2024 - A little sour, a little sweet

Grocery ended strong with December being strongest month of 2024, up 3.3% YOY.  The first time in 2024 where the YOY number topped 3%.  December units were up 1.48% YOY which was the second best month of 2024, and price was up 1.8% YOY which was the highest for 2024. For the year, sales finished up 1.7% YOY, units up 0.5% and price up 1.2%. 

I know I have kicked this horse a few times, but the first half of the year was rough, and the second half bounced back strong, driven almost entirely by better-than-expected unit growth. And December was the strongest month of the year, so hopefully this momentum will carry over into next year.

Sales

2024 actuals were largely within the forecast upper and lower bounds. December YOY sales came in at a 3.3% and we expected 2.8%. For the entire year, we predicted sales would be up 2.0% and they finished the year at 1.7%.

Units

Units exceeded the forecast bounds in the second half of the year. December units came in at 1.5% YOY and we forecasted 0.2%. For the year, we forecast 0% growth and we ended the year up 1.1%.

Price

Price trended along the bottom range of the forecast for much of 2024 but started to show some life the last four months of the year.

This is the CPI FAH YOY over view. Again, we can see CPI FAH rebounding in the last part of the year. It is interesting to see how high CPI FAH was in the previous two years and a bit surprising we did not see CPI FAH go negative in 2024.

Finally, we see the month-over-month view, which I find the most helpful when projecting forward. We can see how the early months exceeded the lower bounds as CPI FAH dropped. 

Comparing our price forecast to the actual CPI FAH values, we can see how the forecast consistently over estimated food inflation. But as we would expect, the lower prices did help units to rebound.

Last word(s)

The 2024 forecast aligned closely with actual sales.  We predicted 2% growth and it finished the year at 1.7%. We over forecasted price which we expected to be up about 2% and we under forecast units which we expected to be flat.

Based on the previous years 2020-2023, 2024 was a pretty quiet year.  It was a transition year between the Covid chaos and the post Covid trends, which will likely resemble the pre Covid years with unit growth around 1%, price growth around 2% and sales growth around 3%. And the 2025 forecast does look a lot like these pre Covid long run trends.

We did release the 2025 forecast in December. For those who did not see it, the sales forecast came in at 2.6% which was higher than I expected. Our confidence interval is 2.2% to 3.0%. This assumed 1.6% CPI FAH growth, 1.6% growth in Real Disposable Income, and a 2.4% increase in housing prices.

In the upcoming weeks, we will be providing our 2025 outlook for grocery sales, eCommerce, and grocery trends. We will dig a bit deeper into the current transition and how the next five years will look very different from the last five. It will require a shift in how grocery retailers go to market. Stay tuned...