The European Grocery Sector in 2024: A Year of Stabilization and Challenges
The year 2024 was marked by stabilization in the European grocery sector, with some signs of recovery in certain markets. Despite this, European grocers faced ongoing economic pressures, leading to cautious consumer behavior and restrained spending. Grocery sales grew by 2.4 percent in Europe, slightly surpassing the food price inflation rate of 2.3 percent. Discounters and private labels continued to gain market share, albeit at a slower pace compared to previous years. Overall, there was a balance between consumers trading up to more expensive options and those trading down, indicating a stabilization after years of significant downtrading.
Looking ahead to 2025, the recovery in the grocery sector is expected to gain momentum. Grocery retail CEOs in Europe are slightly more optimistic about the future, but challenges are expected to persist, including low volume growth and sustained pressure on profitability. To succeed in this competitive landscape, grocers will need to focus on differentiation, operational efficiency, meeting the needs of future consumers, and leveraging data, AI, and technology.
Key Trends
1. Low Volume Growth
The grocery retail sector experienced low volume growth in 2024, a trend expected to continue in the next five years.
In 2024, volume growth was minimal, and this trend is projected to persist, with up to 0.2 percent annual volume growth in Europe through 2030. The shift from traditional to modern trade is anticipated to drive net growth, particularly in Central and Eastern Europe and Southern Europe. However, a decline in volume is expected in the shift from grocery to foodservice. Despite overall low growth, certain countries, channels, and categories show potential for growth, including online sales, discounters, fresh foods, healthy options, and convenience items.
Cost and margin pressure remain top concerns for grocery retail CEOs, driven by low volume growth and challenges in passing on sourcing costs to consumers.
2. From Private Labels to Private Brands
In 2024, private labels gained market share, positioning themselves as differentiated alternatives to A-brands.
The sales share of private labels in total grocery sales increased to 39.1 percent in 2024, with consumers showing a preference for private-label products even as their purchasing power grows. The sales share of private labels is expected to reach 40.0 to 42.0 percent by 2030, driving market share growth for grocers. Grocers that develop private brands, akin to A-brands, stand to gain significant market share by differentiating their offerings and appealing to specific customer segments.
3. Growing Appetite for Healthy Food
Consumers, especially Gen Z, are increasingly seeking healthy and functional foods, presenting a growth opportunity for grocers.
The demand for healthy and functional foods is on the rise, with consumers showing a preference for high-quality, fresh products and clean ingredients. Gen Z, in particular, has a strong intent to focus on healthy nutrition, presenting a growth opportunity for grocers to cater to this demographic.
Overall, while challenges persist in the European grocery sector, opportunities for growth and innovation abound. By focusing on key trends such as low volume growth, private labels to private brands, and catering to the demand for healthy options, grocers can navigate the competitive landscape and thrive in the years to come.
When it comes to shopping preferences, Gen Z consumers are leading the way in focusing on healthy eating habits. In comparison to last year, there has been a seven percentage point increase in the net intent of Gen Z shoppers to prioritize healthy eating. Furthermore, one in three members of Gen Z have expressed a willingness to pay a premium for healthier products.
Healthy eating preferences vary across different generations, reflecting the diverse perspectives on what constitutes good health. Baby boomers tend to focus on reducing salt and consuming less processed foods to maintain heart health and prevent age-related conditions. On the other hand, Gen Z and millennial shoppers lean towards high-protein, low-calorie options.
Despite the growing interest in healthy eating among consumers, there is a notable dissatisfaction with the healthy product offerings available at main grocery stores. Only 35 percent of consumers feel that their primary grocer provides the right assortment of products for a healthy diet. While some consumers are willing to pay extra for healthy products, there is a significant group that can only afford to purchase healthy food if it is priced affordably.
Ready to (h)eat: Catering to the no-cooking generation
As the number of consumers who do not cook continues to rise, the demand for ready-to-eat and ready-to-heat meals is on the upswing. This trend presents an opportunity for grocers to reclaim market share from foodservice companies.
Foodservice establishments have been outpacing traditional grocery growth, with a preference for convenience driving consumer behavior. Gen Z shoppers and millennials, in particular, are cooking less frequently compared to baby boomers, contributing to the popularity of on-the-go food options and ready-to-eat meals.
Younger consumers, including Gen Z and millennials, are at the forefront of the “no-cooking” trend. Despite expressing an intention to cook from scratch, a significant portion of these consumers opt for on-the-go food purchases and ready-to-eat meals on a regular basis.
Unlocking a new level of customer engagement
Customer engagement and personalization play crucial roles in driving customer loyalty, with retailers turning to technologies like gen AI to enhance these aspects. Consumers now expect personalized experiences as the standard for engagement, particularly Gen Z members who are inclined to become repeat buyers after a personalized interaction.
While retailers are striving to meet evolving customer expectations around personalization, there is still room for improvement. Implementing digital health services, in-store pharmacies, and other innovative offerings can enhance the customer experience and drive loyalty.
Grocers are leveraging gen AI technologies to enhance customer engagement through chatbots for customer service, personalized shopping experiences, and loyalty programs. Despite the growing importance of digital interactions, the human touch remains crucial in delivering a personalized and pleasant in-store experience.
Sustainability: Scope 3—the challenge ahead
Meeting sustainability targets is a significant challenge, but implementing the right measures at the right time can help lower costs and align with evolving consumer demands. While the overall share of consumers looking to buy more sustainable products has decreased, Gen Z shoppers and millennials show a stronger intent to purchase sustainable products.
Factors such as local sourcing, recyclability, and social responsibility have gained importance among consumers, indicating a shift towards more sustainable purchasing behaviors. As Gen Z and millennials continue to drive the demand for sustainability, retailers need to adapt and incorporate eco-friendly practices into their operations to meet consumer expectations.
The Changing Landscape of Grocery Retail in Europe: Trends and Outlook for 2025
As we look ahead to the year 2025, the grocery retail industry in Europe is undergoing significant shifts and transformations. One key trend that is emerging is the changing consumer preferences towards more sustainable products. However, a recent study has shown that the intention to buy organic products, dairy alternatives, and meat alternatives has declined by 2 to 4 percentage points across generations.
This year, many retailers are focusing on addressing upcoming regulations related to sustainability. In 2025 and 2026, several major sustainability-related directives and regulations are coming into force, requiring significant effort and investment by retailers. Compliance with these regulations will be crucial for grocers to maintain their market position.
While grocers have made progress in reducing Scopes 1 and 2 CO2 emissions, reducing Scope 3 emissions remains a challenge. The costs associated with decarbonization can vary significantly, and it is essential for grocers to develop concrete abatement plans for each category to manage costs effectively. Collaboration with companies along the value chain on joint decarbonization plans could help reduce costs and drive sustainability progress.
European grocery consolidation is expected to accelerate in the next five years, as multinational grocers aim to achieve cross-country synergies. Margins are under pressure for most European grocers, and scale matters for profitability. Successful grocers are typically larger in size and have the capacity to invest in procurement capabilities, supply chain automation, and technology.
The race to get tech right is another key trend shaping the grocery retail industry in Europe. Data, AI, and technology are becoming top priorities for CEOs, as the gap between leaders and late adopters widens. Grocers with superior capabilities in data, AI, and tech are experiencing higher growth and financial performance compared to their peers.
Investments in adoption are essential to drive value creation with AI. Grocers that align the entire organization on areas of greatest value, develop domain-specific roadmaps, and put the right enablers in place are more likely to see the benefits of their AI investments reflected in their profit-and-loss statements.
In conclusion, the grocery retail landscape in Europe is evolving rapidly, driven by changing consumer preferences, sustainability regulations, consolidation efforts, and advancements in technology. Grocers that are able to adapt to these trends and capitalize on opportunities will be well-positioned for success in the coming years.
Retail Media Growth and Professionalization: A Strategic Analysis
As retail media spending grows, grocers are streamlining advertising sales and diversifying advertising opportunities to take advantage of this important profit source.
Retail media spending by advertisers keeps growing fast. IAB Europe expects retail media spending to reach €31 billion by 2028, up from €14 billion in 2024—a CAGR of about 20 percent. This means that retail media spending could reach €41 billion by 2030. That said, in 2024, the retail media share of total advertising spending is even higher in the United States—by 5.4 percentage points. For European grocers, retail media is the largest and fastest-growing profit source beyond conventional retail.
Grocers are streamlining the way they market retail media to advertisers. Over 50 percent of European retailers have had a retail media proposition for over a year. However, the fragmented landscape has made it hard for advertisers to reach consumers across different retailers. According to IAB Europe, 60 percent of advertising buyers cite standardization as the key to future growth. In response, in 2024, the IAB and the Media Rating Council introduced standardized performance metrics to enable accurate performance assessment across retailers. This could increase the attractiveness of retail media networks’ for advertisers.
The year 2025 will be marked by a diversification of advertising opportunities. So far, retailers have scaled their offerings on platforms they operate themselves, such as advertisements on their websites and in-store screens. Additional growth could be unlocked by extending the reach of their networks and offering their targeting capabilities on platforms operated by others. Examples include third-party websites and social platforms, shoppable video, and connected TV advertising.
Gen AI has the potential to make retail media networks more attractive. It can improve campaign creation, campaign optimization, targeting, and personalization. Alphabet, Amazon, Meta, and TikTok have launched gen AI tools in these areas. Meta reports that these tools bring significant increases in conversion rates (17 percent uplift) and returns on advertising spending (32 percent uplift).
Market Trends in Retail Media
With the rapid growth of retail media spending, it is crucial for grocers to understand the key market trends shaping the industry. Here are some of the trends that are driving the evolution of retail media:
1. Data-Driven Advertising
Data-driven advertising is becoming increasingly important in the retail media space. Grocers are leveraging customer data to target ads more effectively and measure the impact of their campaigns. By analyzing customer behavior and preferences, retailers can create personalized advertising experiences that drive engagement and sales.
2. Cross-Platform Advertising
As consumers engage with brands across multiple platforms, grocers are expanding their advertising opportunities beyond their own websites and stores. By partnering with third-party websites and social platforms, retailers can reach a broader audience and increase the visibility of their advertising campaigns.
3. AI and Automation
The adoption of AI and automation tools is revolutionizing the way retailers manage their advertising campaigns. By leveraging AI for campaign creation, optimization, and targeting, grocers can improve the efficiency and effectiveness of their advertising efforts. Automation also allows retailers to scale their advertising operations and reach a larger audience.
Strategic Recommendations for Grocers
Based on the current market trends and the growth potential of retail media, here are some strategic recommendations for grocers looking to capitalize on this lucrative opportunity:
1. Invest in Data Analytics
Developing robust data analytics capabilities is crucial for grocers to effectively target their advertising campaigns and measure their impact. By analyzing customer data and tracking key metrics, retailers can optimize their advertising strategies and drive better results.
2. Expand Advertising Reach
Explore opportunities to expand advertising reach beyond owned platforms by partnering with third-party websites and social platforms. By diversifying advertising opportunities, grocers can reach a wider audience and maximize the impact of their campaigns.
3. Embrace AI and Automation
Adopt AI and automation tools to streamline advertising operations and improve campaign performance. By leveraging AI for campaign creation, optimization, and targeting, retailers can enhance the efficiency and effectiveness of their advertising efforts.
FAQs
Q: What is driving the growth of retail media spending?
A: The growth of retail media spending is driven by the increasing importance of data-driven advertising, the expansion of cross-platform advertising opportunities, and the adoption of AI and automation tools by retailers.
Q: How can grocers optimize their advertising campaigns?
A: Grocers can optimize their advertising campaigns by investing in data analytics, expanding advertising reach to third-party platforms, and embracing AI and automation tools for campaign management.
Conclusion
In conclusion, retail media growth presents a significant opportunity for grocers to capitalize on the increasing demand for targeted advertising. By strategically aligning their advertising strategies with market trends and leveraging data analytics, cross-platform advertising, and AI technologies, retailers can drive sales and enhance customer engagement. As the retail media landscape continues to evolve, grocers must adapt to the changing dynamics of the industry to stay competitive and maximize their advertising ROI.
Title: The Benefits of Incorporating Mindfulness Practices into Your Daily Routine
In today’s fast-paced world, it can be easy to get caught up in the hustle and bustle of everyday life. From work deadlines to household chores, it can feel like there is never a moment to pause and catch your breath. However, incorporating mindfulness practices into your daily routine can have a multitude of benefits for both your mental and physical well-being.
Mindfulness, at its core, is the practice of being present and fully engaged in the moment. This can involve anything from deep breathing exercises to meditation to simply taking a few minutes to appreciate the world around you. By incorporating mindfulness practices into your daily routine, you can experience a wide range of benefits, including reduced stress and anxiety, improved focus and concentration, and enhanced overall well-being.
One of the key benefits of incorporating mindfulness practices into your daily routine is the ability to reduce stress and anxiety. By taking the time to slow down and focus on the present moment, you can help calm your mind and body, allowing you to better cope with the challenges of everyday life. Studies have shown that mindfulness practices can reduce levels of cortisol, the stress hormone, in the body, leading to a greater sense of calm and relaxation.
Additionally, practicing mindfulness can help improve your focus and concentration. By training your mind to be present and aware in the moment, you can enhance your ability to pay attention to tasks at hand, leading to increased productivity and efficiency. This can be especially beneficial in today’s world, where distractions are constantly vying for our attention.
Furthermore, incorporating mindfulness practices into your daily routine can have a positive impact on your overall well-being. By taking the time to connect with yourself and the world around you, you can cultivate a greater sense of gratitude, compassion, and contentment. Mindfulness can also help improve your relationships with others, as you become more present and engaged in your interactions.
In conclusion, incorporating mindfulness practices into your daily routine can have a multitude of benefits for your mental and physical well-being. From reducing stress and anxiety to improving focus and concentration to enhancing overall well-being, mindfulness can be a powerful tool for living a more fulfilling and balanced life. So why not take a few minutes each day to incorporate mindfulness practices into your routine? Your mind and body will thank you for it.
