Why Do Millennials Hate Groceries?

Last week, the Wall Street Journal reported that twenty- and thirtysomethings are bidding adieu to yet another cultural mainstay of the Baby Boomer generation—shopping trips to supermarkets. With an abundance of options on the streets and at their fingertips, young shoppers are eating out at restaurants and bars, ordering in on their phones, or snagging groceries at convenience stores, such as CVS, and superstores, such as Walmart.

Supermarkets, meanwhile, are stuck in a middle that is being hollowed out by choice and technology. “I don’t think we’ve seen shopping change so dramatically ever,” Marty Siewert, senior vice president for consumer and shopper analytics at Nielsen, told reporter Heather Haddon.

But this story reflects two universal truths about culture. First, many cultural changes for which Millennials are initially blamed really reflect broader trends affecting even the oldest consumers. Second, many cultural changes are really reversions to old norms.

So what’s the real story here? Yes, Millennials are shifting their spending toward restaurants and bars and away from grocers. But it’s not an unprecedented shift. They’re simply returning to their mid-aughts levels of restaurant spending.

Although it is always emotionally satisfying to blame young people for wrecking the world order, the shift in Millennial food preferences is not exclusive to Millennials. Using data from the Consumer Expenditure Survey, a division of the Bureau of Labor Statistics, here is a graph showing restaurant spending (technically: “food away from home”) as a percent of total food spending for older Millennials—25-34-year olds. This is not a sudden shift toward restaurants, so much as a halting, start-and-and-stop move away from groceries and food at home, which still accounts for the majority of Millennial food spending.

I wondered if the Millennial slow shift toward restaurants was unique. So I added two more age groups to the picture--Gen-Xers (older thirtysomethings and younger fortysomethings) and senior citizens.

Now a clearer picture is coming into view. The big story here is not that young people are uniquely turning away from groceries. Rather, the story is a structural shift toward eating out at restaurants, among Millennials and their parents (and perhaps even their grandparents). Between the first year of the Bill Clinton's administration and the middle of George W. Bush's presidency, senior citizens' restaurant spending rose from 27 to 38 percent of their food budget, far surpassing the increase among shoppers under 45.

Economists have found the same shift toward restaurant dining and away from old-fashioned grocers. Using Census data, the economist Mark J. Perry calculated that for the first time on record, Americans are spending more money at restaurants and bars than at grocery stores.

Today’s shoppers are going out to restaurants more often. But they’re also dividing their grocery shopping among several stores, rather than relying on one supermarket.

In 2005, two-thirds of shoppers said that their local supermarket was their primary shopping destination, according to the 2016 U.S. Grocery Shopping Trends report from the retail trade group FMI. This year, fewer than half of shoppers do. The hegemony of the supermarket has been broken by the rise of food shopping options, particularly convenience stores, superstores, and online shopping.

But this shopping future is not a brave new world, so much as the old world made new again. The supermarket was an invention of the early 20th century; King Kullen's supermarket, which opened in 1930 on Long Island, is considered the nation’s first. Supermarkets were an innovation in an era of “mom-and-pop stores, butcher shops, greengrocers and fish markets,” as the New York Times characterized the shopping landscape of the 1920s. They were beneficiaries of the technologies of their time—cars, refrigeration, urbanization, and working mothers who needed fast and easy meals for their family.

But today’s shoppers are springing for options in a market that supermarkets once monopolized. Modern shoppers divide their shopping among superstores like Walmart, supermarkets like Giant, specialty shops for bread and coffee, and online shopping for all of the above. It is what industry analysts are calling "grocery channel fragmentation,” and nothing in this retail sector is growing faster than than the low-end. In a reflection of the slow recovery, dollar and convenience stores accounted four in five new food retailers that opened since 2013.

So what seems to be a strictly Millennial trend is in fact part of a much broader cultural shift. Restaurants are eating America’s food budget, while Walmart and convenience stores are eating America’s groceries.