The grocery industry had a big—and at times, a little dramatic—2024, and with many trends gaining even more steam and a new administration set to shake things up, 2025 promises to be a dynamic one for the industry.
This year, Coresight Research anticipates the US retail market will grow by 3.1%, driven by inflation, which will remain elevated at 2%–2.5%, Sujeet Naik, analyst at Coresight Research, told Retail Brew. Circana similarly predicted dollar sales in the food and beverage industry will grow between 2% and 4% this year, with volume growth ranging between flat to 1%.
Here are the policies, strategies, and consumer behaviors that could impact the industry’s growth this year.
Doubling down on value: Consumers were shopping with value in mind last year, a trend that will likely continue into at least the first six months of 2025, in terms of where consumers chose to shop—like dollar, mass, and value grocery stores, according to Sally Lyons Wyatt, global EVP and chief advisor of consumer goods and food service insights at Circana. They’ll also continue to turn to online grocery, which accounted for 35% in growth within food and beverage last year and are “using online as a way to look at different pricing, figure out where they need to go.”’
Naik said Coresight predicts the online grocery market will grow by 10% in 2025, outpacing the predicted 3.1% growth of the total grocery market, driven by new consumers entering the space, as well as improvements in delivery and pickup services and online subscriptions like Target Circle 360.
Circana will be keeping an eye on whether consumers are “entrenched” in their value-base shopping habits even as prices lower, which will become more clear in the latter half of the year, Lyons Wyatt said. If consumers’ finances become more stable and they become more willing to spend, some “discretionary” items in 2024 could be purchased more often in 2025, she noted.
The momentum of private brands will likely continue as well, Naik told Retail Brew, and he predicted more retailers will boost the quality and selection of their products, continuing a trend that emerged last year, which will increase penetration for these brands.
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A new administration: There’s a lot still up in the air regarding government policy that’ll likely become more clear once President-elect Trump takes office on January 20. Trump’s plan to impose 25% tariffs on imports from Mexico and Canada, which accounted for $86 billion in agricultural goods imported to the US in 2023, per Reuters, could potentially up the prices for produce like avocados and strawberries, alcoholic beverages like beer and tequila, and meat, as well as leaving some items out of stock. Increased costs of other important imported items for food companies like equipment, packaging materials, and fertilizer could also boost prices, Grocery Dive noted.
Still, Naik believes the grocery industry is “a bit insulated” from Trump’s tariffs than other sectors, as the majority of the food supply chain is localized. But within categories that are impacted, grocers may have to figure out how to absorb some of those costs in their margins to keep shoppers from trading down to other items, he said.
More M&A: Naik predicted more consolidation in the US grocery market next year, particularly for regional supermarkets who are competing with Walmart, Costco, and Amazon, companies who are “encroaching” on the player market, investing in online infrastructure, retail media, and growing their private label assortment in 2024. This consolidation may not be at the caliber of Kroger-Albertsons, but will likely look like the Raley’s and Bashas’ and Price Chopper/Market 32 and Tops Markets deals in recent years, he noted, or Aldi’s acquisition of Southeastern Grocers closed last year.
“They may not have that scale and capital to compete with those larger players, so they will be banding together with other regional grocery retailers,” he said.
And while the Kroger-Albertsons deal was terminated at the end of 2024—and Kroger CEO Rodney McMullen said it wouldn’t likely seek to merge with anyone else—the grocery industry will be watching to see how their lawsuit plays out in 2025.