In Q1 2026, Grocery & Gourmet brands continued to invest and capture steady demand. Conversion strengthened, costs remained relatively stable, and returns held steady.
Beneath those gains, however, the operating environment became more complex.
Performance was less consistent across the quarter and more sensitive to changes in competition, visibility, and timing.
This reflects a broader change in shopper behavior. Demand for Grocery remains strong, but consumers are more selective and more responsive to value, reshaping how performance shows up across retail media.
Q1 Grocery Market Trends: Pricing Pressure, Promotions, and Competitive Intensity
In Amazon’s Grocery category, brand average daily spend increased by 6–7% year over year, while cost-per-click declined slightly. At the same time, conversion rates (CVR) rose 12–13%, driving a 5–6% lift in return on ad spend (ROAS).
These gains were driven primarily by stronger conversion rather than increased investment, suggesting improved alignment between shopper intent and retail media execution.
However, performance was not evenly distributed.
CVR and ROAS fluctuated throughout the quarter. Cost pressure also varied, increasing in more competitive moments while stabilizing elsewhere.
This variability highlights a key shift: Grocery performance is no longer defined by steady efficiency, but by a more dynamic balance between demand, competition, and execution. As a result, sustained success requires a more responsive approach.
Grocery Consumer Trends: Price Sensitivity and Promotion-Driven Behavior
These performance patterns are closely tied to changes in how shoppers are approaching grocery purchases.
According to a recent Pacvue consumer trends survey, 74% of consumers plan to increase grocery spending in 2026. At the same time, overall shopping patterns are split: 38% of shoppers report shopping more frequently, while 30% report shopping less.
This split indicates that growth is being driven by a mix of behaviors that vary by shopper and by moment. As a result, performance becomes harder to predict and more dependent on timing, value, and visibility.
Increased Price Sensitivity Impacting Conversion
Conversion trends reinforce this shift.
While CVR improved year-over-year, it fluctuated across the quarter, signaling that shoppers are becoming more selective in their purchase decisions. Even as overall spending increases, shoppers are weighing price, promotions, and perceived value more carefully before converting.
Promotion-Led Shopping Cycles
That selectivity helps explain why performance strengthens during key promotional periods.
During Amazon’s Big Spring Sale, CVR increased by 4–6%, while ROAS held above 4.5x. At the same time, CPC rose by 5–7%, reflecting heightened competition.
After the event, both conversion and return metrics softened, reinforcing a broader pattern: grocery shoppers are more likely to convert when value and visibility align, and more likely to wait when they do not.
Substitution Behavior and Basket-Level Decision Making
Grocery purchasing remains inherently flexible, and that flexibility is becoming more pronounced.
Benchmark data shows that even as CVR improved, smaller basket sizes and lower average order values continued to shape performance, reflecting a shift toward more frequent, lower-value purchases.
This behavior increases the likelihood of substitution. When multiple products appear at similar price points or placements, shoppers are more willing to switch between options, selecting based on value, availability, or convenience.
In this environment, visibility alone is not enough to guarantee conversion. Success depends on how well pricing, availability, and positioning align with shopper expectations.
Grocery Ecommerce Trends: Demand Volatility and Channel Fragmentation
These behavioral shifts directly influence how demand appears across platforms.
As purchasing becomes more selective and timing-driven, performance becomes less stable. Instead of following a predictable pattern, demand fluctuates based on when shoppers engage and where they begin their journey.
Keyword Demand Shifts Across Categories
This is most visible in keyword performance.
Across Q1, CVR declined over time while CPC increased, widening the gap between cost and efficiency. However, this gap fluctuated, narrowing during stronger demand periods.
This reflects a shift away from stable keyword performance. Efficiency now depends on how well campaigns align with changing demand conditions, requiring more active optimization.
Fragmentation Across Retail Media Networks
At the same time, demand is becoming more fragmented across platforms.
Pacvue consumer trends research shows that less than half of consumers now turn to Google (41%) and Amazon (38%) as starting points for product searches, with other channels like social media and AI continuing to gain influence.
As a result, demand is not just shifting within platforms; it’s moving between them. This makes it more difficult to track performance drivers and requires a more holistic approach to retail media strategy.
Retail Media Trends in Grocery: Efficiency Challenges and Rising Costs
These shifts in demand and behavior are reshaping how retail media performs. While efficiency remains strong overall, maintaining it has become more complex.
Rising CPCs and Declining ROAS Efficiency
Across Q1, CPC increased by 10–12%, while ROAS declined by 10–15% from its peak.
Returns remained relatively strong, holding near 4x, but performance became less consistent, with efficiency improving during high-demand periods and becoming harder to sustain when shoppers were more selective.
Impact of In-Stock and Buy Box on Performance
Operational factors are also becoming more important.
Availability and placement can directly impact conversion, especially during high-demand periods. Even small disruptions can result in lost sales or substitution to competitors.
Disconnected Data Limiting Optimization
Performance signals are also becoming more fragmented.
CPC, CVR, and ROAS are influenced by multiple factors across platforms, making it harder to identify what is driving changes. Without a unified view, optimization becomes slower and less precise.
Brands that are able to connect media performance across channels with inventory, pricing, and shopper behavior are better positioned to maintain efficiency.
Grocery Delivery Trends: The Growth of On-Demand Commerce
The evolution of grocery delivery is adding another dimension to how demand shows up across the category.
Online grocery continues to expand, with U.S. sales exceeding $166 billion and adoption continuing to grow across a wide range of consumers. At the same time, platforms like Instacart, DoorDash, and retailer-owned delivery services are increasing their role in how shoppers discover and purchase products.
As a result, grocery demand is no longer concentrated within a single shopping behavior or platform. Instead, it is distributed across multiple purchase occasions, each with its own expectations and decision dynamics.
Expansion of Instacart, DoorDash, and Last-Mile Platforms
Instacart, DoorDash, and similar services have become deeply embedded in the grocery ecosystem, helping drive incremental demand while also changing how consumers interact with retailers. These platforms enable faster, more convenient purchases, making it easier for shoppers to act on immediate needs rather than relying on planned shopping trips.
Performance data reflects the impact of that shift. On Instacart, ROAS for Sponsored Products increased by 7% quarter-over-quarter, even as spend declined by 12%, indicating that demand in these environments is often more efficient and closely tied to immediate purchase intent.
This expansion increases accessibility, but it also adds complexity for brands.
Real-Time Demand and Optimization Requirements
As delivery adoption increases, expectations around speed and convenience are also rising.
Instead of relying primarily on large, planned purchases, many shoppers are placing smaller, more frequent orders tied to specific needs.
This creates a more fragmented demand environment, where performance is influenced not just by overall intent, but by how quickly brands can respond to it.
Blending Retail Media with Delivery Commerce
As these platforms grow, retail media is becoming more integrated into the delivery experience.
Sponsored placements within delivery apps influence purchase decisions closer to the moment of need, giving brands additional opportunities to capture high-intent demand. But these environments operate differently from traditional ecommerce platforms, with shorter decision windows and fewer opportunities to influence shoppers over time.
For brands, this means that retail media strategies must adapt to different contexts. What works in a planned shopping environment may not translate to on-demand, where speed, availability, and relevance play a larger role.
Key Q1 Performance Signals Brands Should Monitor
As Grocery performance becomes more dynamic, the challenge is no longer just measuring outcomes; it’s understanding what is driving them.
Aggregate metrics like average ROAS or total spend still provide a useful benchmark, but they can obscure the variability that defines performance in the current environment. To navigate that complexity, brands need to focus on the signals that reveal how demand, competition, and execution are interacting in real time.
Keyword and Search Performance Signals
Search remains one of the most immediate indicators of changing demand conditions.
When CPC rises alongside stable or improving CVR, it often reflects increased competition in high-intent environments. When CPC rises while CVR declines, it can signal that demand is softening or becoming more selective.
Tracking these metrics together, rather than in isolation, provides a clearer picture of whether performance shifts are driven by demand strength or competitive pressure.
Pricing and Promotion Signals
Promotional periods require their own lens.
As Q1 demonstrated, conversion rates and returns can improve materially during key demand windows, even as costs increase. This makes it critical to evaluate performance during these periods separately from baseline.
Understanding when promotions are driving incremental demand can help brands allocate spend more effectively and avoid over-investing in lower-intent periods.
Inventory and Availability Signals
When demand strengthens, availability and placement can have an immediate impact on conversion. Out-of-stock products, suppressed listings, or lost Buy Box ownership can quickly undermine otherwise strong media performance.
Monitoring inventory and availability alongside media metrics helps ensure that demand can be captured when it appears, rather than lost due to execution gaps.
How Leading Grocery Brands Are Adapting Their Strategies
When performance varies based on timing, competition, and shopper behavior, brands must build flexibility into how they operate.
Cross-Retailer Planning and Budget Allocation
One of the most visible strategic changes brands are making is how they allocate spend across retailers.
As demand becomes more fragmented, brands are increasingly balancing investment across Amazon, Walmart, Instacart, and other platforms, aligning budgets with where demand is strongest at any given time.
This allows brands to respond more effectively to shifting conditions. Rather than committing to fixed spend levels, they can increase investment during higher-efficiency periods and scale back when returns soften.
Full-Funnel Activation Across Commerce Platforms
Brands are also taking a more coordinated approach to how they generate and capture demand, expanding activation strategies beyond isolated lower-funnel tactics and aligning upper- and lower-funnel efforts to ensure that demand is not only captured but also created across the shopping journey.
Ensuring consistent visibility across platforms helps maintain performance even as shopper behavior becomes less predictable.
Aligning Media with Inventory, Pricing, and Profitability
Perhaps the most important shift is the closer alignment between media execution and broader business inputs.
As we’ve seen, factors like pricing, promotions, and availability play a direct role in shaping performance. When these elements are not aligned, even well-optimized campaigns can underperform.
Leading brands are addressing this by connecting media decisions more closely with inventory, pricing strategy, and profitability goals. This allows them to respond more quickly to changes in demand and ensure that spend is aligned with both performance and business outcomes.
Turning Q1 Grocery Trends into Action for Q2 and Beyond
The opportunity in Grocery remains strong, but performance is becoming more complex to manage.
In Q1, gains were driven by improved conversion rather than increased spend, but those gains were less consistent across the quarter. Performance is now shaped by shopper behavior, competition, and execution.
Looking ahead, success will depend on how effectively brands respond to these dynamics.
For a deeper look at how these trends are playing out across platforms, explore Pacvue’s Q1 2026 Retail Media Benchmark Report, which provides comprehensive data and insights to help benchmark performance and identify new opportunities for growth.
