2025 Grocery Store Closings Driven By These Factors

Your favorite grocery store could disappear or may have already closed due to a perfect storm of market conditions that range from rising food prices to labor and other operational challenges to evolving consumer preferences.

There’s no single reason for the closures.

“Grocery always has been a business with slim profit margins,” Barbara Kahn, a marketing professor at the University of Pennsylvania’s Wharton School, told Patch in a telephone interview.

Given the economic strains, “the ones on the margins won’t make it,” Kahn said.

That doesn’t necessarily mean hometown independent grocers and smaller chains will be squeezed out, or that juggernauts like Walmart, Costco and Amazon will get bigger.

Survival in the industry goes beyond profit statements, and stores with smaller footprints that listen to what customers want may be among the greatest winners, Kahn said.

Here’s a quick look at some of the closings:

Kroger And Albertsons

Courts have blocked giants Kroger and Albertsons from going ahead with what would have been the biggest grocery store merger in U.S. history. Together, they own about 36 store brands.

Kroger and Albertsons said the merger would allow them to compete with Walmart, Costco and Amazon, along with newer national players, discount grocers like Aldi and specialty stores like Trader Joe’s. The Federal Trade Commission and several states sued to block the merger, arguing it would harm consumers and workers by reducing competition, and the court agreed

Now, both companies are re-examining their footprints. Kroger interim CEO Ron Sargent said in a June 20 conference call that the company would be closing 60 unprofitable stores nationwide over the next 18 months.

Kroger didn’t disclose where the stores are located, but the United Food & Commercial Workers labor union and various news outlets have reported stores in Georgia, Illinois, Indiana, Kentucky, Maryland, North Carolina, Ohio, Tennessee, Texas, Virginia, West Virginia and Wisconsin are targeted.

Albertsons sued Kroger after the merger was blocked, alleging it had intentionally derailed the deal, stating in the lawsuit that it would be “identifying additional opportunities for value creation through the optimization of our substantial real estate footprint and other assets.” It didn’t say where the stores would be located, and pointed out the closures could take place over several years.

Other Store Closures

Even behemoth Walmart with more than 4,600 U.S. locations plans to close some stores. The largest U.S. grocer said earlier this year it would close 11 underperforming stores in California, Colorado, Georgia, Maryland, Ohio and Wisconsin.

Among other stores that are closing, according to a list compiled by Yahoo Finance, are:

• Amazon Fresh closed two locations, one in California and the other in Virginia.
• Giant closed a store in Ashburn, Virginia, because it had other stores nearby.
• Piggly Wiggly plans to close or has closed locations in Alabama, South Carolina, Georgia, Oklahoma and Wisconsin.
• Some Winn-Dixie and Harvey’s stores acquired by Aldi will close and then reopen as under the new banner as the German multinational company expands its footprint in the Southeast.

Value Isn’t Just Low Prices

Creating value isn’t just about offering the lowest prices, but doing business in a substantially different way that makes customers want to shop there, Kahn said

Mom-and-pop grocery stores and smaller chains have an outsized opportunity to create value by building on local tastes and traditions that will make customers want to shop with them, Kahn said.

“By looking to see what the competition is doing and doing better than the competition, you can draw a buzz,” she said. “What you can’t do is keep doing what you’re doing, which is particularly true in groceries because the margins are so slim.”

It’s a smart strategy for high-end stores, too. Some that are doing it well are H-E-B in Texas and Wegmans Food Markets in the Northeast, Kahn said.

“They’re not the cheapest, but people are willing to pay for an upscale experience,” she said.

‘Middle Aisle’ Competition

One area where traditional grocery stores have taken a hit is in the sale of profit-generating “middle aisle” merchandise sold in large or bulk quantities, such as diapers, toilet paper and other household supplies. More consumers are ordering online and having the items delivered, and stores are also facing competition from drugstores, home improvement stores and other nontraditional competition, Kahn said.

Labor costs remain a challenge for grocers, although some are affected to a greater degree than others, she said. Warehouse stores like Costco are able to shave labor costs by not breaking up bulk quantities. Other stores have used self-checkouts.

“Retail theft is the flip side,” Kahn said. “That’s a constraint on profitability.”

Technology exists to monitor customers’ grocery bags as they leave the store, but stores must weigh the costs of the technology versus the cost of theft, as well as the cost of hiring employees to staff checkouts.

“Bottom line, grocery is a difficult business that takes discipline because it’s not just about marketing,” Kahn said. “Supply issues, e-commerce — although not a huge competitor, somewhat of a trend — and non-traditional stores, all making the business difficult.”

In a tight economy, grocers are also reviewing whether their stores are in the right places.

“In general, the U.S. was ‘over-stored’ for a while,” Kahn said. “There are some efficiencies in closing stores in areas that are over-served.”

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