Grocery in Europe grows thanks to M&A operations

Investments in the European grocery sector exceeded EUR 6 billion, up 16% and marking the first increase since 2020, driven by a 35% growth in portfolio volumes. At the same time, M&A activity in the sector grew by around 30% since 2020, highlighting how retailers are reacting to a prolonged profitability squeeze, fierce price competition and the need to strengthen their balance sheets.

This is captured in Savills' latest report on investments in this specific retail segment. Large-scale operations, strategic acquisitions and cross-border divestments have helped reshape an increasingly concentrated market. There was also strong growth in sale and leaseback transactions, which accounted for almost 21% of total investments in grocery - the highest level in 13 years - confirming operators' need to generate liquidity and strengthen their presence in core markets.

Over the past five years, many operators have absorbed higher levels of inflation than is typical of an economic cycle, with significant impacts on margins. This scenario, coupled with intensified competition and changing retail formats, has prompted retailers to review their strategies: from network diversification, to the development of new strategies and the search for operational efficiencies.

Discounters continue to represent the main transformational force in the sector. Over the past ten years, retailers in this segment have recorded an average annual revenue growth (CAGR) of 5.2 per cent, significantly outperforming traditional supermarkets (+3.2 per cent). Their expansion in urban areas is redefining the competitive dynamics at European level.

francesca Cattagni, head of retail agency, explained: "A strategic rationalisation of networks based on consumption and new trends is underway, with growth in proximity supermarkets and discounters testing reduced and neighbourhood formats. Consumers are more attentive to quality, health and sustainability, but also to price, with less brand loyalty in favour of better value for money and consumer trends".