McKinsey & Company’s ‘State of Grocery Retail Europe 2025’ report describes 2024 as a year of stabilization for European grocers, with sales up 2.4 percent and only a small lift in volumes. Cost and margin pressure remain central concerns as price sensitivity stays high and growth prospects stay modest. The outlook to 2030 suggests very low annual volume growth across Europe, but the report identifies clear pockets of potential, from online and discounter formats to categories such as fresh foods, healthy and functional products, convenience, and food-to-go. Private labels continue to gain share, and the shift “from private labels to private brands” appears to be a major route to differentiation and market share gains.

Healthy eating remains a strong consumer theme. Gen Z and millennials drive demand for fresh, functional and “clean” food and buy food on the go far more frequently. Their expectations of personalised experiences, clear product information and sustainability claims shape retailer priorities. At the same time, new EU regulations and the need to tackle Scope 3 emissions place heavy demands on grocers, who must balance sustainability with affordability.

Data, AI, and technology have moved near the top of the CEO agenda. Investment in IT, AI and automation is rising, with leaders showing stronger financial performance. Yet many transformations have not reached scale, and capturing value depends on adoption across the organisation. Retail media is becoming a major profit source as spending grows rapidly and standardisation improves its appeal to advertisers. The report also expects European consolidation to accelerate as scale becomes more important for profitability, private label development, sourcing and tech investment.