Companies in the Zacks Retail – Supermarkets industry are leveraging consistent consumer demand while accelerating the use of AI-driven omnichannel strategies to deliver greater convenience, efficiency and personalization. These initiatives are strengthening the competitive positions of leading players such as Walmart Inc. (WMT Quick QuoteWMT - Free Report) and The Kroger Co. (KR Quick QuoteKR - Free Report) , supporting their prospects for sustained long-term growth.

At the same time, the industry continues to navigate economic challenges that are influencing shopper behavior. Rising labor expenses, store modernization efforts and ongoing technology investments are weighing on margins. In response, retailers are adjusting their product mix, focusing on value and updating merchandising to keep pace with changing shopper needs.

About the Industry

The Zacks Retail – Supermarkets industry includes supermarket retailers that offer grocery, health and beauty aids, household chemicals, electronics, stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts, entertainment products, home furnishings and more. Players in this industry operate through various formats such as supermarkets, multi-department stores, retail stores, discount stores, supercenters, hypermarkets and warehouse clubs. Food retail accounts for a chunk of their business. The industry has undergone a significant transformation over the years, with e-commerce playing a strong role. Given consumers’ rising preference for online shopping, industry participants have enhanced pickup and delivery services and are offering easy payment options.

Major Trends Shaping the Future of the Supermarket Industry

Advanced Omnichannel Acceleration: Supermarket chains are intensifying their focus on blending digital and physical retail to offer a unified shopping experience. Investments in modern store formats, broader assortments, and smarter inventory systems are enhancing convenience and efficiency. With online grocery adoption staying strong, retailers are fast-tracking digital upgrades through technology partnerships, acquisitions, and improved logistics and payment ecosystems. Services such as same-day delivery, curbside pickup and contactless checkout have become core expectations. Artificial intelligence now plays a central role, powering real-time inventory management, personalized marketing and data-driven customer engagement. These innovations are redefining the supermarket model and setting the stage for sustained growth in a tech-enabled, convenience-driven marketplace.

Stable and Resilient Consumer Demand: Grocery retailers continue to benefit from steady demand, supported by the essential nature of food and household staples. Despite economic uncertainty, both in-store visits and online orders remain robust, underscoring the sector’s defensive appeal. Shoppers are increasingly drawn to fresh, healthy and locally sourced options, while digital convenience continues to drive repeat purchases. Retailers are adapting quickly, refreshing assortments, enhancing value propositions and leveraging data insights to align with evolving consumer habits. This resilience, combined with the industry’s agility, keeps supermarkets well-positioned as dependable performers within the broader retail landscape.

Profit Margins Under Pressure: Supermarket players are battling persistent cost inflation across operations. Rising labor costs, store refurbishments, and heavy spending on e-commerce and technology upgrades continue to elevate expenses. Marketing, digital initiatives and competitive promotions further weigh on margins. In addition, higher import tariffs and supply-chain disruptions are inflating procurement costs, while cautious consumer spending adds pressure on pricing power. Retailers are increasingly focused on optimizing efficiency, managing expenses, and prioritizing strategic investments to protect margins while maintaining innovation and service quality.

Zacks Industry Rank Indicates Robust Prospects

The Zacks Retail – Supermarkets industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #98, which places it in the top 40% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. 

Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence about this group’s earnings growth potential. Since the beginning of August 2025, the industry’s consensus earnings estimate for the current fiscal year has risen by a cent.

Let’s look at the industry’s performance and current valuation.

Industry Versus Broader Market

The Zacks Retail – Supermarkets industry has outperformed the S&P 500 and the broader Zacks Retail – Wholesale sector in the past year.

The industry has surged 28.8% over this period compared with the S&P 500’s growth of 17.5%. Meanwhile, the broader sector has advanced 12.2% in the said time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing retail stocks, the industry is currently trading at 34.48X compared with the S&P 500’s 23.39X and the sector’s 24.61X.

Over the last five years, the industry has traded as high as 34.48X and as low as 17.55X, with the median being at 22.15X, as the chart below shows.

Price-to-Earnings Ratio (Past 5 Years)

2 Supermarket Stocks to Keep a Close Eye On

Walmart: The Zacks Rank #3 (Hold) company is benefiting from the inherent strength of its highly diversified business model. The company's strong omnichannel strategy has boosted traffic at physical stores and digital platforms. Walmart’s focus on improving delivery services is successful, leading to steady grocery market share gains. Key initiatives, such as Walmart Marketplace, Walmart Connect (its advertising platform) and Walmart+ (its membership program), are not only enhancing customer engagement but also contributing to higher-margin revenue streams. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for WMT’s current fiscal year earnings per share (EPS) has remained unchanged in the past 30 days at $2.60. Shares of Walmart have rallied 29% in the past year.

Price and Consensus: WMT

The Kroger Co.: The Zacks Rank #3 company continues to leverage its customer-first strategy, robust private label portfolio, and expanding digital ecosystem to drive shopper engagement and loyalty. Strength in pharmacy, personalized promotions and investments in fresh food offerings underpin its core growth. Digital initiatives, including fulfillment expansion and Boost membership, are gaining traction, while retail media and health & wellness offer incremental profitability. Investments in automation and AI-driven inventory management continue to enhance operational efficiency, reduce waste and improve margins, positioning Kroger for long-term scalable growth. 

The Zacks Consensus Estimate for KR’s current fiscal-year EPS has remained unchanged at $4.79 in the past 30 days. Kroger’s shares have jumped 21% in the past year.

Price and Consensus: KR