Shares of grocery and drug retailers fell in 2008, but not as much as the broader market, as shoppers spent what little money they did have on staples like groceries and prescriptions.

Still, both segments faced challenges. Nearly all grocers grappled with higher prices on goods and elevated transportation costs. Both drugstore chain Walgreen Co., after a failed acquisition attempt, and competitor Rite Aid Corp., dealing with mounting losses, had management shake-ups.

But the largest pressure of the year - on consumers' wallets - created a boost for some. People ate out less and dined in more, making grocery stores one of the bright spots in retail for the year.

"I think with consumers who face tighter credit, they are looking at food as an affordable luxury," said Charles Cerankosky, an analyst at FTN Midwest Securities Corp. "They are willing to defer a new car or defer redecorating, but they are still looking at quality food."

The Dow Jones U.S. Food & Drug Retailers Index fell 33 percent for the year while the broader market had a deeper slump. The Standard & Poor's 500 index fell 39 percent and the Dow Jones Total Market Index lost 40 percent.

Grocers like Kroger Co. were among the top performers in the sector, building on recent acquisitions. Despite increased competition from other grocery chains and discounters, Cincinnati-based Kroger shares fell just 2.5 percent.

Safeway Stores Inc. invested heavily in reformatting its stores and saw the effort pay off with modest sales and earnings gains throughout the year. But the Pleasanton, Calif.-based company's resistance to cutting prices until late in the year spooked some investors who were watching recessionary pressures build on consumers. Safeway shares fell 32 percent in 2008.

High-end grocer Whole Foods, which is known for its gourmet offerings, had a very difficult year. Its stock lost 77 percent of its value as the company struggled to draw shoppers eager to cut expenses. It also continued an antitrust battle against the Federal Trade Commission over its acquisition of Wild Oats Markets, which remains in legal limbo.

Drug retailers took steps to deal with the struggling economy. Rite Aid and CVS each launched generic drug savings programs to cope with the economic slump. Walgreen relaunched its own program, which began in 2007, and started marketing it more aggressively to customers.

To be sure, drugstores didn't feel as big of a bite from the sagging economy as other retailers, but their stocks slumped as Wall Street saw hints of tighter consumer spending, decreasing sales of name-brand prescriptions and as some dealt with company-specific issues.

Camp Hill, Pa.-based Rite Aid was the biggest loser in the group. It replaced three top executives in September after its second-quarter loss nearly tripled due to weak results from its Brooks Eckerd stores. Rite Aid shares dropped more than 80 percent during the year and the company is preparing to perform a reverse stock split to retain its New York Stock Exchange listing.

CVS Caremark Corp. shares lost 29 percent. In August, Woonsocket, R.I.-based CVS agreed to buy Western drug store operator Longs Drugs Stores, acquiring more than 500 stores in California, Hawaii and Nevada.

Walgreen made a slightly higher offer that was later withdrawn over finance and antitrust concerns. Two days later, the Deerfield, Ill., company said Chief Executive Jeffrey Rein was retiring. Walgreen shares fell about 38 percent for the year and are trading at their lowest levels since 2000.