Somewhere near you, people are lining up to pay twenty dollars for a bottle of blue milk, or for a smoothie with a celebrity's name on it, and they aren't confused. They're telling you something.
The easy read is that they're rich, or gullible, or chasing something they saw on a phone, and some of them are. Most of them are doing something older and more ordinary than that. They've found a place where they're known, where the person behind the counter remembers the order, where there's usually something new to try and somebody to talk to about it. They've found shelves that have already been curated for them, where somebody has read the label so they don't have to, and where everything in the building fits the healthier life they want and are, mostly, already living. Buying the groceries is the price of admission. The milk costs twenty dollars because the place and the trust come with it.
I spent most of thirty years in this industry believing what everybody in it believed: that grocery is logistics with a storefront, that the customer wants it fast and cheap and over with, and that whoever takes the most friction out of the trip wins. I helped do that, and I did it well, nineteen years of it at Costco. The odd part, which took me far too long to notice, was that the warehouse was full of people on a Saturday who seemed to be enjoying themselves. That isn't supposed to happen in a logistics business.
The supermarket won, and that was the problem
The supermarket didn't fail. It won, completely, at the thing it set out to do, and the thing it set out to do turned out to be the wrong thing.
That thing was more. More items, more square feet, more promotions, lower prices through scale, and for fifty years it worked. Every decade took another human out of the trip. The butcher became a case, the cashier became a scanner you run yourself, and the person who knew where things were became a sign and then an app. Each decision was rational and saved money, and I'd have made most of them myself. The cumulative effect was a store that was a little less of a place every year and a little more of a process, and nobody was measuring that, because there's no line for it on a P&L.
The customer noticed before the industry did. Trips have been getting shorter and more frequent for years, with Placer.ai's data showing more quick fill-in visits across more stores and the average visit shrinking since 2019. A ten-minute trip is the sound of a customer who wants to be in your building as little as possible. Now the apps offer zero minutes, and at Groceryshop this fall the talk was of AI assistants that build the basket and place the order while nobody stands in an aisle at all.
For a conventional supermarket, that's the end of the argument for the building. If a store is only a place to acquire items, an app does it better. Which leaves a question the industry never had to answer before: if people don't have to come to a store, why would they?
The places we lost
In 1989 the sociologist Ray Oldenburg put a name on something every neighborhood used to have. He called it the third place: not home and not work, but the spot where people turn up regularly and voluntarily and spend time together for no better reason than that they want to. The diner, the barbershop, the church hall, the coffee shop on the main street. Neutral ground, where whatever you are outside, inside you're a regular, and conversation is the real activity.
Over the last thirty years those places mostly went away. The diner became a drive-through. The coffee shop became a laptop room and then an app you order ahead on so you never stand in the room at all. The mall emptied and the church hall emptied faster.
Eventually somebody counted. In 2023 the U.S. Surgeon General issued an advisory on what it called an epidemic of loneliness, with about half of American adults reporting it and the health cost of isolation put at roughly the level of smoking fifteen cigarettes a day. Federal time-use data shows average daily time spent socializing falling from 45 minutes to 35 over twenty years. Derek Thompson's reporting in The Atlantic found that by 2023, 74 percent of restaurant traffic was takeout and delivery. Eating, about the most social thing people do, became something we do alone, out of a bag, in front of a screen.
I know this one personally. I drank Starbucks coffee for thirty years, and in every city I moved to it was the place: familiar, the same everywhere, somewhere to sit for twenty minutes. Then mobile order-ahead arrived, and slowly nobody hung out there anymore. The feeling went first and the seating went after it. In New York I found new places, and they were mostly small curated food stores with products I hadn't seen before and people standing around talking about them. That's where the idea for my book started. Not in a spreadsheet, but in noticing where I'd started spending my own twenty minutes.
Wellness became the identity
A third place needs something for its regulars to share. In Oldenburg's day it was the neighborhood or the parish. Today, for a large and growing share of people, it's wellness, and I mean that as an identity rather than a diet: the kind of person who takes care of themselves, eats real food and reads the label.
McKinsey's 2025 research found 84 percent of Americans call wellness a top or important priority, in a U.S. market above $500 billion and growing, with Gen Z and millennials over-indexing on the spending. You can't go to the gym four times a day, but you do eat four times a day, and each of those meals is a small vote for the person you're becoming. The store where you cast that vote gets attached to the identity, whether it means to or not.
Research by Jonah Berger and Chip Heath shows people care more about their choices in categories that signal who they are, and over the last decade food crossed over. The drink in your hand and the bag you carry out now say something about you, the way a record collection did in 1985. And once a category becomes identity, people pay more for it, photograph it and look for other people who share it, which brings you straight back to the third place.
I saw this at Fairway before I had language for it. Every morning the same regulars came in for a coffee, a bagel or a couple of pieces of fruit. They could have bought any of it anywhere in New York. They came back because they recognized people and had conversations, and for some of them it was the important social interaction of the day. They weren't buying food so much as a little familiarity and a sense of belonging.
What the twenty dollars buys
Put those together and the economics stop looking strange. People are short on places to belong, and they're building an identity around how they take care of themselves. A store that gives them both, several times a week, is selling the two scarcest things in their lives and throwing in the food. That's how a premium grocer earns multiples of a conventional margin and still has the customer walk out feeling good about it. Nobody feels good about paying more for the same box of cereal. People feel fine about paying for a place they love.
What they're paying for is plainer than "experience." It's recognition: someone knows their name and their order, which is the cheapest thing in the store to provide and the hardest to fake. It's trust: everything in the building was chosen by someone who knows more than they do, so it's safe to stop reading labels. And it's newness: there's always something to try and something they were there for first, which turns a visit into a habit rather than a decision.
Two cautions. The store has to be attainable as well as aspirational, with a $6 item next to the $40 one, so a first-timer can belong this week; a store that's all aspiration is a museum, visited once and photographed. And none of it survives being treated as a trick. When the recognition is scripted, the trust is broken or the newness is clutter, the price stops being a signal and becomes a markup, and the customer notices before you do.
Why it isn't a fad
The test of a fad is whether the demand comes from a trend or from a change in how people live. The places to belong keep closing. Wellness keeps growing and skews young. The basket is moving toward protein, fresh and functional, with Numerator finding 22 percent of households now include someone on a GLP-1 medication. Spending has split, with a third of households stretched and the top half choosing to spend on how it lives. Erewhon has gone from an LA curiosity to fourteen stores and its first location outside Los Angeles County. And the apps that are taking the errand out of the building are sending the people who want a place to the stores that have one.
Not one of those is a trend. Every one was underway before the first smoothie went viral, and every one will still be underway when it's forgotten.
That doesn't mean every store will make it. Most of the new entrants won't, and not for lack of demand. They'll build the part that shows and skip the part that doesn't, the receiving dock and the counts and the labor model that decide whether a beautiful store is still open in month fourteen. That's the rest of the book.
The question for every business
Take grocery out of all this and one question is left, and every business has to answer it: do people come to you because they have to, or because they want to?
Have-to businesses compete on friction and price, and they lose to whoever removes more of both, which eventually is an app. Want-to businesses compete on recognition, trust and something new, and they're hard to replace, because what they're selling isn't on the invoice. My own twenty minutes moved from Starbucks to the lounge at my gym, which tells you the third place was never a category. It belongs to whoever is paying attention.
Your customer is not confused. They're telling you what they want, and it isn't cheaper groceries. It's a place where they're known, a shelf they can trust, something new to try and a version of themselves they're proud of. Build that on purpose, and the groceries will pay for it.
This article is adapted from Part 1 of The Truth Behind Premium Grocery, a playbook for opening and running a premium or experimental grocery store, and for any business that wants to be chosen rather than tolerated. Take the twenty-question diagnostic to see which of the twelve systems your store isn't looking at.
Sources: Ray Oldenburg, The Great Good Place (Project for Public Spaces); U.S. Surgeon General advisory, 2023 (NPR / MPR News); American Time Use Survey (Axios, July 2026); Derek Thompson, "The Anti-Social Century," The Atlantic, February 2025; McKinsey, The Future of Wellness, 2025; Berger and Heath, Journal of Consumer Research, 2007; Food Institute on shorter trips; Shelby Report, Groceryshop 2026; Grocery Dive on GLP-1 households; Grocery Dive on Erewhon Thousand Oaks.
