Q1 2026 INDUSTRY REPORT

Q1 2026 Report | Grocery

Q1 2026 Grocery: Why volume growth is costing brands margin & ROAS

Growth is up. Margin, ROAS & fill rates are not. Download the report.

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Key takeaways

Volume is outrunning value: Revenue grew ~32% YoY on the back of ~20% higher glance views and a ~12 point conversion lift, but ASP fell over 6% and discounts barely moved, confirming structural mix shift toward lower-priced items rather than promotional pull-through

Margin is compressing as the category scales: Gross margin narrowed two to six points YoY, meaning Grocery's accelerating top line is coming at a measurable cost to per-unit profitability that volume alone can't offset

Ad spend is scaling faster than it's earning: A ~36% YoY increase in ad spend produced a ROAS decline, with February dipping below 3.0 and CPC up ~10%, making budget pacing and bid discipline the clearest levers for restoring efficiency

Fulfillment is improving in throughput, not in prioritization: Fulfilled units rose ~26% YoY, yet fill rates softened and unavailable tickets reached nearly 2.4x the March 2025 level, exposing persistent friction even as raw volume scales

Stockout losses are concentrated where growth is fastest: OOS revenue loss spiked ~70% YoY despite on-hand inventory running 60%+ above prior year and Rep OOS% only edging up to 2.6%, confirming that high-turn, top-revenue ASINs are where brands must sharpen replenishment

Demand is outpacing replenishment velocity: Aggregate inventory builds aren't solving availability problems on the highest-turn ASINs, and even small gaps on top-revenue items are generating outsized lost revenue