Back when I regularly shopped at Costco, my visits tended to focus on a mix of novelty and long-term need. I might come home with a book, a new jacket, some K-Pods, a 12-pack of toothbrushes, a drum of aspirin, or maybe a comically large candy pack, but I almost never entered the grocery section.
I never really considered the chain an option for perishable because large quantities made little sense in a three-person household.
Now, however, Costco has quietly become a growing player in grocery.
“Fresh comparable sales were up mid-single digits, led by bakery and meat,” Costco CFO Gary Millerchip said during the chain’s fourth-quarter earnings call.
Costco threatens Kroger, Publix, and other grocery chains
If shoppers are increasingly focused on value, Costco has several advantages.
Kroger CEO Greg Foran has even dismissed the idea of his company winning on cost.
“We do not need to be the lowest-priced retailer. We need to be more competitive, more consistent and easier for customers to understand. When a customer is deciding where to shop, we want more of them choosing Kroger more often because the value is clear, the experience is great and the trust is there,” he said during the chain’s third-quarter earnings call.
The problem for Kroger and other traditional grocery chains like Publix, Stop & Shop, Albertsons, and more it that price has become a driving factor.
The 2026 State of the American Shopper report shows nearly one-third (31%) of U.S.-based shoppers say they have tried a new retailer in the past 12 months, and half (53%) of consumers say price is their top factor in deciding which brands or retailers to shop.
Traditional grocery chain used to win, at least partly, because of convenience and routine. Now, shoppers are more willing to go where the best value is
“According to consumer sentiment captured in the report, years of high inflation, economic volatility, and unsteady labor markets are coming to a head. U.S. consumers are looking beyond simply trimming budgets and weighing day-to-day purchasing decisions. Instead, the survey results indicate that consumers are more open to shopping around for value,” the study showed.
Shutterstock
Costco has been gaining share
“Market share figures also show Costco steadily gaining ground each year. Numerator data put the club retailer’s grocery market share at the end of June at 8.3%, up from 7.9% at that point the year before and 7.6% in mid-2024,” according to Grocery Dive.
Costco’s gains come at a time when traditional grocery chains also face pressure from discounters like Aldi, and giant retailers including Amazon, Walmart, and Target.
In the battle for new customers, Costco has been beating even Aldi when it comes to value perception by generation.
“While Costco wins the overall value crown with a net score of 38 among U.S. adults (compared to Aldi’s score of 35), perception shifts significantly based on generation,” according to a survey done by YouGov.
More Costco:
- Costco keeps discontinuing popular products
- Discontinued Costco member favorite returns to shelves
- Costco’s new service beats Amazon at its own game
Generation Z, people who are 14-29 in 2026, see Costco in the most positive light and that’s important because at the older end of that spectrum is where people start doing their own grocery shopping.
“Gen Z records the greatest gap between the two budget-focused brands. Between January and August 2026, Costco recorded a Value score of 44 among Gen Z adults, compared with 32 for Aldi – a 12-point difference in net score,” the survey showed.
Related: History of Costco: Company timeline and facts
Costco shared where it’s winning
Millerchip explained why Costco was growing sales in bakery and meat.
“Growth in bakery reflects our success in adding new and indulgent items at great value for our members. An example of this is our in-house pastries, which grew by over 100% in the quarter,” he said.
The meat increases were more about overall value as well as affordable indulgences.
“In meat, our commitment to great quality and value fueled continued growth in both lower-cost proteins such as poultry and ground beef as well as premium items such as USDA Prime beef and Wagyu,” he added.
GlobalData Managing Director Neil Saunders sees that battle as a simple one.
“The main battleground for grocery is focused on value,” he told Frozen & Refrigerated. “After years of hefty inflation, consumers are weary of high prices, and they are shopping around to reduce their grocery bills. Any retailer that wants to gain or defend market share needs to engage in this battle at least partly.”
He believes Costco has an edge that has been growing. That advantage is showing up in Costco’s grocery market share, which has risen steadily even as consumers have had more options for finding lower prices.
“One of the factors underpinning the success is the widening gap in perceived value. More consumers now use warehouse clubs, especially for essentials, because they know that buying in bulk saves them money. The catch is that, with the membership fees and up-front outlays, this has a stronger appeal among higher income shoppers than lower income ones,” Saunders posted in LinkedIn.
