipate more targeted offers, and 84% expect increased personalization in the coming years.
Over the next few years, the regional winners will be the ones building those systems.
And of course, for regional supermarkets, that system probably looks different than it does for a national chain. It may revolve around fresh departments, prepared foods, service, local relevance, distinctive private brands, or signature products that shoppers cannot find elsewhere.
At the end of the day, a regional is never going to out-Walmart Walmart; they have to build great systems, leverage every advantage, and be better at being themselves.