Daily Briefing (Insiders Only): Gearing Up For Slow-Growing Grocery
The grocery industry is gearing up for a slow year as retailers across all channels – including natural, discount, mass, conventional and even third-parties like Instacart – project a deceleration in sales throughout the course of 2025.
The earnings reports have been rolling in over the past week, and while many posted strong performance throughout 2024, it’s the expectations for 2025 that have analysts biting their nails.
Bargain retailer Grocery Outlet (which saw net sales increase 10% year-over-year during 2024) has begun executing a restructuring plan that will see it cancel leases on planned, unopened stores and lay off an unspecified number of employees as it works to reduce costs and improve long-term profitability amid the slowdown.
- The news comes less than a month after Jason Potter (former CEO of The Fresh Market) took over as CEO of the discount chain.
- Grocery Outlet previously said it would open between 50 to 55 stores this year but has since cut that estimate to between 33 to 35 new stores.
In the aisles of mass, grocery is expected to contribute to a sluggish year ahead. Walmart – which attracted higher-income grocery shoppers this year with its “Everyday Low Prices” – warned investors last week that sales and profits are expected to slow in 2025 as it also navigates “global economic and geopolitical conditions,” during its earnings report last Thursday.
Those trends were also reflected in the expectations of third-party delivery and grocery tech platform Instacart. Despite steady revenue and order growth both from the Q4 and yearly performance, the tech giant is gearing up for a slower year as consumers continue to feel the crunch at checkout. Both cost-constrained consumers and the limited ad budgets of food and beverage brands are weighing on its 2025 outlook.
Although stagnation is spreading across all channels, one retailer in the natural channel believes it’s poised to fare better than most. Sprouts shared some optimism in its earnings last week, highlighting its ability to capitalize on the current, rising popularity around natural living.
- The company’s same-store sales have increased for the past two quarters as its total FY24 sales grew 18%, ecommerce business eclipsed $1 billion and it added 33 new stores throughout the last year.
- Even with optimism and healthy living trends in its corner, Sprouts expects slower sales growth – between 10.5% to 12.5% during 2025 – and about the same rate of store openings.
