When the Federal Trade Commission blocked the high-profile proposed merger of Kroger and Albertsons, it might have seemed like a significant blow to the grocery industry’s ambitions. Yet, the sector proved resilient, with other players stepping in to drive growth and transformation.
Aldi emerged as the undisputed leader in U.S. grocery expansion in 2024, opening 105 new stores and adding over 2.3 million square feet of retail space, according to a JLL analysis of the sector. This remarkable growth outpaced all competitors, underscoring Aldi’s dominance in the market. Other chains also expanded their footprints, though at a slower pace. Publix added 43 locations, Sprouts Farmers Market opened 35 stores, Trader Joe’s introduced 34 new outlets, Grocery Outlet added 27, and Amazon Fresh launched 21 more by year-end. Even Kroger, despite its blocked merger, managed to open 16 new stores.
While the Kroger-Albertsons deal was halted, mergers and acquisitions continued to reshape the industry. Aldi completed its acquisition of Southeastern Grocers, initiating the conversion of 220 Winn-Dixie and Harveys Supermarkets locations into its own format. Meanwhile, Canada’s Jim Pattison Group acquired Save Mart, a West Coast regional grocer with over 190 stores. Several smaller deals also occurred, involving acquisitions ranging from 22 to 49 stores. These transactions highlighted the ongoing consolidation within the sector despite regulatory hurdles.
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Fueling this activity was a robust appetite for grocery-anchored properties among investors. Although high inflation and elevated interest rates initially posed challenges in capital markets, conditions began to shift in the latter half of the year. The Federal Reserve’s decision to cut interest rates by a total of 100 basis points — 50 in September and two additional 25-point reductions in November and December — spurred investment momentum. By year-end, multi-tenant grocery-anchored retail transactions reached approximately $7 billion, marking a 14% increase from the previous year. The average price per square foot also hit a record high of $209, reflecting strong demand for these properties.
The investment landscape itself became more diversified. Private capital’s share of investment volume dropped from 74% in 2023 to 68% in 2024 as other investor types became more active. Real estate investment trusts (REITs) and operators increasingly sought opportunities in grocery-anchored retail properties, drawn by their consistent foot traffic and potential for synergy with other businesses within retail centers. Operators like Publix, Trader Joe’s, Walmart, H Mart, and Weis Markets significantly ramped up their investments, pushing total volume among this segment to an eight-year high.
Also, private-label brands have gained traction as inflationary pressures persisted. Although overall inflation appeared to stabilize in late 2024, food prices remained elevated heading into 2025. “Food away from home” inflation grew by 3.6% year-over-year in December 2024, while “food at home” inflation rose by 1.8%. These trends underscored ongoing challenges for consumers and grocers alike but also presented opportunities for private-label products to capture greater market share.
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