Performance across Europe’s grocery groups has diverged, intensifying competition and sharpening the focus on efficiency and balance sheet strength. Germany’s Schwarz Group, Rewe and Aldi remain Europe’s largest players by revenue in FY 24/25, each delivering mid-single-digit growth as discounters outperform in a cautious demand environment. Elsewhere, Carrefour and Edeka saw revenues soften amid currency effects and broadly flat euro-denominated sales, while Tesco held steady in a highly competitive UK market. By contrast, Mercadona delivered standout growth of around 9%, supported by domestic expansion and inflationary tailwinds, while Ahold Delhaize benefited from the integration of Delhaize Belgium, highlighting the advantages of scale in a low-sales-volume growth market.

This divergence has pressured underperforming operators amid rising operating costs, sustained price competition and continued polarisation between hypermarket and convenience formats. Improving productivity, defending margins and reinforcing balance sheet strength have therefore become paramount, with consolidation increasingly used to protect competitiveness and secure greater control over critical assets.

Against this backdrop, M&A activity across Europe’s grocery sector has risen by around 30% since 2020, according to McKinsey. For leading groups, consolidation has provided a route to scale, asset quality optimisation and synergy extraction, while weaker players have pursued partnerships or market withdrawals. Horizontal consolidation has been most pronounced in mature markets, where limited organic growth makes integration a more reliable path to earnings resilience.

Alongside M&A, portfolio optimisation has been a central theme. Retailers are rationalising store networks and sizes, redefining core geographies, shifting away from legacy stores, and internalising mission‑critical assets to enhance operational control and capital discipline. Carrefour’s withdrawal from Italy, via the transfer of 1,188 stores to NewPrinces Group for approximately €420 million, alongside its €823 million exit from Romania to Paval Holding, reflects a sharper focus on core markets. In Sweden, ICA Fastigheter’s €373 million acquisition of Alecta’s remaining stake in Ancore Fastigheter underlines a preference to retain ownership of strategic infrastructure.

As networks are refined, capital is being recycled toward formats and locations better aligned with evolving consumer behaviour, including the growing appeal of convenience retail, enhanced digital capability and rising sustainability‑related capex requirements. Over time, these pressures are reshaping market structures, pushing several national markets toward increasingly concentrated outcomes. Finland and Sweden are highly consolidated, with their top four operators controlling close to 90% of market share.

Even historically fragmented Italy has tightened materially, with the combined share of its top seven operators rising from 52% in 2010 to 71% in 2024. France experienced a step change in 2025, as nearly 300 Auchan stores rebranded under Intermarché and Lidl acquired 19 additional sites, lifting its CR-4 (four largest firms' combined market share) to 76% in the twelve weeks to December 2025, up from 69% five years earlier. Over the same period, the UK has remained comparatively stable, with its CR-4 edging up to 67%, as Aldi and Lidl continued to take share through disciplined, price-led expansion, while Asda and Morrisons lost ground amid highly leveraged balance sheets and leadership disruption that constrained investment and execution.

For investors, consolidation, land scarcity and limited new compliant stock support pricing for existing grocery assets, shoring up the sector’s defensive appeal even as concentration risks increase.

_{Read the articles within Spotlight: European Grocery Report – Q4 2025 below.}