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.