The State of Grocery-Retail 2024 Signs of Hope

Signs of Hope
The State of
Grocery Retail
2024
– Europe –
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Getty Images
Contents
Foreword and
introduction to the team 3
State of Grocery Europe 2024:

Signs of Hope 6
Key trends looking forward 13
Overall implications for grocers 23
Food and grocery market KPIs 25
Interviews with
four inspirational CEOs 28
Acknowledgments,
contributors, and contacts 41
Foreword
For the European grocery sector, 2023 was all about inflation—again. European food price
inflation averaged 12.8 percent in 2023, reaching its highest level since the end of the Second
World War. While unfavorable market conditions put a strain on consumer wallets and margins
are pressured by rising costs, there are signs of hope: inflation has stabilized, real wages are
recovering, and fewer consumers indicate an intent to trade down, with some groups even
inclined to trade up.
This report examines the most prevalent trends that will influence the grocery industry in 2024
and beyond. How can grocers mitigate further cost increases and improve their margins? Will
uptrading return and propel grocery sales again? What does the future hold for food to go?
Will sustainability targets be reached on time? What needs to happen for players to get ahead
in the online grocery market? How can grocers develop retail media businesses that support
profitability reliably? Where should grocers invest in AI and advanced analytics to achieve the
highest impact? Finally, in a world of tight labor markets, how can grocery retailers attract and
retain the right talent for future growth?
The State of Grocery Europe is an annual publication. This year’s report, Signs of Hope—The
State of Grocery Retail 2024: Europe, is a continuation of a partnership between McKinsey and
EuroCommerce, and it is designed to provide executives with a comprehensive view of the
market and future trends. In preparing the report, we surveyed more than 12,000 consumers
across 11 European countries and more than 30 grocery executives from more than 15 countries
across Europe. In addition, we interviewed four grocery CEOs. We combined EuroCommerce’s
policy and sector knowledge with McKinsey’s global expertise and analytical rigor.
We hope this report will offer new insights and perspectives to help grocers navigate ongoing
uncertainties and take advantage of future growth opportunities.
Christel Delberghe Daniel Läubli

Director general Head Food Retail
EuroCommerce McKinsey & Company
3 Signs of Hope—The State of Grocery Retail 2024: Europe

Editors
Christel Delberghe Anton Delbarre Dirk Vissers

Christel is director general Anton is EuroCommerce’s Dirk is responsible for the
of EuroCommerce, the chief economist and leads development of global
European organization research on the role of retail insights at Europanel.
that represents five million in the European economy.
retailers and wholesalers.
Daniel Läubli Franck Laizet

Daniel is a senior partner at Franck is a senior partner
McKinsey leading the Food at McKinsey leading the
Retail Practice globally. Retail Practice in Europe,
the Middle East, and Africa
(EMEA).
Rickard Vallöf Alexandre Kleis

Rickard is a partner at Alexandre is an associate
McKinsey and a lead editor partner at McKinsey and a
of the report; he leads the lead editor of the report.
Food Retail Practice in
Europe.
Signs of Hope—The State of Grocery Retail 2024: Europe 4

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State of Grocery Europe 2024
Signs of Hope
For the European grocery industry, 2023 was a challenging year. Inflation led consumers to
tighten their belts, leading to a drop in volume and significant downtrading. As a result, industry
growth was significantly below food price inflation. Food price inflation in Europe was 12.8
percent in 2023,1 while grocery sales grew at a rate of only 8.6 percent.2 Discounters and private
labels benefited from this market environment and were yet again the winners of the year.
In 2024, we expect macroeconomic uncertainty to persist, but at the same time, our research
indicates the first small signs of recovery. The pressure on margins, costs, and prices remains a
key concern for grocery retail CEOs, but leaders are less pessimistic than they were in previous
years. In addition, thanks to initial signs of economic recovery and wage increases in many
countries, consumer confidence is returning. Still, our consumer research shows that recovery
of consumer behavior is very polarized for 2024. While most consumer segments are still price
sensitive and trading down, some segments show an increased appetite for uptrading and
innovations.
by Christel Delberghe, Anton Delbarre, Dirk Vissers, Daniel Läubli, Franck Laizet, Rickard Vallöf,
and Alexandre Kleis
1
Based on Eurostat data, January 2024.
2
Based on Europanel data.

2023: Again all about price Real wages were compressed during 2022 and most of
2023. This has put severe pressure on many household
Grocery sales in Europe3 grew by 8.6 percent in 2023.
budgets and curbed consumer purchasing power.
This growth was a result of 12.8 percent food price
Wage increases of 6.3 percent in the EU-27 in the
inflation, a downtrading effect of 1.8 percent, and a 2.0
second half of 2023 brought some relief for consumers,
percent volume decline. This implies that grocery sales
but not all countries returned to 2019 wage levels in real
in real terms (that is, adjusted for inflation) declined
terms. For instance, real wages are still below 2019 lev-
again in 2023 and are now 4.5 percent below 2019 lev-
els in France, Germany, Italy, and the Netherlands. On
els. This decrease from 2019 is driven by a small volume
average, real wages in the EU-27 were 1.2 percentage
increase of 0.3 percent and a decline of the price per
points below 2019 levels at the end of 2023.5
item in real terms by 4.8 percent.
As a result, consumers traded down significantly in
While inflation eased significantly over the course of
2023, and private labels and discounters benefited.
2023, it was still the dominant factor affecting the indus-
The private label share increased substantially by 1.8
try. Overall inflation came down from a historic high of
percentage points, to 38.0 percent of sales in 2023
10 percent in October 2022 to a stable 3 percent at the
from 36.2 in 2022 (see “Food and grocery market KPIs
end of 2023. European food price inflation was even
in 2023,” page 25). Discounters gained another 0.8
higher, reaching a 19.0 percent peak in March 2023
percentage points in market share on average, and at
and an average of 12.8 percent for the full year. Pro-
least 1.0 percentage point in Belgium, Germany, Poland,
ducer prices in the European Union started to decline
Sweden, and the United Kingdom. The overall market
in early 2023, following agricultural prices with a delay
share of supermarkets remained stable at 37.2 percent
of six months. Food prices for consumers saw minimal
in Europe. Supermarkets in Italy, the Netherlands,
decline at the time, in part because grocery retailers’
Portugal, and Spain found strategies to succeed despite
price contracts with suppliers remain in effect and labor
high price pressure and even achieved market share
costs increased significantly.4
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3
Includes Belgium, Czech Republic, France, Germany, Italy, Netherlands, Poland, Portugal, Spain, Sweden, and the United Kingdom.
4
Eurostat, January 2024.
5
Economist Intelligence Unit (EIU), January 2024.

increases of 0.5 to 0.8 percentage points. Online sales With inflation easing toward the end of the year, the de-
remained stable at 6 percent of total grocery sales, with velopment of the grocery market also improved. Down-
significant differences among countries. France had the trading and declines in volume slowed from quarter to
highest online gain with 0.5 percentage points, while quarter and came close to zero in the fourth quarter of
the online channel lost market share in Sweden (–1.2 2023 (Exhibit 1).
percentage points), the United Kingdom (–0.7), and
Italy (–0.5), as well as in Belgium, the Netherlands, and
Portugal (–0.2).6
Web 2024>
<MCK241022 SoG Europe Full Report >
Exhibit 1
Exhibit <1> of <11>
Europe’s grocery retail market improved during 2023 as inflation slowed.

EU-51 retail sales vs previous year, by quarter, %
EU-5 Total Europe

Q1 Q2 Q3 Q4 2023 2023
9.5
Drivers 11.0
8.8 8.6
8.7
Food inflation2 17.2 6.7

15.0
12.3 12.8
11.1
7.5
−1.5 −1.6 −0.4 −0.3 −1.9 −2.0

Volume3 −4.5 −2.0 −0.6 −1.3 −1.8
Up- and downtrading4 −2.1
Development vs 2019,
Indexed Q1 2019 = 100
Market size 122.6 124.5 125.9 125.5 124.6 123.1
Volume 100.6 101.6 101.2 101.3 101.2 100.3
1
France, Germany, Italy, Spain, and United Kingdom.
2
Changes in prices for food and beverages as collected by national statistics offices. Note that Europanel calculates “prices paid” instead of using official
food inflation; thus value growth displayed does not match value growth collected by Europanel.
3
Volume change is defined as the change in number of units sold.
4
Downtrading refers to customers switching to lower-value items.
Source: Europanel (volume and up- and downtrading); Eurostat (inflation)
6
Europanel, March 2024.

2024: Signs of hope? Grocery CEOs remain concerned—although less so than
last year. Seventy-six percent of European grocery retail
Our data shows signs of hope for 2024. While the first
CEOs in our survey remain concerned about challeng-
few months of 2024 may still be challenging as the
ing market conditions (Exhibit 3). Thirty-six percent
economy contends with the aftereffects of high infla-
expect market conditions to become worse than in the
tion, the fundamentals are slowly improving. Overall
prior year (down from 44 percent in 2023 and 60 per-
inflation is expected to stabilize around 2 percent, with
cent in 2022), while 40 percent expect them to remain
food inflation slightly below in the short to medium
the same (up from 33 percent in 2023). CEOs are par-
term. Real wages are expected to grow. Grocery volume
ticularly concerned about prices and inflation. That said,
stopped decreasing toward the end of 2023 and even
CEOs in Central and Eastern Europe are somewhat less
started to increase in some markets. In addition, in our
pessimistic than their peers in Western Europe. Only 29
survey, consumers tell us that they plan to trade down
percent of Central and Eastern European CEOs expect
less than they did in 2023, and a few consumer groups
market conditions to become worse, compared with 50
even intend to start trading up again (Exhibit 2). If this
percent in Western Europe.
trend holds, we expect grocery volume in Europe to
return to growth in the second half of 2024. The 2024 grocery CEO agenda remains similar to last
year’s. Increased margin pressure and downtrading
Our data also shows large differences among countries
take the top two positions again, well ahead of other
and consumer segments. In some countries, includ-
priorities (Exhibit 4). However, four priorities gained
ing Germany, consumers report a strong intention
between seven and 12 ranks compared to last year:
to reduce downtrading and to start trading up again
talent, food to go, government regulations, and loyalty
selectively. In other markets, consumers are still less
programs.
optimistic about the future (for example, in Italy and
Switzerland). We therefore expect market performance Based on our CEO and consumer surveys and further
in Europe in 2024 to be quite heterogenous, with sig- research, we identified eight trends that we believe will
nificant differences between countries. We expect the shape the grocery industry in 2024. Some of the trends
same to be true for consumer segments. For example, build on last year’s, while others are new and will shape
low-income households are still trading down, while the strategies required to win in the grocery industry in
high-income households intend to trade up again on the coming years (see “Key trends,” page 13).
specific occasions or in selected categories.
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Web 2024>
Exhibit 2
Exhibit <2> of <11>
In most European countries, shoppers are less focused on saving money in

2024 than they were in 2023.
Net intent1 of consumers 2024 net intent in % xx
toward grocery shopping, xx Change in net intent vs 2023
2024 vs 2023,2 % 0 10 20 30 40+
Southern Central
Northern and Western Europe Europe Europe
European United Nether- Switzer-
average Germany Kingdom lands France Belgium Sweden land Denmark Spain Italy Poland
Price consciousness persists but is less prominent than in 2023
Look for ways to save 48% 48% 54% 47% 48% 44% 51% 47% 43% 52% 46% 47%
money when shopping
–5 –7 –1 –7 –8 –7 –6 +4 –9 –5 –4 –6
Actively research 39% 28% 32% 39% 45% 39% 42% 27% 41% 48% 45% 42%
for best promotion
–5 –7 –2 –4 –1 –4 –11 –1 –7 –10 +1 –6
Buy store’s own food 32% 36% 38% 41% 34% 36% 31% 34% 26% 31% 30% 19%
brands instead of
known brands –4 –10 –4 –5 –2 –7 –6 +3 –3 –3 +4 –7
Consumers start treating themselves with healthy, sustainable, on-the-go products

Focus on healthy 31% 29% 30% 34% 33% 29% 20% 34% 27% 35% 36% 29%
eating and nutrition
0 0 +5 +2 –5 –4 0 –3 +2 –6 –3 +7
Pay a higher price to 1% –5% –11% –3% 6% –6% –9% 4% –2% 6% 15% 15%
get a healthier product
+5 +8 +6 +10 +4 +6 +2 –2 +6 +3 +2 +8
Buy products from 17% 22% 5% 12% 27% 14% 3% 23% 7% 31% 24% 20%
local producers and
farmers +2 +5 0 +3 –1 +3 +1 –1 0 +5 +3 +7
Buy organic 2% 2% –10% 5% 1% –3% –8% 3% 4% 7% 17% 6%

products
+5 +14 +4 +10 +3 +6 +3 –6 +5 +6 +3 +9
Buy environmentally 17% 21% 9% 17% 16% 12% 3% 24% 11% 24% 27% 19%
friendly products
0 –4 –1 +5 –6 +1 –1 –3 –2 +6 +2 +3
Buy high-quality/ 0% –13% –9% 1% 4% –1% –4% –2% 1% 12% 10% 4%
premium products
+5 +8 +3 +10 0 +9 +1 +1 +5 –5 +8 +14
Buy food from deli –3% –11% –12% –10% 2% –5% –14% –5% –7% 17% 12% 1%
counters in stores
+4 +9 +1 +7 +1 +6 +1 –2 +4 0 +5 +3
Positive attitude toward online3

Online shopping 5% 1% 9% 6% 12% 4% 2% –1% 1% 9% 12% 2%
behavior
+8 +6 +2 +6 +7 +6 +3 –1 +1 +8 +12 +5
1
Net intent represents the share of consumers who want to do more of the activity minus the share of consumers who want to do less of the activity
in 2024 vs 2023.
2
Question: Think about 2024. Are you planning to do more, less, or about the same of the following? I plan to . . .
3
Net intent is calculated as the share of total population who currently shop online (ie, monthly) and will do more of it plus the share of total population who
currently do not shop online but will do more (ie, start) minus share of total population who currently shop online but will do less.
Source: McKinsey Consumer Survey 2024, n = 12, 598; Belgium, Denmark, France, Germany, Italy, Netherlands, Poland, Spain, Sweden, Switzerland, and
United Kingdom, sampled to match general population aged 18 and above

Web 2024>
Exhibit 3
Exhibit <3> of <11>
European CEOs are less pessimistic about market conditions in 2024

compared with last year.
European CEO survey results, sentiment toward 2024 grocery market conditions1 (n = 33)
24%
Become better
+1 p.p. vs 2023
36%
Become worse
–8 p.p. vs 2023
40%
Remain the same
+7 p.p. vs 2023
Words describing the grocery industry in 20242
Challenging/complex
Sustainability/ESG Stagnant
Concentrated
Competitive
Customer-focused
Resilient Cost focused
Recovering
Price focused Purchasing power
Inflation Dynamic/volatile
Declining volumes Continuously improving
Changing/uncertain
Under public scrutiny
1
Question: Thinking ahead, how do you see the market conditions for the grocery retail industry evolve in 2024?
2
Question: Please choose the top 3 adjectives you would use to describe the grocery retail industry in 2023.
Source: McKinsey CEO Survey 2024 (n = 33); McKinsey CEO Survey 2023 (n = 47)

Web 2024>
Exhibit 4
Exhibit <4> of <11>
Margin pressure and downtrading remain at the top of CEOs’ minds.

Top 15 trends mentioned by CEOs for the grocery industry in 2024,1
% of CEOs mentioning trend as top 1–3 or top 4–7 (n = 33)
Increase or decrease
of rank compared
with last year’s survey
Top 1–3 Top 4–7
Cost and margin pressure 70 15 85 0
Downtrading of consumers 61 18 79 0
Talent hiring and development 15 33 48 9
Private label 15 24 39 –1
Ready-to-eat, ready-to-heat, 18 18 36 12
ready-to-cook
Advanced analytics and AI 9 24 33 4
Store network expansion 3 30 33 N/A
Product sustainability 3 30 33 –4
IT modernization 24 6 30 0
Supply chain disruption and 15 12 27 –5

availability
Government regulations 6 18 24 7
Product innovation 3 18 21 N/A
Shift toward discounters 9 9 18 –5
Increased investments 6 12 18 –3
Loyalty programs 18 18 8
1
Question: Looking to the near future, what do you think will be the “top of mind” focus areas that will shape the grocery retail industry in the next 1 to 3
years?
Source: McKinsey CEO Survey 2024 (n = 33); McKinsey CEO Survey 2023 (n = 47)

Web 2024>
Exhibit <5> of <11>
Key trends
Eight trends will characterize the European grocery retail market in 2024.
1 Cost and margin

pressure
#1 concern
70% of surveyed CEOs named
addressing cost and margin pressure
as a top priority
2 Return of
polarization
1 in 5
consumers in Europe intend to splurge
on groceries over the next 3 months,
while 45% continue to look for ways to
save money
3 Food to go:
A wrestling match
for share of stomach
×2.5
faster growth expected in
away-from-home food (~8%)
vs overall grocery (~3%)
4 Sustainability:
Progress made, still
a long way to go
29%
of top 10 retailers have achieved
Scope 1 and 2 targets for 2025;
however, none of them report
progress on Scope 3 targets
5 Online:
Liberation
from offline
37%
of online shoppers in the UK go to
different stores online than offline
6 Retail media:
Click here to boost
the bottom line
20 out of the top 30
European grocers already have an
established retail media business
7 Conversational 6
promising generative AI use cases
commerce: The next can unlock 10–20% of the value of
wave of analytics advanced analytics and AI
8 Talent:
Making retail
a career again
29.4%
increase in retail vacancies, up
from 1.7% in 2019 to 2.2% in 2023

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Cost and margin pressure
The profitability of grocers declined margin pressure is a top three priority for 70 percent of
CEOs (compared with 67 percent last year).
further in 2023, and the pressure will
To improve their margins, retailers are expected to
not go away in 2024. intensify supplier negotiations, buying-alliance activity,
Margins decreased for both grocery retailers and con- and consolidation efforts in 2024. In 2023, we saw in-
sumer packaged goods (CPG) companies between 2019 tense supplier negotiations during which some leading
and 2022. While grocery retailers lost 0.4 percentage products were temporarily not available in stores. This
points of EBITDA margin in that period, CPG compa- year we expect to see even more intense negotiations.
nies lost 1.3 points. However, 2023 followed a different Buying alliances are gaining strength, and selected new
trajectory. Retailers were losing another 0.3 percentage ones are emerging—such as the recently announced
points because of additional cost increases, while CPG partnership between Auchan and Intermarché. “This
companies gained back 0.8 percentage points as they will be a real game changer,” Auchan CEO Yves Claude
passed their cost increases on to retailers (Exhibit 5). told us during an interview (see page 28). Meanwhile,
M&A activity is expected to stay high as retailers seek
In 2024, grocery retailers will continue to feel margin economies of scale, building on the 2023 record of 21
pressure. The main driver in 2024 is rising rent and transactions in Europe,7 including Reitan’s acquisition of
labor costs. According to our CEO survey, cost and the majority of the ALDI store network in Denmark.
Web 2024>
Exhibit 5
Exhibit <6> of <11>
Compared with 2019, margins in 2023 were lower for both retailers and
consumer packaged goods companies.
Margin performance, %
Grocery retailers1 Top 7 CPG players2
–1.1 p.p. (–2%)

–1.4 p.p. (–6%)
53.3 50.0 52.2
23.9 22.5 22.5
Gross
margin
–0.5 p.p. (–2%)
–0.7 p.p. (–10%)
23.3 22.0 22.8

EBITDA 6.9 6.5 6.2
margin
–0.1 p.p. (–1%)
–0.2 p.p. (–7%)
19.4 18.5 19.3
EBIT 3.1 3.2 2.9
margin
2019 2022 2023 2019 2022 2023
Note: Figures may not sum to totals, because of rounding.

1
Companies in the sample: 9 European grocery retailers (Ahold Delhaize, Carrefour, ICA, Axfood, ELO S.A., Kesko, DIA, Jeronimo Martins, and
Sonae Retail).
2
Companies in the sample: Top 7 consumer packaged goods companies (Nestlé S.A., P&G, PepsiCo Inc., the Coca-Cola Company, Kraft-Heinz,
Mondelez, Kellogg).
Source: Company reports; Corporate Performance Analytics by McKinsey
7
GlobalData, March 2024, data available for past ten years for Europe.

The return of polarization
Most consumer groups still intend Private label growth continues and is expected to per-
sist, even if the economy improves. Both private labels
to trade down in 2024, while high- and discounters experienced strong growth across Eu-
income households are starting to rope, gaining 1.8 and 2.9 percentage points, respectively
(see “Food and grocery market KPIs in 2023,” page 25),
trade back up. and consumers continue to have positive experiences
More than 45 percent of respondents to our European with private label offerings. According to our consumer
consumer survey said they are still looking for ways to survey, 83 percent of consumers rate private label prod-
save money when shopping in 2024. Still, this num- ucts of equal or better quality than branded options.
ber is lower than it was last year, while it continues Therefore, we do not expect shoppers to switch back
to be similar across income groups (Exhibit 6). While even if the market environment improves.
downtrading is still highly prevalent across low-income
The quest for health and longevity is the only premium-
households, we saw initial signs in 2023 that high-in-
ization trend that has not been negatively affected by
come households are uptrading again. The net intent
inflation. The intent of shoppers to buy healthier prod-
of high-income households to buy more high-quality or
ucts has remained constantly high for several years.
organic products further increased at the beginning of
According to our consumer survey, consumers also
2024 and is now clearly positive. We therefore expect
prioritize products perceived as “good for myself” over
to see downtrading and uptrading at the same time,
those “good for the planet.” Functional food claims such
depending on the consumer group and the geogra-
as “boosting energy” and “supporting health” continue
phy. The consumer survey results vary greatly across
to gain traction.
countries, leading us to expect significant differences in
market development across Europe.
Web 2024>
Exhibit 6
Exhibit <7> of <11>
Consumer intent to save money has declined but stays high, with increased
interest in quality and stable interest in health.
Net intent of consumers, 2024 vs 2023,1 EU-11,2 % 2023 2024
Price Quality Health

Look for more ways Buy high-quality/ Focus on healthy
to save money premium food products eating and nutrition
–7 p.p. –6 p.p.
–1 p.p.
55 +5 p.p.
51 –1 p.p.
48 45 +6 p.p. 36 35
3 8 24 23
−16 −10
Low income High income Low income High income Low income High income
1
Question: Think about 2024. Are you planning to do more, less, or about the same of the following? Percentage is calculated as net intent (% of people
intending to do more of the activity minus % of people intending to do less). Sample sizes for low- and high-income consumers in total are 2,600 and
5,500 respondents, respectively.
2
2023 and 2024 both cover EU-11 (UK, DE, FR, IT, ES, NL, CH, PL, SE, BE, DK).
Source: McKinsey Consumer Survey 2024 (n = 12,598), 2023 (n = 12,777), Belgium, Denmark, France, Germany, Italy, Netherlands, Poland, Spain, Sweden,
Switzerland, and United Kingdom, sample to match general population of aged 18 and above

Food to go: A wrestling match
for share of stomach
As consumers spend more time on “In Paris, half the population
the move, the food-to-go market is now lives alone, so they prefer
surging.
packaged meals and smaller
The food-to-go market declined during the COVID-19
pandemic, but it has recovered and continues to grow. portions. Our new concept
Food to go encompasses various channels: prepack-
aged ready-to-eat meals, ready-to-heat convenience
stores will help us gauge the
meals, counters and kiosks, restaurant takeaways, and demand for ready meals.’”
meal delivery. The growth of these channels is driven
by the return of workers to offices and consumers’ in- – Yves Claude, CEO, Auchan Retail
creasingly busy lifestyles. According to our CEO survey, levels, while Germany and Spain are still below those
food to go is one of the top five trends for 2024; CEOs levels.9 Going forward, food to go is expected to grow
expect food to go to drive traffic, raise margins, and at roughly 8 percent per year over the next five years in
generate cross-selling opportunities. Europe,10 while the grocery retail market is expected to
Foodservice providers such as restaurants, takeaway grow at roughly 3 percent.
players, and meal delivery services are gaining share Grocery retailers are expanding their food-to-go offer-
from grocery retailers. Despite the inflationary environ- ings to capture this growth. Grocers are expanding their
ment and consumers trading down, the foodservice offerings of traditional ready-to-eat, ready-to-heat, and
industry outpaced the grocery retail industry by nearly ready-to-cook products. They are also increasingly
three percentage points. While foodservice grew at experimenting with foodservice offers such as hot food
11.5 percent,8 grocery achieved a growth rate of only to go, cafeterias, and seated restaurants, either through
8.6 percent last year. France and Italy now have higher third-party concepts or by offering them directly.
foodservice volume compared with prepandemic
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8
Eurostat foodservice turnover.
9
Eurostat, February 2024; McKinsey, growth in sales value adjusted for change in Harmonised Index of Consumer Prices for catering.
10
GlobalData: Away-from-home food in retail channel 2023, sample of 23 European countries.

Sustainability: Progress made,
still a long way to go
A step change for sustainability be reduced in a way that also reduces cost.
in grocery requires bold actions So far, none of the top ten European grocers are re-
porting any progress on Scope 3 emission reductions.13
from retailers; our 2024 consumer This is mainly because measuring these emissions
research does not show increasing accurately is very difficult. However, pioneering retailers
pull from consumers. have started to build Scope 3 accounting capabilities
that use actual emissions by product and supplier
In fact, the share of consumers who want to buy prod- instead of global averages across all suppliers. This
ucts that are more sustainable in the next 12 months shift will enable grocers to measure and reduce their
decreased by one percentage point from 2023. Also, the Scope 3 emissions more effectively. For example, by
intent to buy more alternative-protein products remains understanding the real emissions associated with each
stable at the low levels of 2023. Only members of supplier, grocery retailers can switch to suppliers with
Generation Z and millennials signal a high intent to buy lower emissions or agree with suppliers on concrete
more environmentally friendly products in 2024. reduction targets.
The window of opportunity to reach 2025 sustainability Regenerative agriculture14 could become the new ‘organ-
targets is closing. All of the top ten European grocery ic.’ Most of grocery retailers’ greenhouse gas emissions
retailers have set sustainability goals for 2025, covering are driven by agriculture. About 50 percent are driven
a variety of sustainability dimensions (Exhibit 7).11 Many by dairy and meat alone. Regenerative agricultural
of the dimensions still have sizable gaps to close to practices are therefore the key to meet the net-zero
reach these targets. We therefore expect to see acceler- ambitions proclaimed by many retailers. Introducing
ated sustainability efforts across the industry in 2024. regenerative agricultural labels in their assortment as
For targets on Scopes 1–3,12 working toward these pres- an alternative to organic labels can be a big opportunity
ents a dual opportunity to reduce carbon emissions for retailers to differentiate their offerings while working
and capture cost savings; we have found that, depend- toward their sustainability targets.
ing on the category, up to 40 percent of emissions can
Web 2024>
Exhibit 7
Exhibit <8> of <11>
The top ten European grocers are on a final sprint to meet their 2025 goals.
Selected Share of retailers with Reported progress on targets
sustainability 2025 targets set1
dimensions Target On track (>50% Lacking progress Progress
Target set No target met of target already (0–50% of target not reported
achieved) met)
Scopes 1 and 2 29 43 29
Scope 32 100
Packaging 33 22 44
Animal 40 20 40
welfare
Agriculture/ 38 63
deforestation
Note: Top 10 European grocery retailers: Schwarz Group, ALDI Süd, Ahold Delhaize, Tesco, Edeka, Rewe, Leclerc, Carrefour, Sainsbury, Casino.
1
Some of the retailers have multiple targets per category. 2Including supplier goals.
Source: Company sustainability reports; company websites
11
The top ten European grocers are Schwarz Group, ALDI Süd, Ahold Delhaize, Tesco, Edeka, Rewe, Leclerc, Carrefour, Sainsbury, and Casino; Euromonitor, accessed
February 2024.
12
Scope 1 is direct emissions generated by an organization. Scope 2 is emissions generated by production of purchased energy. Scope 3 is indirect emissions from up
and down the value chain.
13
Scope 3 refers to all greenhouse gas emissions that happen in the value chain before or after grocery retailers (that is, suppliers and consumers).
14
Regenerative agriculture includes farming and grazing practices that improve soil health, crop resilience, nutrient density, water management, and biodiversity, as well
as the livelihoods of farmers.

Online: Liberation from offline
Online grocery is returning to growth, Pure players are starting to reach profitability. For
instance, Rohlik is profitable.16 Picnic claims to be “op-
and it is increasingly evolving into erationally profitable in mature markets,”17 and Ocado
an independent, profitable format returned to profitability in 2023. Moreover, leading meal
delivery players have also reached breakeven (Door-
with its own differentiated value Dash and Deliveroo over the course of 2023), thanks to
proposition. a successful shift of priorities from growth to rightsiz-
ing.18
Online grocery lost market share in 2023, but consumers
are starting to return as spending power recovers. The Increasingly, consumers expect different value propo-
net intent of consumers to buy more food online has sitions from online and offline channels. It is becom-
returned to positive, increasing by eight percentage ing progressively clear that the two channels satisfy
points in the first quarter of 2024. We expect e-grocery different shopping needs. For example, 37 percent of
to grow faster than the overall grocery market over the consumers in our UK survey (two percentage points
next years. Meal delivery from restaurants might grow higher than 2023) always shop at a different banner
even faster than e-grocery (Exhibit 8). Pure players online than offline because they exhibit different needs
in particular show extraordinary growth rates as they by channel. In addition, UK consumers see promotions
expand into new regions. For instance, Picnic grew as more important than price for offline store selection,
at more than 30 percent per annum over the past five while for online, price is more important than promo-
years,15 driven by rapid expansion. tions.
Web 2024>
Exhibit 8
Exhibit <9> of <11>
Online grocery and meal delivery are expected to outpace offline growth.
Food retail and delivery market size per channel, EU-51 2019–30, € billion CAGR 2023–30
Meal delivery Online grocery Offline grocery

9.2%
50
76
6.8%
32
27 53
48
19 24 26
42 45 44
27 12
801 2.0%
695 711
635 625 640
584
2019 2020 2021 2022 2023 2024F 2030F
1
Includes Germany, France, Italy, Spain, and United Kingdom.
Source: Europanel; Euromonitor; Statista; McKinsey analysis
15
Picnic company accounts, February 2024.
16
Zosia Wanat, “Brunch with the founder of Rohlik — a profitable disruptor of a trillion-dollar grocery industry,” Sifted, December 12, 2023.
17
“Online supermarket Picnic gets €355 million capital injection from shareholders,” NL Times, January 9, 2024.
18
Company financials; Corporate Performance Analytics by McKinsey, March 2024.

Retail media: Click here to boost
the bottom line
Retail media (RM) undoubtedly will prompt smaller players to consolidate and form
partnerships to maintain relevance in the RM world.
remains a substantial profit driver for Alliances, such as the Unlimitail partnership between
grocery retailers, with 20 of Europe’s Carrefour and Publicis, and the growth of ad network
aggregators such as Amazon Ads are expected to
top 30 grocery retailers now active in shape the market this year.
the market. Standardization, impact measurement, and ad diversi-
Grocers view RM as a fundamental driver of profitability. fication are critical for engaging CPGs on RM. Regula-
In Europe, the RM market was worth €11 billion in 2023 tory changes have increased the difficulty of targeted
and is expected to grow at a rate of 15 percent annually digital marketing, boosting the appeal of RM for CPG
in the coming years. With EBIT margins reaching 65 to companies to engage with consumers at the point of
70 percent within three years of launching, RM presents purchase. Transparency and standardization of impact
an attractive opportunity for grocery retailers.19 In our metrics, such as return on ad spending, are essential
survey, grocery retail CEOs confirmed this opportunity, for RM success, and CPG companies rank these as the
naming RM as one of the top five opportunities for the top barrier to further investing in RM.20 To address this,
year ahead. Ahold Delhaize, for example, has launched a self-ser-
vice platform for suppliers to manage and track the im-
2024 will be marked by a bold expansion of retailers’ RM
pact of RM campaigns. Moreover, retailers are expected
footprint. The name of the game for RM is scale—only
to expand their offerings beyond classic paid search
the largest players are expected to remain relevant for
and website banners to include video, connected TV,
CPG advertisers in the long run, especially in light of
shoppable (video) content, and innovative in-store acti-
Amazon’s large share in the market (Exhibit 9). This
vations in order to stay relevant to CPG advertisers.
Web 2024>
Exhibit 9
Exhibit <10> of <11>
Retail media continues to grow; Amazon remains in a league of its own.

Digital retail media ad spend in Europe, € billion
Amazon Others Total

+28% p.a.1
21.9
18.4
31%
+25% p.a.1
14.3 29%
10.5 27%
9.0
7.9 25%
23%
5.6 71%
4.3 73% 69%
75%
77%
2019 2020 2021 2022 2023 2024F 2025F 2026F
1
Per annum.
Source: Euromonitor; IAB Europe
19
IAB Europe, Statista, January 2024.
20
Retail Media Standards Survey 2023, IAB Europe, 2023.

Conversational commerce:
The next wave of analytics
Advanced analytics and traditional AI instance, US-based Walmart launched its Text to Shop
proposition last year, allowing consumers to shop for
still account for most of the impact, groceries by texting. They can also get inspiration for
but conversational commerce recipes, make restocking suggestions, and schedule
delivery or pickup times.
enabled by generative AI has the
potential to reimagine how we shop. Advanced analytics and traditional AI are still the largest
sources of technology-driven value creation in retail.
Retailers have started to experiment with generative Eighty to 90 percent of future value creation for grocers
AI but have yet to unlock real value. From the total is driven by advanced analytics and traditional AI. For
advanced analytics and AI impact pool in grocery retail, grocers, assortment, pricing, and promotion optimi-
an estimated 10 to 20 percent of value potential stems zation are the largest opportunity areas. Rigorously
from generative AI. In grocery, six revenue-enhancing leveraging advanced analytics and traditional AI across
and efficiency-driving use cases are expected to drive the organization has the potential to improve EBIT mar-
value: hyper-personalized content, smart search, co- gins in retail by up to one percentage point. Most large
pilots for category management (for example, supplier retailers in Europe have adopted a range of advanced
negotiations), copilots for support functions (such as analytics use cases by now and started to capture
software development), content creation, and conver- a significant share of that potential. The remaining
sational commerce (Exhibit 10). By engaging shoppers opportunity resides in expanding to further use cases,
with a human-like chatbot as a personal shopping increasing adoption of use cases, and using the new
assistant, conversational commerce can significantly capabilities to localize and personalize the offering for
improve the on- and offline shopping experience. For each store and consumer.
Web 2024>
Exhibit 10
Exhibit <11> of <11>
Generative AI accounts for 10 to 20 percent of the value potential from

analytics in grocery retail, with the most value coming from six use cases.
Analytics impact potential, Generative AI use cases in grocery
% of total EBIT impact from analytics retail that add the most value
Revenue-enhancing Efficiency-driving
1 Conversational commerce
2 Hyper-personalization
3 Smart search for grocery
80–90%
10–20%
Advanced analytics Copilot for category management
Generative AI 4
and traditional AI (eg, supplier negotiations)
Copilot for support functions

5
(eg, software development)
6 Marketing content creation

Talent: Making retail a
career again
Grocers across Europe face an technological skills will become more important as
the need for physical activity decreases. Our analysis
unprecedented number of job shows that by 2030, the time workers spend using
vacancies, and the average employee social or emotional abilities will increase by 32 percent,
and the time they spend leveraging technical skills will
tenure is shrinking. increase by 64 percent. Physical and manual activity,
Vacancy and fluctuation rates are high. In the third on the other hand, will decline by 17 percent as a result
quarter of 2023, 2.2 percent of all retail jobs were of technological advancements.
vacant, a 29.4 percent increase from 1.7 percent prior
Attractive grocery employers offer careers, not just jobs,
to the pandemic.21 While retailers work hard to fill open
in combination with the right work–life balance. Forty
positions, they are also confronted with high turnover
percent of retail employees in Germany and 33 percent
rates—especially in frontline positions. In addition, there
of retail employees in the Netherlands are considering
is a shortage of skilled talent, particularly in supply
changing their jobs.23 Respondents cited unmet needs
chain activities, as well as for jobs that require digital
of applicants, compensation, and working times among
and technological know-how. The aging of the popu-
the top five factors in ongoing retail vacancies in
lation further exacerbates the situation. The number of
Germany. Flexible work arrangements and a multitude
citizens of working age in the EU-27 will decline by ap-
of career paths gain in importance. Yet only 16 percent
proximately one million people per year going forward.
of retail employers in Germany say they offer work–life
Hiring and developing talent is one of the top three
benefits to frontline retail employees, and more than 50
priorities of European grocery retail CEOs, according
percent of retail employers in Germany say they do not
to our survey. Yet only 21 percent of retail employers
offer individual career opportunities to their employees.
in Germany say they have a professional retention
In the United Kingdom, the retail sector ranks in the
program in place, and even fewer—11 percent—say they
bottom third in terms of offering career progression
have the tools in place to survey employee satisfaction
opportunities compared with other sectors. Meanwhile,
regularly.22
retailers such as Walmart have started acting on these
As automation and digitalization progress, the roles and developments by offering different types of career paths
job profiles of retail employees will change significantly and trainings depending on employee preferences.
over the next decade. Social, emotional, cognitive, and
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21
Eurostat EU-27 countries.
22
Study: Talents4Retail 2023/24, EHI Retail Institute, January 2024.
23
McKinsey HR-Monitor Germany 2024; Distrifood 2023.

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Implications for grocers

The state of grocery continues to tioned to win in this market environment—especially
given that different countries, regions, and neighbor-
present challenges, but—supported hoods will show varied recoveries in 2024.
by stronger consumer sentiment— Driving nontrivial efficiency savings
there are opportunities for executives As margin and cost pressure remains high, grocery
to build new sources of competitive retailers need to take rigorous mitigating actions to
achieve cost savings. With low-hanging fruit already
advantage. We see three strategic captured, cross-functional and nontrivial cost positions
priorities for grocery retailers that need to be addressed in 2024—for example, operat-
ing model redesign, end-to-end supply chain opti-
will help them strengthen their mization from supplier to store, rent renegotiation, or
assortments, increase profitability, design-to-value for private label assortment.
and leverage the momentum for RM
networks. Monetizing retail media
When it comes to building and scaling a RM busi-
Future-proofing the assortment ness that drives profits in 2024 and beyond, grocers
Confronted with polarized consumer behavior, grocers have no time to lose. To go from good to great in RM,
seek to balance affordability with value-adding products players need to think like ad agencies and secure the
while rationalizing the assortment to optimize costs. To right leadership commitment, business autonomy, and
defend their market share, supermarkets and hypermar- resources dedicated to RM business development.
kets will want to keep strengthening their private label Grocery retailers enjoy a privileged position in today’s
offerings. At the same time, growing demand for healthy media landscape. However, to remain relevant to adver-
products and for food-to-go, ready-to-eat, and ready-to- tisers over time, RM players should consider improving
heat options provides further opportunities for uptrading their impact measurements, as well as continuously
consumers. Retailers that can differentiate assortment enhancing and renewing their advertising offerings.
by store depending on local needs will be best posi-

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Food and grocery market KPIs in 2023
Year–over–year (YoY) growth in 2023 vs 2022 and 2019, %
Northern and Western Europe Southern Europe Central Europe
United Nether- Czech Weighted

Germany France Belgium Sweden Spain Italy Portugal Poland
Kingdom lands Republic average1
Food market—segment growth

Grocery retail value vs 2022 +7.6 +9.2 +7.1 +8.8 +9.0 +5.9 +10.1 +7.8 +8.2 +7.2 +11.7 +8.6
growth2
percent change vs 2019 +23.3 +23.3 +24.9 +18.5 +23.0 +27.1 +21.7 +22.4 +24.2 +23.1 +37.0 +23.1
– Modern grocery retail vs 2022 +8.6 +8.5 +7.9 +9.6 +8.4 +5.4 +12.1 +8.2 +8.2 +7.0 +13.2 +9.2
value growth3
– Other grocery for- vs 2022 +3.5 +12.6 +1.6 +4.2 +11.3 N/A +3.8 +6.2 +8.2 +7.6 +8.5 +6.2
mats value growth4
percent change vs 2019 +5.1 +21.6 +22.1 +12.8 +26.7 N/A +5.3 –2.5 +17.6 9.2 +13.1 +11.3
Grocery retail deflated vs 2022 –4.7 –4.8 –4.5 –3.3 –4.4 –6.4 –1.5 –2.3 –2.0 –4.6 –3.9 –3.8
value growth5
percent change vs 2019 –8.0 –4.0 –1.0 –4.3 –3.1 –1.9 –6.4 –0.5 –3.1 –11.3 –4.2 –4.5
Foodservice value vs 2022 +7.7 +11.3 +13.0 +11.0 +11.0 +7.8 +9.2 +14.6 +14.2 +18.0 +16.4 +11.1
growth6
Modern retail—revenue breakdown

Total2 vs 2022 +8.6 +8.5 +7.9 +9.6 +8.4 +5.4 +12.1 +8.2 +8.2 +7.0 +13.2 +9.2
percent change
vs 2019 +28.0 +23.6 +25.4 +19.5 +22.0 +29.1 +27.3 +30.8 +25.4 +27.8 +50.8 +26.7
– Hypermarkets7 vs 2022 +6.8 +6.6 N/A +8.8 –2.8 +3.4 +12.3 +5.4 N/A +4.6 +1.3 +6.8
percent change
vs 2019 +14.0 +4.8 N/A +12.4 –1.2 +16.4 +23.0 +3.6 N/A +16.5 +8.6 +11.0
– Supermarkets8 vs 2022 +6.2 +7.7 +7.9 +8.8 +6.6 +5.5 +11.5 +9.2 +9.5 +5.3 +11.1 +8.2
percent change
vs 2019 +28.9 +14.2 +19.0 +16.9 +16.9 +20.8 +25.2 +30.2 +23.1 +20.9 +33.9 +22.8
– Online9 vs 2022 +13.5 +2.6 +4.4 +14.9 +3.6 –14.3 +10.1 –10.2 –0.4 +7.2 +23.5 +7.5
percent change
vs 2019 +85.0 +78.4 +116.6 +76.8 +121.5 +70.5 +75.6 +45.7 +14.3 +73.1 +161.6 +83.3
– Discounters10 vs 2022 +10.5 +18.3 +9.9 +9.8 +12.3 +12.8 +14.9 +9.7 +4.7 +10.8 +16.4 +12.4
percent change
vs 2019 +28.2 +58.3 +26.6 +18.5 +24.3 +55.8 +34.1 +50.9 +36.4 +42.3 +69.5 +37.1
Modern retail—space breakdown

Total vs 2022 +0.5 +1.3 +1.1 +1.7 +1.0 +0.9 +1.6 +4.5 +2.1 +1.5 +3.9 +1.8
percent change
vs 2019 +0.4 +3.3 +6.0 +4.4 +3.4 +4.8 +3.5 +4.4 +14.1 +6.9 +16.0 +4.1
– Hypermarkets11 vs 2022 –0.5 –0.2 N/A +1.4 0.0 +2.3 +1.3 +1.0 N/A +1.1 +0.8 +0.6
percent change
vs 2019 –7.4 –0.1 N/A +2.0 0.0 +3.9 +4.6 –6.6 N/A +1.6 –9.7 –2.0
– Supermarkets12 vs 2022 +0.8 +0.3 +1.1 +1.5 +1.4 –0.7 +0.8 +1.0 +3.0 +1.1 +2.6 +1.0
percent change
vs 2019 –0.2 –0.2 +4.9 +2.3 +3.4 +2.5 –1.0 –0.7 +21.7 +6.9 +7.5 +1.5
– Discounters13 vs 2022 +0.7 +2.2 +1.0 +0.4 +0.7 +3.3 +8.4 +13.1 +0.9 +3.4 +4.4 +3.5
percent change
vs 2019 +4.6 +19.3 +7.6 +2.5 +4.2 +19.5 +33.0 +19.0 +11.8 +22.5 +35.4 +13.5
– Convenience14 vs 2022 +3.1 +5.6 +2.9 +4.0 +1.1 –0.1 –0.2 +2.4 +2.4 +0.8 +6.7 +3.3
percent change
vs 2019 +20.2 +7.9 +41.0 +19.6 +3.5 –0.3 +3.8 +23.7 +11.6 +3.5 +27.3 +16.3
Sales/m2 vs 2022 +8.0 +7.1 +6.7 +7.7 +7.3 +4.5 +10.3 +3.5 +6.0 +5.5 +9.0 +7.3
percent change
vs 2019 +27.6 +19.7 +18.3 +14.4 +17.9 +23.2 +23.0 +25.2 +9.9 +19.5 +29.9 +21.7

Northern and Western Europe Southern Europe Central Europe
United Nether- Czech Weighted

Germany France Belgium Sweden Spain Italy Portugal Poland
Kingdom lands Republic average1
Grocery retail—price and volume growth

Volume15 vs 2022 –1.9 –1.5 –2.3 –3.1 –1.3 N/A –0.4 –1.8 –2.4 –1.6 –3.1 –2.0
percent change
vs 2019 –0.3 +0.3 –3.5 +0.7 –1.1 N/A –3.8 +6.1 +2.7 –1.7 –2.7 +0.3
Basket size volume 16

vs 2022 –5.8 –1.8 –5.0 –4.2 –4.2 N/A –1.4 –7.7 –8.0 –4.5 –3.3 –4.3
percent change
vs 2019 –1.3 +11.9 –4.0 –2.1 +0.9 N/A –1.0 –6.1 –10.5 +1.8 +12.2 +0.6
Frequency vs 2022 +4.1 +0.3 +2.8 +1.1 +3.1 –0.3 +1.0 +6.4 +6.1 +3.0 +0.2 +2.5
percent change
vs 2019 +1.0 –10.4 +0.5 +2.8 –2.0 –2.1 –2.9 +13.1 +14.7 –3.5 –13.3 –0.3
Food and beverage vs 2022 +13.0 +14.7 +12.1 +12.5 +14.0 +13.1 +11.8 +10.3 +10.4 +12.4 +16.2 +12.8
price changes (inflation)
Up- or downtrading vs 2022 –2.9 –3.4 –2.2 –0.2 –3.1 N/A –1.1 –0.4 +0.4 –3.1 –0.8 –1.8
percent change
vs 2019 –7.7 –4.2 +2.7 –5.0 –2.1 N/A –2.7 –6.2 –5.6 –9.8 –1.6 –4.8
Other key grocery indicators

Online channel market share 3.9 11.0 7.8 9.4 4.0 5.1 2.6 2.5 2.3 3.8 2.1 6.0
percent, full year
Private label value share17 35.8 51.5 47.0 39.1 40.4 27.6 30.8 32.2 45.4 29.9 23.0 38.0
percent, full year
Private label value vs 2022 +2.1 +0.6 +2.4 +2.4 +1.7 +1.5 +1.6 +1.7 +3.2 +1.8 +1.9 +1.8
share17
p.p. change vs 2019 +4.5 +1.4 +3.3 +3.1 +2.3 +5.4 +5.8 +4.8 +9.4 +6.9 +4.6 +3.9
Promo share 22.4 26.1 N/A 14.5 17.0 38.1 12.8 33.1 23.8 55.0 28.6 23.2
percent, full year
Promo share vs 2022 +1.9 +0.5 N/A –0.4 –3.1 –0.2 +1.0 –0.6 –0.6 +1.7 +4.4 +0.7
p.p. change
vs 2019 +4.1 –6.2 N/A –0.2 N/A +10.2 –0.1 –8.1 –4.5 +2.9 +5.3 –0.5
Consumer indicator
Consumer confidence vs 2022 +4.6 +9.2 +7.7 +1.7 +7.1 –1.2 +7.3 +4.6 +3.4 +7.6 +8.2 +5.3
points change, full year
vs 2019 –13.3 –16.7 –10.8 –8.4 –1.9 –14.6 –12.7 –4.2 –19.8 –20.9 –12.1 –11.4
1 Weighted according to total grocery 6 I ncludes food and beverage service 11 Sales area between 3,000m2 and 6,000m2; 17 rivate label is defined as any brand/
P
revenues for each country. If for a given activities providing complete meals or substantial nongrocery store offering product that is owned and sold by an
KPI group the data is not available for drinks fit for immediate consumption (eg, (according to IGD). individual retailer and not sold by other
some countries, these countries are traditional restaurants, self–service, or 12 Sales area ranging from 300m2 to retailers. This includes any product with
excluded from the weighted average. takeaway restaurants). 6,000m2; store offering is predominantly the store name in the brand such as
2 Data measures the value of fast–moving 7 arge retail outlets under common
L food (according to IGD). [Store name] Cornflakes and similar. It
consumer goods (FMCG) and fresh ownership with sales area >2,500m2 13 Sales area from 300m2 to 1,500m2 includes all “brands” sold by discounters
purchases that are taken home (excludes (according to Europanel). (potentially up to 6,000m2); narrow range or any other retailer that are owned and
value of purchases that are consumed on 8 Smaller retail outlets under common (<4,000 SKUs) with a focus on everyday sold exclusively in their own stores.
the go, at work, etc). ownership, excluding discounters. Sales low prices. Offerings typically dominated Fresh products sold with a retailer
3 Consists of hypermarkets, supermarkets, area from 450m2 to 2,500m2 (according to by private label, and stores operate with name/exclusive “brand” on the shopper
online stores, and discounters. Europanel). low–cost business model (according to package/receipt are included; loose no–
IGD). name fresh products are excluded.
4 Remaining store types not covered by 9 Any FMCG and fresh products bought
“modern retail.” Examples include small on the internet and either delivered or 14 Stores typically under 300m2, with
corner store, pharmacy, drugstore, and collected. convenience–focused ranges usually up
open market. 10 imited–range discount retailers such
L to 6,000 SKUs and long opening hours
5 Inflation–adjusted grocery retail value as ALDI, Lidl, Biedronka, Norma, Netto (according to IGD).
growth. Marken–Discount, Eurospin, Penny, 15 Number of units sold.
Dia, and Leader Price (according to 16 Average number of units sold per basket.
Europanel).
Source: CBS (NL), Europanel, GfK, IGD, ONS (UK)

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Interview
“The customer
experience has to be
grounded in the warmth
of human interaction.”
Yves Claude
CEO, Auchan Retail
Auchan employs more than 150,000 people and operates

more than 2,300 points of sale under the Auchan banner
in 11 countries.
Q: From your perspective, how did the market conditions for grocery retail evolve in
2023? And how was business for Auchan?
A: Last year was a challenging one for the industry in multiple respects. The French economy went
through some difficult times. Things went reasonably well for Auchan during the first three quar-
ters of 2023, but the fourth quarter was more challenging. In addition, our suppliers increased their
prices significantly, and with only 8 percent market share in France, we don’t have much bargaining
power. We had to pass on price increases to our customers, and many of them traded away to other
players.
Q: Did you experience the same challenges in other countries as well?
A: Not as much. In other countries, such as Portugal and Spain, Auchan offers the best prices
in the market. This is a real advantage in times of high inflation. Some markets have shown
more resilience, both in terms of sales and in terms of profitability, because consumers there
are more willing to spend money on groceries. Households in Spain and Portugal have lower
average incomes than those in France, but shoppers in those countries will still spend money
on good food. In Spain, we also successfully integrated the Dia stores we acquired in mid-2023,
subsequent to the acquisition the previous year. That was a big step for us. And in Portugal, we
signed the acquisition of Dia stores.
Q: What are your thoughts on inflation?
A: In France, inflation dominated the news in 2023, and it put pressure on our profits. Now, as
inflation slows, the sector can return to more conservative commercial strategies. We ended
2023 with an overall price increase of 1 to 2 percent. For some products, we will even lower
prices. Overall, and as with most of our competitors as well, our customers bought much more
of our private label this past year.

Q: How has 2024 been so far?
A: We’re off to a challenging start, with strikes and protests that are affecting our supply chains.
But we also see signs of hope. Thanks to the acquisition of the Dia stores, we will be able to
double our market share in Portugal in 2024. Another reason for optimism is our ten-year buy-
ing alliance with Intermarché and Casino. This will be a real game changer. Together, we have
32 percent market share in France. That makes us a force to be reckoned with.
Q: How are shopping habits changing in the markets in which you operate?
A: In Paris, half the population now lives alone, so they prefer packaged meals and smaller
portions. Our new concept stores will help us gauge the demand for ready meals. We will even
offer our customers the option to eat these meals on-site. Hypermarkets are still working for
families or older customers, but a lot of younger people don’t shop there. They prefer to buy
their groceries close to their home, in a local store with a human touch. So we must improve the
experience to keep these customers coming into our stores. The customer experience has to be
grounded in the warmth of human interaction.
Q: What are you doing to promote sustainability?
A: We’re a family business. We take a long-term view. We want to make sure that we are
responsible. We can’t aspire to please everyone; we aspire to stand up for our values. For exam-
ple, we try to do as much local purchasing as possible. We also want to be long-term partners
for our suppliers. We have worked with some of them for over 60 years, and we will stand by
them in the quest for sustainability.
Q: How are your customers responding to your commitment to sustainability?
A: Consumers want healthy food, ideally from local producers, but they are also price con-
scious. We want to offer consumers with smaller budgets quality products that more affluent
shoppers buy in small local shops. Our purpose is “#vivre mieux” [“#live better”], and it drives
all our decisions. We want consumers to have food sovereignty. To make this happen, we need
to communicate clearly about the quality and the origin of the food we sell so consumers can
make informed choices. Take chicken. Many grocers import chicken from faraway countries
to get better prices. At Auchan, we sell only French chicken. We shrink our margin to do it. We
can’t turn the tide alone. It takes a joint effort, including the government, associations, and farm-
ers.
Q: How far along are you on the e-grocery journey?
A: The average Auchan shopper has 30 products in their cart, including heavy packs of bottled
water, frozen products, and ready meals. That’s a lot of variety, and it’s hard to handle in terms
of logistics. To make things even more difficult for us, most of our online customers want home
delivery.
Q: Is click and collect a viable alternative?
A: It could be, but for it to be fully effective, the pickup locations need to be on a consumer’s
path from their place of work or study to their home. Our current store locations are not always
ideal for that type of business.
Q: What about the online experience itself?
A: Customer expectations are very high. They expect a sleek, highly functional website with
features such as filtering tools, customer reviews, and videos. We don’t have all of that in place
at this point. So the online purchasing journey isn’t yet as engaging and as seamless as we
would like it to be. We’re working on it, but we take it one step at a time to get it right. Some
parts of our assortment, such as textiles, aren’t even available online yet. We will change that
soon.

Q: What are your thoughts on format evolution?
A: I don’t think more hypermarkets will open in the countries in which we do business, or at
least only very few will. Because of changing shopper needs, we expect to see a lot of stores
with smaller footprints to open in the future, which will restore balance in the market. To partake
in this development, we are working on a franchise model to build a network of small, indepen-
dent stores run by local entrepreneurs. When we advertised this opportunity internally, many of
our employees started selling their Auchan shares to free up capital, start their own store, and
be their own boss. This project is very close to my heart because it’s about empowerment. It’s
a way for us to give something back to the people who work for us and expand our network at
the same time. We are also now reducing the size of our hypermarkets.
Q: Looking ahead beyond 2024, what is your top priority?
A: We will push for growth in the markets in which we are already present, rather than enter
new territories. Right now, our market share is relatively low in most markets: 8 percent share in
France, 6 percent in Spain, 5 percent in Romania, 3 percent in Poland. As a result, our volumes
are too low to command attention from suppliers. For suppliers, volume is key, and they prefer
exclusivity. Some suppliers shut us out because of this. So growing market share is a priority for
us. Our aspiration is to reach a double-digit market share in each market. France, Spain, and
Portugal are our priorities right now, but we will pursue market share growth in other countries
as well.

Interview
“To solve for net zero,

I expect brand owners
to address their Scope 1
and 2 emissions.”
Ole Robert Reitan

CEO, Reitan Retail
Reitan Retail employs more than 43,000 people and has

a network of 3,850 grocery, convenience, and mobility
stations across seven countries, including Norway,
Denmark, Sweden, Finland, and the Baltic states.
Q: Can you tell our readers a little about the history of your company?
A: My grandfather started it. He opened the first grocery store in Trondheim in 1948, a tradi-
tional store with him as the shopkeeper behind the counter. As the owners of the grocery store,
my grandparents were at the center of their local community. They knew everyone, from the
housewives and the schoolteacher to the priest and the soccer coach. My grandfather worked
behind the counter all his life, and I grew up in his store.
Q: How did that store evolve into the company you manage today?
A: That’s where my father comes in. In 1972, he opened his own store. At the time, he and my
grandfather had a very intense argument about whether a chain-operated retail model could
work. My father envisioned a chain of stores. My grandfather thought that was a terrible idea
and argued it would never work. He was convinced that the owner had to be on the shop floor
all the time, watching over the customers, the local market, the inventory, the costs—everything.
Q: How did they resolve their disagreement?
A: The pivotal moment was a trip to the United States my father took in the mid-1970s. In
America, he discovered the franchise system. McDonald’s and Holiday Inn made a big impres-
sion on him. Here was a system that combined the best of both worlds: the accountability of
owner–operators and the scale of a chain.
Q: So that was the magic moment?
A: Exactly. It really is a miracle that these two guys with totally different perspectives on life
and business found common ground after almost a decade of arguing. The next argument was
around the actual concept. So my father took another trip: in 1977, he went to Germany and met
the Albrecht brothers, the founders of ALDI. My father was thrilled, and he came home with
the plan to create the first Norwegian discount concept. He opened the first outlet in 1979 and
called it REMA 600, with an assortment of 600 SKUs. In 1980, he expanded the assortment to
1,000 SKUs, paving the way for the REMA 1000 brand.
Q: And it took off right away?
A: It did, thanks to my father’s focus on low costs, low prices, and high turnover. High turnover
enabled him to reduce costs even further, and he passed the savings on to customers through
even lower prices that led to even higher sales. It was a strong flywheel.

Q: Let’s fast-forward to the present day: what was 2023 like for the Nordic grocery mar-
ket?
A: Inflation was the main topic. Prices increased by as much as 10 percent. That had a big
impact on the market. In early 2023, it was a “wild West” situation in terms of pricing. Competi-
tion was fierce, and some prices we saw didn’t make sense to me. I just didn’t see how some of
our competitors could cover their costs with those prices. Later on, it turned out that I was right,
and things balanced out toward the end of the year.
Q: How did all this affect REMA 1000?
A: The first half of 2023 was challenging, even for us. But thanks to the price pressure, the mar-
ket share of discounters grew, so that worked in our favor. As a company, we did well in 2023,
especially in Denmark and Norway.
Q: What was your biggest achievement in 2023?
A: That’s easy. It was the acquisition of the majority of ALDI’s store network in Denmark. There
had been similar milestones in the past, such as the takeover of Lidl stores in Norway in 2008,
but the fact that the Albrecht brothers had been our idols from the start made this deal very
special. So when I sat down with ALDI to sign the agreement in a hotel in Copenhagen, I had
to pinch myself to make sure I wasn’t dreaming. I’m probably the only person on the planet who
has signed such acquisition agreements with both Lidl and ALDI.
Q: How do you expect the grocery market to evolve in the Nordics over the coming years?
A: Because of the challenging macroeconomic situation, shoppers will keep looking for ways
to save money. I think there is still room for growth for discounters, especially because they offer
such high quality in the Nordics. In the big cities, supermarkets will have a hard time competing
with soft discounters, at least for regular shopping trips for 90 percent of the population.
Q: What is your aspiration for 2024?
A: We want to be the market leader in discount grocery, and we are well positioned because
we are the most efficient player thanks to simplicity, franchise, and standardization. We have
only one grocery brand, REMA 1000, with one concept and one assortment. That creates a slim
and efficient value chain all the way from sourcing to distribution. And thanks to the franchise
system, we also have a slim administration.
Q: And what is the biggest challenge you are facing in 2024?
A: The biggest challenge is the integration of the stores we have acquired. In a normal year, we
recruit 15 to 25 new franchisees. Now, we have to onboard 70 franchisees and 2,200 employ-
ees in nine months. With all these new people coming in, it won’t be easy to uphold our strong
culture. But the ALDI deal has given the entire organization an adrenaline rush, so I’m confident
we can pull it off.
Q: What is your perspective on sustainability?
A: Our credo is to offer the highest quality at the lowest price, delivered in a responsible way.
We have a commitment to cut our carbon emissions in half by 2030, and that is a demanding
task. We work with 10,000 suppliers from 200 countries, so the complexity is considerable. But
what makes me optimistic is that I expect brand owners to address Scope 1 and 2 emissions. If
everyone follows the same logic, it’s going to work.
Q: Do you think retailers will have to change the way they run their business to promote
sustainability?
A: No doubt. Until now, you had the operations and an ESG [environmental, social, and gov-
ernance] department. In the future, you have to put the ESG department in the heart and the
mind of every employee. At Reitan, we are glad that we started working on sustainability years
ago. Thanks to that head start, we have answers to some of the increasingly difficult questions
consumers are asking today.

Q: What are your thoughts on meat and dairy?
A: Everyone is talking about reducing red meat and dairy. But you have to replace it with
something. So you have to get creative with new production methods, new tastes, new rec-
ipes, new category management solutions, and new formats to entice shoppers to try plant-
based alternatives. Food producers and food distributors have to take joint responsibility to
make change happen. Right now, we are ahead of the policy makers, but if we fail to deliver,
they might create an environment that’s even stricter than that of today.

Interview
“The shift of sales

to online channels
is inevitable, so I
encourage everyone
to embrace it.”
Niklas Östberg
CEO, Delivery Hero
Delivery Hero is a food and grocery delivery company

that is active in more than 70 countries.
Q: Delivery Hero is a pioneer in the meal delivery space. What factors, capabilities, and
strategic decisions have contributed to its success? What were the turning points, if any?
A: One of the key strengths of Delivery Hero was always our willingness to take risks and inno-
vate. Many of our brands were part of the first wave of online marketplaces that digitalized the
phone-based meal ordering process, enabled by an online menu. The next stage of evolution
was to take end-to-end ownership of the delivery experience. This was a tough and capital-in-
tensive transition, but it was worth it. Our current model brings a better customer experience
and stronger long-term economics, in line with our vision: “Always delivering an amazing expe-
rience—fast, easy and to your doorstep.”
We started out with meal delivery and added grocery delivery as a second pillar of our busi-
ness. In the future, we will expand our offering to additional categories, some of which we are
already testing, such as health and beauty. While we acknowledge that each category has its
own rules, we are confident we can bring the capabilities that helped us win in meal and gro-
cery delivery to bear in new categories, such as building a large customer base, using data to
understand customer demands, and establishing efficient logistics networks for delivery.
Q: How important will grocery delivery be for your business in 2024?
A: We believe that the absolute growth in grocery delivery will be slightly higher in 2024 than
it was in 2023, and it will be a growth engine for us as customer adoption of our service keeps
growing. Because of this, we focus on improving the customer experience in this area with more
choice, more affordability, and higher reliability of delivery.
Q: How do you see the different segments of your market evolving?
A: There is still substantial room for growth in meal delivery. We know this from comparing
customer penetration in our most mature markets with penetration in markets we have entered
only recently. This is why we will keep investing in meal delivery.
In the grocery space, the future will be omnichannel, where customers shop online—much
more than today—and visit physical stores for a different experience. We’re betting on quick
commerce because we believe this will become the largest share of online grocery, and we see
this in just how fast we’ve grown this business over the past four years and how much our cus-
tomers love it. What matters to them is choice, so our own stores, Dmarts, now have more than
4,000 items on offer. Many of them are offering more than 6,000. And through our marketplace

model, our traditional grocery-retail partners already provide an assortment on our apps that
is almost identical to what customers find in stores.
Q: You said that choice is very important for customers. What about prices?
A: We are acutely aware of the importance of affordability for both meal and grocery deliv-
ery, and I believe our offerings are priced very attractively, given the convenience we provide.
We already offer subscription programs in which customers can benefit from attractive
discounts on both items and delivery fees. Also, many restaurants and consumer brands
are keen to appear on our platform to achieve visibility, and they are prepared to grant very
attractive conditions that we can pass on to our customers in the form of discounts.
Q: What will be the biggest challenges for meal delivery companies in the next three to
five years? How will Delivery Hero prepare to tackle these?
A: In the current environment of economic and political uncertainty with high inflation, high
interest rates, and geopolitical risks, the key challenge is to find ways to create an affordable
customer offering. Meal delivery shouldn’t be a luxury. To ensure affordability, we work hard
to build an efficient ecosystem through data and technology, and we reinvest the savings
this efficiency generates into our customer offering.
Another challenge is the need to keep innovating. Ours is a young and dynamic industry, and
we need to make sure we stay at the forefront of how it is changing and adapt our business
model accordingly. One question we are focusing on is what delivery technologies will look
like in five years. To prepare for any future changes, we conduct pilot tests and engage in
partnerships with pioneers.
Q: Reaching profitability is one of the keys to success in your industry, and many play-
ers struggle with it. In your view, what are the key levers needed to reach profitability in
the delivery space for 2024 and beyond?
A: It may sound paradoxical, but the single biggest driver of profitability in our industry is
still growth. Our fixed costs don’t really increase, so any sales growth improves the bottom
line. As far as variable costs are concerned, customer acquisition and the actual delivery are
the biggest line items in the profit and loss statement. We know from the data in our most
mature markets that there is still a lot of potential to improve efficiency in both areas. As the
business grows, the share of sales allocated to marketing can be reduced. And as increasing
volume enables us to weave denser delivery networks, delivery cost goes down.
Q: What role do partnerships, such as with consumer packaged goods manufacturers
[CPGs] and retailers, play for Delivery Hero?
A: These partnerships are essential. For CPGs, we can be
an important growth channel because of the convenience
“Our aspiration is to be
we offer to customers. We are also an attractive advertising the driving force behind
partner for manufacturers, given the trove of data we have
on customer interest and demand. And the income we derive all changes that bring
from retail media advertising helps us improve profitability
and maintain an affordable customer proposition.
better service, even if
We are also committed to good partnerships with retailers. In
that comes at some
fact, we already generate more sales through retail partners short-term expense.”
on our platforms than we do through our own stores, and we
also see more growth there going forward. For these partner-
ships, we focus primarily on using data to help retailers grow and succeed on the platform. In
addition, we offer technology solutions for seamless order fulfillment.
Retail partnerships also enhance the offerings in Dmarts—for example, by including the
private label brands of our retail partners in our assortment. And some stores operate fully
under a partner’s brand using our fulfillment capabilities.

Q: What advice would you give to CEOs in traditional retail?
A: The shift of sales to online channels is inevitable, so I encourage everyone to embrace it. We
want to help traditional retailers unlock those online channels with our marketplace model and
tech capabilities, and I look forward to expanding our relationships with traditional retailers in
the years to come.
Q: What is your most important learning from your journey with Delivery Hero?
A: You can never stand still. Delivery Hero is a young company, and we have already shaped
and mastered several transformations. So the value of keeping an open mind, upholding an
entrepreneurial spirit, and being able to change course quickly cannot be overstated. Our aspi-
ration is to be the driving force behind all changes that bring better service, even if that comes
at some short-term expense.
Q: What legacy do you want to leave behind with Delivery Hero?
A: Two things are very important for me. One, that we build a truly successful business, and
that can be done only if we attract and retain amazing people. I want to leave behind a compa-
ny that offers an attractive environment for the best people in the world.
Two, I believe doing business makes sense only if we also look beyond the things that can be
measured in euros and cents. I want us to be mindful of the environment and the communities
we operate in, mitigating any potential adverse impacts and making a positive contribution. This
is why we started investing in sustainability years ago, and I hope that Delivery Hero will be rec-
ognized as a company that truly cares.

Interview
“This year will be

challenging. We expect
the increase in costs to
outgrow the increase in
revenues.”
Lionel Souque
CEO, Rewe Group
Rewe is a retail group that employs nearly 390,000

people, with more than 10,000 outlets in 21 countries.
Q: What was 2023 like for Rewe? What are the things that stand out?
A: It was quite a good year, especially from a sales perspective, although that was partly driven
by inflation, not necessarily by volume growth. Penny, our discount business, did especially well
in 2023—even better than our supermarkets. This is partly due to the continuing price sensitivi-
ty of consumers.
A major milestone in 2023 was that we put an end to printed leaflets. We were the first food
retailer in Europe to do that. We used to print more than a billion leaflets every year in Germa-
ny alone, and we stopped doing that as of July 1, 2023. Now all our leaflets are digital, and this
hasn’t damaged our sales. We’re saving more than 70,000 tons of paper as well as CO2 emis-
sions. Of course, we’re also saving money that we’re reinvesting in other marketing channels,
such as radio and TV.
Q: Would you encourage other players to do the same?
A: Many found our decision risky. After all, the leaflet has been by far the most important ad-
vertising medium in the retail industry for decades. However, we can only improve in terms of
sustainability if we rethink, question the old, and show courage. I am proud that we have been a
first mover in order to improve our ecological footprint. At Rewe, we have a tradition of leading the
way toward more sustainable practices. In 2016, for example, we were the first major food retailer
in Germany to abandon plastic bags.
Q: Looking ahead to 2024, how do you think it will be different from 2023?
A: This year will be challenging. We expect that the increase in costs will outgrow the increase
in revenues in 2024, especially regarding personnel costs and rents, because wage agreements
and indexed rents reflect inflation with a time delay. At the same time, food inflation is already
declining throughout Europe, especially in Eastern Europe. In fact, some countries there have
entered a period of deflation. As a result, prices are going down while some sourcing costs
remain high. That will be the big challenge for 2024. On the bright side, we expect fewer supply
chain disruptions than in the past few years, so our shelves should be well stocked.

Q: What is your expectation for online grocery in 2024 and beyond? Will you keep invest-
ing in e-grocery?
A: I still expect that e-grocery will keep growing—but much slower than a lot of people expect-
ed. In addition, the low average price per item in Germany makes it hard to turn a profit with
e-grocery. However, we do not only focus on our online delivery. That’s why we also focus part
of our investments on click and collect. We believe that this might be a very economically viable
model in the long run. Home delivery is complex and costly; many customers prefer picking up
their orders in their own time to waiting at home for the delivery to arrive. In France, pickup is
already the biggest segment of the online grocery market. Additionally, we are selling wine and
spirits online through two dedicated shops, Weinfreunde and Kölner Weinkeller, because we
think these categories are particularly well suited for e-commerce.
Q: What other growth opportunities do you pursue beyond your core business?
A: One of our fastest-growing brands is ZooRoyal, a pet product retailer. That’s a booming
market. Unlike Rewe, ZooRoyal started online, but we are opening brick-and-mortar stores
as well. We have also replaced private label pet food in Rewe stores with ZooRoyal products.
Beyond that, we are offering some of our e-commerce, fulfillment, and payment solutions to
other companies, and we are investing in food tech. But these are small ventures at this point in
terms of sales and profits.
Q: What about retail media?
A: That’s a massive market. Some experts say it will be worth €25 billion in 2026, twice what it
was in 2023. Most manufacturers spend the lion’s share of their retail media budget on e-com-
merce platforms, but we have a different proposition, driven by digital technology at the point of
sale. We already have more than 3,000 screens in our Rewe and Penny stores that can display
ads. That’s about as close as you can get to the purchase decision, and manufacturers like that.
We have a dedicated team that has been developing this kind of technology for several years,
and I am convinced that it will keep growing.
Q: Sustainability is a concern for a growing share of consumers. How does Rewe respond
to that?
A: It’s not only one of our strategic priorities; it’s also in our DNA. Rewe started as a buying
cooperative almost 100 years ago, so the social aspect of sustainability was there right from
the start. More recently, we have added the environmental aspect. In 2008, we switched all our
stores in Germany to green energy. A few years ago, well before the energy crisis, we invested
in an offshore wind energy plant that will launch in 2025. The green energy we will receive from
the wind energy plant reflects nearly 20 percent of Rewe Group’s total energy consumption.
Last year, our German divisions Rewe and Penny joined the Science Based Targets initiative,
and the rest of the group will follow in 2024. Our ambitious goal is to achieve net-zero emis-
sions as a group by 2050. The focus here is not only on drastically reducing emissions in our
own activities but also in our supply chains.
Sustainability matters to our customers, and it matters to current and future employees as
well. In job interviews, that’s one of the first questions many applicants ask: What are you
doing for the environment? And investors ask the same question. That’s why we put out a
sustainability-linked bond last year. In Germany, we work with the Nature and Biodiversity
Conservation Union, a nongovernmental organization for nature conservancy, to restore moors,
which can absorb high amounts of CO2. We will have solar panels on up to 1,000 roofs of stores
and warehouses to generate power on-site, and we have already built hundreds of stores that
conform to green building standards, with a much lower energy footprint than traditional stores.
In 2024, we will open the 400th store of this type.

Q: What about agriculture? How do you think your relations with farmers will evolve in the
coming years, especially in terms of sustainable practices?
A: We can and want to play an active role in that, which is why we always seek direct dialogue
and joint solutions when working together. But in most cases, we don’t have direct relations
with those farmers. We as food retailers are only a small part of the overall system. Manufactur-
ers are much more powerful in that respect because they directly negotiate with the producers
or farmers.
There are only a few cases where we directly work together with farmers. These are often
only small-scale arrangements, in which a farm is supplying a handful of nearby stores. These
arrangements are typically very beneficial for farmers because there’s a specific customer seg-
ment prepared to pay higher prices for local produce, meat, and dairy.
To promote sustainable agriculture at scale and reduce Scope 3 emissions of greenhouse gas-
es, we have established a competence center for agriculture that pools the expertise of farmers,
scientists, policymakers, and retailers. The ultimate aim is to reduce the climate impact of the
entire supply chain, from farm to table.
Q: To wrap things up, let’s talk about talent. Are you having trouble filling vacancies?
A: Last year, Rewe Group received more than 700,000 applications for 65,000 jobs in Germany
alone, including temporary and part-time positions. That’s more than ten applicants per job.
What comes after that is decisive. Attracting, developing, and retaining great people is there-
fore a strategic priority for us. In retail, great people are crucial. Of course, there are shortages
in certain areas, such as IT and data analytics, where many employers are competing for the
same pool of people. The good news is that we have a lot of exciting opportunities for these
people because of the high potential for automation and data leverage in retail.
Once we hire someone, we do everything we can to retain them. We have very little fluctuation
in central and managerial functions. In stores, it’s a bit higher. To improve retention, we talk to
those who leave. We can see that topics such as the relationship to the direct manager play an
important role when deciding to leave the company. This is something we take very seriously.
We have set up an awareness program for managers at all levels, with coaching and dedicated
training modules. Retail can be a very top-down industry, but we want Rewe to be different. We
want it to be a place of respect, appreciation, and empowerment.

©
Getty Images

Acknowledgments
Lead operational contributors
Sina Sawall Maria Siffringer Marek Karabon Nadya Snezhkova Bas Vaandrager
Engagement manager Retail capabilities and Senior knowledge Consumer and Consultant,
and operational lead, insights specialist, expert, Wroclaw shopper insights Amsterdam
Amsterdam Munich expert, London
The authors wish to thank the following people for

their contributions to this report:
We would like to thank industry executives who generously shared their perspectives in interviews:
Ole Robert Reitan, Lionel Souque, Niklas Östberg, and Yves Claude. We also want to extend our gratitude to the mem-
bers of the EuroCommerce, Europanel, and McKinsey communities for their contributions to this research and their
participation in our State of Grocery Retail CEO Survey. The EuroCommerce team played an instrumental role in creating
this report, in particular by contributing to all articles and by driving outreach to grocery CEOs.
The authors wish to acknowledge the following McKinsey colleagues for their contributions to the report:
Magdalena Balcerzak, Anita Balchandani, Thomas Bauer, Sina Berlet, Simon Bills, Marco Blöchlinger,
Pierre de la Boulaye, Gemma D’Auria, Pavlos Exarchos, Jéremie Ghandour, Cornelius Grupen, Laurens Herfs,
Tobias Holmström, Holger Hürtgen, Natalie Kallay, Craig Macdonald, Kamil Marcinkiewicz, Ignacio Marcos,
Kathleen Martens, Maria Miralles, Marcin Nowakowski, Thomas von Obernitz, Daniel Rexhausen, Roger Roberts,
Frank Sänger, Natalie Slotta, Oleg Sokolov, Alexandra Storakers, Alex Sukharevsky, Emilia Szyszko, Alexander Thiel,
and Francois Videlaine.
This report would also not have been possible without the support of:
Elen Guedes and Daniela Haiduc of the EuroCommerce team, as well as Isabelle Senand of FCD and Hélène Hotellier of
FEDERDISTRIBUZIONE. We also thank LEFF for editorial services on this report.

Contacts
For questions on the report or further discussions,

please contact the following contributors:
First point of contact:
Alexandre Kleis
Associate partner, Zurich
Alexandre_Kleis@McKinsey.com
Main contributors:
EuroCommerce experts
Christel Delberghe Anton Delbarre

Director general Chief economist
delberghe@eurocommerce.eu delbarre@eurocommerce.eu
McKinsey experts
Daniel Läubli Franck Laizet

Senior partner, Zurich Senior partner, Zurich
Daniel_Laeubli@McKinsey.com Franck_Laizet@McKinsey.com
Rickard Vallöf
Partner, Gothenburg
Rickard_Vallof@McKinsey.com
Europanel expert
Dirk Vissers
Consumer insights director
dirk.vissers@europanel.com
For other consumer and retail related inquiries,

please reach out to the local team:
Alexandra Storåkers Anita Balchandani
Partner, Stockholm Senior partner, London
Alexandra_Storakers@McKinsey.com Anita_Balchandani@McKinsey.com
Frank Sänger Kathleen Martens

Senior partner, Cologne Partner, Brussels
Frank_Saenger@McKinsey.com Kathleen_Martens@McKinsey.com
Alexander Thiel Pierre de la Boulaye

Partner, Zurich Partner, Paris
Alexander_Thiel@McKinsey.com Pierre_de_la_Boulaye@McKinsey.com
Gemma D’Auria Maria Miralles

Senior partner, Milan Partner, Madrid
Gemma_DAuria@McKinsey.com Maria_Miralles@McKinsey.com

Copyright © McKinsey & Company
All rights reserved
April 2024
McKinsey.com

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Signs of Hope

State of Grocery Europe 2024:

Key trends looking forward 13

Overall implications for grocers 23

Food and grocery market KPIs 25

Christel Delberghe Daniel Läubli

3 Signs of Hope—The State of Grocery Retail 2024: Europe

Christel Delberghe Anton Delbarre Dirk Vissers

Daniel Läubli Franck Laizet

Rickard Vallöf Alexandre Kleis

Signs of Hope—The State of Grocery Retail 2024: Europe 4

5 Signs of Hope—The State of Grocery Retail 2024: Europe

Signs of Hope—The State of Grocery Retail 2024: Europe 6

7 Signs of Hope—The State of Grocery Retail 2024: Europe

Europe’s grocery retail market improved during 2023 as inflation slowed.

EU-5 Total Europe

Food inflation2 17.2 6.7

−1.5 −1.6 −0.4 −0.3 −1.9 −2.0

Up- and downtrading4 −2.1

Volume 100.6 101.6 101.2 101.3 101.2 100.3

Signs of Hope—The State of Grocery Retail 2024: Europe 8

9 Signs of Hope—The State of Grocery Retail 2024: Europe

In most European countries, shoppers are less focused on saving money in

Consumers start treating themselves with healthy, sustainable, on-the-go products

Buy organic 2% 2% –10% 5% 1% –3% –8% 3% 4% 7% 17% 6%

Positive attitude toward online3

Signs of Hope—The State of Grocery Retail 2024: Europe 10

European CEOs are less pessimistic about market conditions in 2024

Words describing the grocery industry in 20242

11 Signs of Hope—The State of Grocery Retail 2024: Europe

Margin pressure and downtrading remain at the top of CEOs’ minds.

Cost and margin pressure 70 15 85 0

Talent hiring and development 15 33 48 9

Store network expansion 3 30 33 N/A

Supply chain disruption and 15 12 27 –5

Product innovation 3 18 21 N/A

Shift toward discounters 9 9 18 –5

Signs of Hope—The State of Grocery Retail 2024: Europe 12

1 Cost and margin

13 Signs of Hope—The State of Grocery Retail 2024: Europe

Signs of Hope—The State of Grocery Retail 2024: Europe 14

Grocery retailers1 Top 7 CPG players2

–1.1 p.p. (–2%)

23.3 22.0 22.8

Note: Figures may not sum to totals, because of rounding.

15 Signs of Hope—The State of Grocery Retail 2024: Europe

Price Quality Health

Signs of Hope—The State of Grocery Retail 2024: Europe 16

17 Signs of Hope—The State of Grocery Retail 2024: Europe

Signs of Hope—The State of Grocery Retail 2024: Europe 18

Meal delivery Online grocery Offline grocery

2019 2020 2021 2022 2023 2024F 2030F

19 Signs of Hope—The State of Grocery Retail 2024: Europe

Retail media continues to grow; Amazon remains in a league of its own.

Amazon Others Total

2019 2020 2021 2022 2023 2024F 2025F 2026F

Signs of Hope—The State of Grocery Retail 2024: Europe 20

Generative AI accounts for 10 to 20 percent of the value potential from

3 Smart search for grocery

Copilot for support functions