If there’s one industry you’d think would be immune to reduced consumer spending, it’s the grocery industry. After all, people need to eat.
But believe it or not, the grocery business has always operated on razor-thin margins. And now, those margins are getting squeezed even further.
Higher labor costs, rising transportation expenses, and fierce competition from warehouse clubs, Walmart, Aldi, and online grocery services are forcing traditional supermarket chains to rethink their footprints.
Industry data show the pressure isn’t easing.
In June, grocery prices rose 2.7%, according to the Consumer Price Index. And the problem isn’t expected to get better anytime soon.
In fact, grocery prices are expected to rise 2.9% in 2027, according to a U.S. Department of Agriculture forecast.
Meanwhile, consumers have become increasingly price-conscious, trading down to private-label brands, shopping multiple stores for deals, and shifting more spending toward discount grocers.
That challenging environment has led many chains to shutter underperforming locations.
Kroger, for example, recently announced plans to close roughly 60 stores by the end of 2026 as it focuses investment on stronger-performing locations.
Now, Stop & Shop is continuing down a similar path.
Stop & Shop continues reshaping its store network
Stop & Shop, owned by Dutch grocery giant Ahold Delhaize, has confirmed another round of store closures, with locations in Basking Ridge and Westfield, New Jersey, among those set to shut their doors, New Jersey 101.5 reported.
The latest closures come after the chain previously eliminated 32 underperforming stores as part of a broader turnaround strategy designed to improve profitability, Supermarket News confirmed back in 2024.
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The company operates more than 350 stores across the Northeast, Inc. noted, making it one of the region’s largest supermarket operators.
However, its traditional suburban grocery model has come under increasing pressure as shoppers migrate toward lower-priced competitors and warehouse clubs while also taking advantage of delivery options and online ordering.
The closure decision reflects a broader trend across grocery retail.
Unlike many other retail sectors, supermarkets can’t easily offset higher operating costs because shoppers are extremely sensitive to price increases. Raising prices too aggressively risks sending customers to competitors, while absorbing higher costs erodes already-thin profit margins.
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Supermarket closures hurt consumers
Stop & Shop’s closures aren’t necessarily a warning sign for the company. Rather, they represent a strategic decision.
The company has remodeled about half of its stores since it kicked off a revitalization campaign in 2018. And it’s trying to focus its attention on stores that draw in the most foot traffic.
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“Stop & Shop has already evaluated its overall portfolio and will make difficult decisions to close underperforming stores to create a healthy store base for the long term,” Ahold Delhaize USA CEO JJ Fleeman told Grocery Dive.
Of course, for shoppers who regularly visit the affected locations, the latest closures could mean longer drives, fewer convenient grocery options, and the potential loss of pharmacy and pickup services.
Employees also face uncertainty, though they may be eligible for a transfer to nearby stores when possible.
Still, the move could strengthen Stop & Shop’s financial position if its remaining stores capture much of the displaced customer traffic and it’s able to reduce its operating costs by having fewer stores to maintain.
That’s the balancing act many grocery chains are trying to achieve as they navigate an increasingly competitive marketplace.
