When the coronavirus pandemic exploded in March 2020 – and for years afterward – the word “unprecedented” was everywhere: In these unprecedented times… entirely unprecedented times… an unprecedented situation… unprecedented… unprecedented…
To the point where, by the summer of 2022, things felt pretty well “precedented.”
Like everything else, the grocery industry was navigating a situation where the abnormal was becoming something like normal. Closures, empty shelves, supply chain disruptions, labor shortages, and the hottest inflation in four decades.
Of course the hits kept coming; tariffs, higher interest rates, geopolitical tensions, highly volatile commodity markets. It seemed the industry never had the chance to catch its breath as the world lurched from one crisis to the next.
Nobody, least of all retailers, chose that environment, but they certainly had to navigate it.
There’s a Change Brewing
Now, a new report from Circana suggests something important is happening. The firm’s latest data show U.S. retail food and beverage sales grew 2.2% during the first half of 2026, almost exactly in line with its earlier forecast, while projecting 2% to 3% annual growth in 2027 – a dramatic shift from the nearly 7% compound annual growth rate the industry experienced between 2019 and 2024.
No – we’re not returning to “how it was” in 2019; consumer habits have changed far too much for that to happen.
But we do seem to be returning to something equally significant: predictability.
Growth is expected to settle into the 2% to 3% range, much closer to the 2.5% to 3.5% annual pace retailers considered normal before COVID. Inflation is continuing to moderate, however unevenly. Shoppers are becoming more deliberate than desperate. Circana argues consumers are no longer simply trading down or cutting back. Instead, they’re “optimizing.” That means using smaller pack sizes, shifting between brands and private label, reducing waste, and increasingly relying on AI-assisted shopping tools to stretch every dollar.
In short, the industry is entering what Circana calls a “period of rationalization.”
That’s something we might call the “new normal.” And it looks pretty normal. I admit, that sounds pretty dry and unexciting, but it might be one of the biggest grocery stories of the year.
See, extraordinary times have a way of masking ordinary performance.
No More Rising Tide to Lift All Boats
When food prices are climbing at historic rates, it’s difficult to know whether sales gains came from brilliant merchandising… or simply higher prices. When supply chains are broken, shoppers often buy what’s available instead of what they prefer. When consumers are in panicked stockpiling mode, almost everyone looks like a merchandising genius.
Normalization strips away those advantages – and any excuses. That’s especially true because Circana expects volume to remain essentially flat, with future dollar growth driven primarily by modest price and product mix rather than consumers buying dramatically more groceries. Inflation’s not going to boost every basket from here, nor will panic buying or stimulus checks. The better stores will win.
That’s a much tougher standard, and one the industry is already coming to grips with, with the intense focus on stronger fresh departments, smarter assortments, top-flight private labels, loyalty and data, engagement – and all the other operational issues we write about here every day!
During periods of disruption, everyone is fighting the same fire, but when conditions stabilize, competitive advantages kick into high gear. It becomes obvious who the good retailers are – and which are mediocre.
That’s why I suspect the next few years will belong to companies that invested wisely while everyone else was focused on surviving. They modernized stores, expanded prepared foods, strengthened fresh departments, improved their data capabilities, built excellent loyalty ecosystems, invested in their associates, and relentlessly upped their execution.
They’ll need those advantages because Circana no longer expects macroeconomic tailwinds to do much of the heavy lifting. Instead, modest price/mix gains and disciplined operations are likely to define the next phase of the competition.
The grocery business has always rewarded disciplined operations, even if the past few years have made it tougher to see just who they were.
Circana’s outlook suggests that particular fog is beginning to burn off.
Welcome to the new normal.