Grocery Report 2025

1. Grocers continue to face competition from the restaurant industry, with the gap in spending between dining out and grocery shopping totaling over $20 billion as of December 2024.
2. Grocery-anchored retail center fundamentals remain strong, with tightening availabilities due to minimal new supply additions and a persisting demand for grocery-anchored retail space helping sustain higher levels of rent growth.
3. Despite persistent capital market challenges, investment in grocery-anchored retail properties in 2024 surpassed 2023 levels, an indication that investors remain enticed by the resiliency of grocery-anchored retail.
4. Aldi remained the fastest-growing grocer in 2024, adding over 2.3 million s.f. of new space in the form of 105 new openings, marking its second consecutive year in which it opened over 100 new locations.
5. Despite the Federal Trade Commission (FTC) blocking the highly publicized Kroger-Albertsons merger, other grocers like Aldi and Grocery Outlet are scaling up their retail footprints through Mergers & Acquisitions, entering new markets in the process.
6. Grocers are adapting to changes in consumer behavior due to the elevated cost of groceries by expanding private-label brand catalogs, appealing to consumers searching for less expensive alternatives.
7. The wave of third-party platforms integrating the Supplemental Nutritional Assistance Program (SNAP) benefits as payment for grocery delivery is furthering grocery accessibility to nearly 41.7 million SNAP participants - over 12% of the U.S. population.
8. Retail media networks are becoming an essential advertising tool for grocers who wish to remain relevant with consumers, with national grocers remaining at the forefront of retail media innovation while regional grocers are following suit.

Grocers have remained resilient in the face of persisting (although improved) inflation and economic uncertainty, following through on their long-term growth plans and opening new locations.

However, as consumer preferences change with the times, so must grocers. To better appeal to and maintain relevancy with consumers today, grocers continue to innovate, investing in their brands and services, further enhancing the grocery shoppers' experiences.

In this report, we look at which grocers were actively opening new stores throughout 2024 and identify the trends that are shaping the future of grocery retail. The ongoing expansion of grocery stores is driving demand for retail space, making grocery-anchored retail properties increasingly attractive to investors. This trend is expected to persist, with REITs and grocery operators likely to play more significant roles in the investment landscape, complementing traditional private capital investors.

Eating out vs. eating in: Spending gap continues to expand
While grocery inflation has slowed, grocers continue to face challenges in the form of changes in consumer behavior due to the higher cost of groceries today and competition from the restaurant industry.

As consumers emerged from the pandemic-related nationwide lockdown in 2021, their desire to socialize, which encouraged dining out – highlighted the shift in consumer preferences from goods to services as they sought new experiences.

Over the past three years, the gap between dining out spending and grocery spending has widened. By the end of 2024, the gap between dining out and grocery spending totaled over $21 billion – more than six times that of January 2022 ($3.4 billion).

Also, the rapid rise in the cost of groceries altered grocery shopping habits by increasing deal-seeking behavior when grocery shopping and nudging some consumers to dine out instead. Dining out spending rose 4.4% in 2024 from 2023, outpacing grocery spending’s 1.8% increase.

Grocery store visits continue to rise
The grocery industry saw a notable decline in foot traffic due to the pandemic, with foot traffic falling 11.4% in 2020 from 2019. As they adjusted to a new “normal,” consumers would eventually return to the grocery stores, with industry foot traffic bouncing back to pre-pandemic levels in 2022 – being up 5.9% from 2019.

Since then, grocery stores have continued to see a steady rise in foot traffic. According to Placer.ai, grocery store foot traffic rose to nearly 17.2 billion visits in 2024 – a 1.0% increase from 2023 and 10.9% from 2019.

However, the average dwell time of a consumer shopping for groceries in-store has slowly declined post-pandemic. In-store grocery shoppers spent an average of 23.4 minutes in 2024 – down 0.3 minutes from 2023 and 1.4 minutes from 2019.

The growth in grocery e-commerce has allowed consumers to spend less time shopping for groceries in-store as they can search for deals and buy their grocery essentials in the comfort of their homes. At the same time, inflation-weary consumers are visiting multiple grocery stores to purchase their groceries, taking advantage of deals and comparing prices between grocers.

Discounter and specialty grocers are having a moment
Post-pandemic, the popularity of discount and specialty grocers has risen significantly among consumers as the elevated cost of groceries has left many searching for lower prices while an exclusive selection of products you can not find anywhere else continues to draw consumer interest.

Foot traffic for Aldi and Grocery Outlet was averaging around 600 million and 87 million visits from 2019 to 2021, respectively. However, this would soon change as the U.S. would confront inflationary pressures. Enticed by low prices, shoppers would increasingly frequent these discount grocers, with Aldi’s foot traffic rising over 900 million in 2024 – up 51.2% from 2019, while Grocery Outlet’s foot traffic rose to nearly 130 million – up 48.7% from 2019.

The unique, curated selection of brands that specialty grocers offer has allowed these grocers to differentiate themselves from the crowd. Among shoppers today, Trader Joe’s has become a personal favorite, with its foot traffic rising to nearly 390 million in 2024 – a 6.1% increase from 2023 and 24.7% from 2019.

The top 10 most visited grocers accounted for nearly 44% of total grocery industry visit share in 2024

Grocery-anchored retail vacancy compresses to new lows
Post-pandemic, minimal new supply additions due to elevated construction costs along with a solid demand for grocery-anchored shopping center space pushed vacancy to new lows.

As of Q4 2024, grocery-anchored retail vacancy registered at 3.5%, 10 basis points below Q4 2023 and 100 basis points below its pandemic-induced peak of 4.5% in Q2 2021.

Net absorption totaled nearly 300,000 square feet in 2024, a 37.9% decrease from 2023, while net deliveries remained limited, with less than 100,000 square feet in net deliveries for the second year in a row. Compared to the average of 2.1 million square feet and 1.1 million square feet – respectively – from the period between 2015 to 2019, net absorption and net deliveries have fallen significantly post-pandemic.

While grocery-anchored retail finds itself in a strong position, the lack of available retail space will impact the long-term growth plans of expanding grocers as they struggle to find desirable space in ideal locations.

Tightening availabilities leads to outsized rent growth
Grocery-anchored shopping center space available for lease has decreased 7.5 million square feet from its pandemic-induced high in Q1 2021, and more than 19 million square feet – nearly half – since its high after the Great Recession.

While the lack of supply has impacted net absorption, the intense competition among retailers searching for desirable retail space – specifically between expanding grocers – has not waned.

Grocery-anchored retail rents continue to rise as demand for grocery-anchored shopping center space persists amidst tightening availabilities, to the benefit of landlords as grocery-anchor retail sustains high levels of rent growth.

Across all the retail subtypes, grocery-anchored retail rents saw the highest annual rent growth, rising 3.1% year-over-year in Q4 2024, followed by neighborhood centers and power centers which both saw an annual rent growth of 2.9%.

Strong second half propels 2024 grocery-anchored retail investment volume above 2023
Investment appetite for grocery, one of retail’s most resilient sectors, continues to remain robust. In 2024, despite persistent capital market challenges, investment in grocery-anchored retail properties surpassed 2023 levels. This growth was primarily fueled by a robust second half of the year, coinciding with a 100 basis points of cuts in benchmark interest rates. By the end of 2024, multi-tenant, grocery-anchored retail transactions totaled $7.0 billion, representing a 1.4% increase from the previous year. The second half of 2024 saw a particularly significant uptick, with transaction volume rising by 34%.

The rising average price per square foot sold over time further demonstrates the growing investment appeal of grocery-anchored retail properties. Several factors have contributed to this upward price pressure, including strong sector performance, diverse tenant mix, durable demand due to high foot traffic, and limited supply of high-quality products. In 2024, the average price per square foot reached a record high of $209.

Looking ahead to 2025, increased investor demand for grocery-anchored retail, coupled with greater clarity in the debt market, is expected to support continued investment activity in the coming years.

Grocery’s investor landscape remains diverse
The multi-tenant grocery retail investment landscape in 2024 exhibited greater diversification among investor types. Private capital's share of the total investment volume in this sector decreased from 74% in 2023 to 68% in 2024, primarily due to increased participation from other investor types, notably REITs and operators. Several REITs, including Brixmor, Phillips Edison & Co, Cohen & Steers, ShopOne, Agree Realty Corporation, and Regency Centers, have become increasingly active in response to strong consumer demand in the sector.

Concurrently, grocers themselves have emerged as significant investors, motivated by a diversification of revenue streams and increased role in optimizing synergies between businesses within retail centers. Operators such as Publix, Trader Joe's, Walmart, H Mart, and Weis Markets have substantially increased their investment activity, with this investor segment’s total investment volume reaching an eight-year high.

The fragmentation of multi-tenant grocery retail investment in 2024 underscores increased investor confidence in the sector, with REITs and grocery operators expected to continue taking on more prominent roles alongside traditional private capital investors.

Aldi remains the fastest-growing grocer
Unsurprisingly, Aldi remained at the top of the list for the fastest-growing grocers in 2024, fueled by the momentum of a record-year for new store openings in 2023. With inflation-weary consumers leaning into discount grocers, Aldi is rapidly expanding, opening 105 locations in 2024, which added over 2.3 million square feet of new space, a 6.7% decrease from 2023.

Larger-format regional grocers were actively expanding in the South. Southeastern grocer Publix added over 2 million square feet of new space in 2024, with the opening of 43 new locations – most of which (over 50%) opened in Florida. Southwestern favorite H-E-B added over 1 million square feet of new space in the form of 9 new store openings in Texas.

Specialty grocers are having a moment as well. Sprouts opened 35 new stores, adding just under 840,000 square feet of new space. Trader Joe’s added over 450,000 square feet of new space in the form of 34 new locations. And The Fresh Market expanded with 8 new locations, totaling just under 200,000 square feet of new space.

Along with steadily expanding its Whole Foods banner, Amazon (surprisingly) restarted its Amazon Fresh expansion with the opening of 21 new locations, which added under 900,000 square feet of new space.

Grocers continue their long-term growth plans
In February 2025, Aldi announced plans to open over 225 new stores in 2025 – a doubling of new store openings from previous years, following its five-year growth plan of opening 800 new stores by 2028, through a mix of organic new store openings and conversions of 220 Winn-Dixie and Harvey Supermarkets stores acquired in its acquisition of Southeastern Grocers.

Like Aldi, Grocery Outlet is expanding in the Southeast through its acquisition of United Grocery Outlet (40-store chain). Additionally, new store openings remained in line with previous years, allowing the grocer to enter Delaware and strengthen its presence in newly-entered Mid-Atlantic markets like Ohio (2023) and Maryland (2022).

Using its cost-effective (smaller) store model, Sprouts is strategically strengthening its limited presence in certain markets while also sprouting in new markets. With new store openings rising 16.7% in 2024 from 2023, Sprouts entered Wyoming and increased its store presence in Delaware, South Carolina and Virginia.

Regional grocers like Publix and H-E-B are strengthening their store presence in the South. While Publix entered its eighth Southeastern state – Kentucky – in early 2024, H-E-B continues to focus on Texas.

Canadian grocers focus on discount growth
Like their U.S. counterparts, Canadian grocers are expanding as well. Here’s the scoop on Canadian grocers’ growth plans:

• Canadian grocers are looking to grow in 2025, particularly in the discount space to reach more price-conscious households. However, they’re keeping their expectations in check due to consumer spending moderation, changes to the Competition Act, and potential U.S. tariffs.

• Loblaw will continue to grow in 2025 with Maxi in Quebec and No Frills in the other provinces, Empire will expand FreshCo in Western Canada, and Metro will open a dozen new locations this year, mostly discount stores, including Super C in Quebec and Food Basics in Ontario.

• Grocers are seeing more foot traffic and are looking to stabilize or grow basket size. They’re also focusing on omnichannel strategies, with e-commerce sales growing by double digits.

   

However, the grocery landscape is constantly changing. Some considerations for the future of Canadian grocery retail include:

• Grocers are expected to be more careful with property controls in new leases. Recent changes to the Competition Act limit the use of exclusivity clauses and covenants on who can occupy adjacent spaces. New entrants that were previously off-limits due to exclusivity agreements now have a better chance of securing a prime retail location.

• A new downside risk is the U.S. tariffs on Canadian goods and Canada’s retaliatory tariffs on U.S. goods. In addition to creating an uncertain environment for grocers and shoppers, these measures will drive inflation and supply chain disruptions. U.S. tariffs are also leading to strong calls to buy Canadian goods and near-shore supply chains.

One way to expand: scaling up with M&A
Grocers must adapt to remain competitive in a constantly changing grocery industry, with some turning to Mergers & Acquisitions. Regional grocers can scale up their retail footprints and increase their market share by strategically joining forces with other regional grocers or acquiring smaller grocers in new markets, helping them compete with national grocers. Additionally, larger grocers benefit from increased buying power and operational efficiencies due to their scale.

Source: JLL Research

“Food at home” inflation remains below 2% target
Since their respective peaks in mid-2022, the pace of inflation growth for “food at home” and overall inflation has significantly improved. While overall inflation has not fallen below the Fed’s 2% inflation target, the pace of “food at home” inflation remained below 2% throughout 2024.

“Food away from home” inflation peaked in early 2023 and has outpaced its counterpart since then. Like overall inflation, “food away from home” inflation has not fallen below the 2% target, rising at an annual rate of 3.6% in December 2024 – roughly 70 basis points higher than overall inflation (2.9%) and nearly 190 basis points higher than “food at home” inflation (1.8%).

However, the cost of groceries and dining out remains elevated, with the “food at home” and “food away from home” indexes registered in December 2024 being up 26.8% and 29.3% from their February 2020 levels, respectively.

Consumers are turning to private-label brands
As prices remain elevated relative to their pre-pandemic levels, consumers are exhibiting greater levels of deal-seeking behavior, constantly looking for ways to stretch their dollars. Some consumers are trading down when grocery shopping, substituting nationally recognized brands for less expensive alternatives such as private-label brands.

Grocers have adapted to these changes in grocery shopping habits by expanding their private-label brand offerings, aiming to appeal to consumers through lower price points.

In 2024, private-label brands sales totaled over $270 billion – a 3.4% increase from 2023, according to the Private Label Manufacturer Association (PMLA). Over the past four years, private label sales have increased by $51.7 billion (or 23.6%).

The rising popularity of private-label brands among consumers is evident in the steadily growing market share of private-label brands. Private-label brand market share rose to 20.7% in 2024, up 160 basis points from 2021.

Grocers expand their private-label brand offerings
Following a solid year for private-label sales, national grocers like Kroger and Albertsons further expanded their enormous private-label brand catalogs in 2024. In fiscal year 2023, Kroger’s Our Brands accounted for over $31 billion of its total sales ($150 billion) while Albertsons’ Our Brands accounted for over $16.5 billion of its total sales ($79.2 billion).

Like national grocers, specialty and discount grocers are investing into their private-label brand offerings as well. Discount grocer Grocery Outlet entered the private-label game with the launch of its private-label program – GO Brands – while specialty grocer Sprouts debuted its private-label personal care line – Real Root.

Additionally, Amazon made an interesting move with the launch of a new private-label brand, Amazon Saver, which offers most grocery essentials at under $5 both in-store and online along with providing a 10% discount for Prime members.

Source: JLL Research

More than 41 million people participate in SNAP
The Great Recession had a tremendous impact on food insecurity, with participation in the Supplemental Nutritional Assistance Program (SNAP) rising by nearly 69% (19.4 million) to 47.6 million in FY 2013 from FY 2008.

At the peak of SNAP participation in FY 2013, over 15% of the U.S. population at the time was participating in SNAP and receiving an average monthly benefit of $133 – a 30.2% increase from FY 2008.

While the number of SNAP participants gradually declined as the economy recovered, SNAP participation fell below 40 million participants in FY 2019 once more – representing just under 11% of the U.S. population.

However, the pandemic led to an increase in SNAP participation and average monthly benefits - thanks to the SNAP emergency allotments (ended February 2023). In FY 2024, SNAP participation remains over 41 million participants – up 16.8% from FY 2019, with the average monthly benefit totaling $187 – up 44.3% from FY 2019.

Third-party platforms follow suit with SNAP Integration
Over the past few years, third-party platforms have jumped on the wave of broadening fresh grocery accessibility for SNAP recipients, allowing them to use SNAP EBT benefits as a payment method for online grocery delivery from grocers nationwide.

Source: JLL Research

U.S. grocery e-commerce growth will continue
While the shift in grocery shopping habits due to the pandemic cemented online grocery delivery and pickup services as a viable alternative to in-store shopping, the rise in on-demand grocery delivery services due to partnerships between grocers and third-party players has helped sustain grocery e-commerce’s growth.

According to eMarketer, grocery e-commerce sales were forecasted to surpass $200 billion for the first time, reaching nearly $204 billion in 2024 – a 10.7% increase from 2023.

Despite the return of in-store grocery shopping – which is up by nearly 11% in 2024 compared to 2019 according to Placer.ai’s foot traffic data – and competition from restaurants, shoppers continue to shop online for some of their grocery essentials.

Grocery e-commerce provides options, whether it’s allowing price comparisons between grocers for the best deals or enabling the use of SNAP EBT benefits as a form of payment. Over the next four years, grocery e-commerce sales are forecasted to observe a strong compounded annual growth rate of 7.4%, surpassing $270 billion by the end of 2028.

Source: JLL Research
*Note: this is not an exhaustive list of all on-demand grocery delivery partnerships or expansions.

Establishing connections with retail media networks
Investments in retail media networks and capabilities are becoming essential for grocers who wish to remain relevant with consumers and competitive in the industry.

By utilizing retail media networks, grocers can establish connections with their shoppers by delivering targeted advertisements.

According to eMarketer, retail media ad spending totaled nearly $52 billion in 2024 – a 20.4% increase from 2023. Over the next four years, retail media ad spending is forecasted to observe an explosive compounded annual growth rate of 17.1%, reaching nearly $100 billion by the end of 2028 – a doubling of 2024.

While national grocers like Albertsons and Kroger are at the forefront of retail media innovation, regional and local grocers are following suit and investing in their own retail media networks.

National grocers lead the way
National grocers remain at the forefront of retail media innovation, enhancing the advertising capabilities of their in-house retail media networks through partnerships with technology companies.

Source: JLL Research

Regional grocers follow suit and invest in retail media
Unlike national grocers who have the necessary resources to establish in-house retail media networks, regional grocers with limited resources are leaning on partnerships with third-party technology companies to help launch retail media networks.

West Coast-based The Save Mart Companies and Oklahoma-based Homeland partnered with Quad/Graphics Inc. to launch In-Store Connect while Northeast-based Wakefern Food Corporation and Northeast Grocery Incorporated are powering their respective retail media networks – Northeast Grocery Shopper Link and Wakefern Media Exchange – through a partnership with Inmar Intelligence.

Also, retail media capabilities can be enhanced through different ways. Some grocers, like Hy-Vee, recently partnered with Grocery TV to power in-store retail media, allowing grocers to engage with shoppers at various checkpoints throughout the store through advertisements on digital screens. Ahold Delhaize is now offering enhanced in-store audio solutions in its U.S. banners stores through a partnership with Vibeomics, with brands being able to advertise to shoppers through personalized, real-time messaging.

Source: JLL Research

Despite the rapidly changing grocery industry, grocers continue to adapt, finding new ways to innovate and remain relevant with consumers. Looking ahead, what should we expect for the future of grocery retail?

Regarding grocery-anchored retail

• The mismatch between demand and supply for retail space will not alleviate in the short-term, with grocery-anchored retail expected to see minimal new supply additions amidst persisting demand for available retail space, helping keep retail vacancy and availabilities near record lows.

• Landlords of grocery-anchored retail centers will continue to benefit from the scarcity of available retail space as market asking rents continue to rise due to grocery-anchored retail’s strong retail fundamentals which are helping sustain higher levels of rent growth.

• The outperformance of grocery-anchored retail compared to the other retail subtypes, along with the stable returns and tenant stability of grocery-anchored retail centers, will continue to attract investor interest.

   

Regarding the grocery industry

• The elevated cost of groceries will continue to fuel demand for less expensive alternatives, with discount grocers capitalizing on this by aggressively expanding while other grocers will continue to invest in their private-label brand offerings to appeal to price-sensitive consumers.

• As grocers face competition from restaurants as the shift from goods to services intensifies, grocers will adapt by establishing and enhancing their retail media networks, helping create a link between grocers and shoppers through targeted ads, elevating the grocery shopping experience.

• Grocery e-commerce will continue to see growth as consumers look for deals online and as third-party platforms jump on the wave of integrating SNAP benefits as payment for on-demand grocery delivery, considering that over 12% of the U.S. population will remain on SNAP in the short term.