Kroger is back in growth mode with Giant Eagle acquisition

Kroger has been struggling with intense competition from a wide variety of retailers, from Walmart to Amazon, Trader Joe’s and Aldi, while consumers have been more cautious in their grocery spending amid higher gas prices and the reduction of SNAP benefits. Kroger grew its sales 2.9% from fiscal 2024 to 2025, excluding fuel. Its newly appointed CEO, Foran, had been looking for new avenues of growth after its proposed $25 billion merger with Albertsons failed to move forward a couple of years ago.

Modern Retail spoke with several industry experts who agreed that the deal will expand Kroger’s reach and abilities beyond just growing the store count — through Giant Eagle’s unique demographics, retail media capabilities and local reach as a regional grocer with a strong following.

Kroger currently has about 2,700 stores; it opened 16 new stores but closed 50 during its last fiscal year, according to Grocery Dive. Foran, a former Walmart executive, said earlier in June that Kroger would need to expand its store count while he also works to simplify Kroger’s pricing strategy, cutting costs and improving its back-end store operations.

“Competitors have continued to grow their footprint while we stepped back,” Foran said in the company’s first-quarter earnings call. “Our existing footprint is one of our strongest assets, but standing still in store growth means standing still in market share.”

Giant Eagle operates 197 supermarkets and 11 standalone pharmacies in north and central Ohio, western Pennsylvania, northern West Virginia, Maryland and Indiana. It does about $9 billion in sales, according to Kroger’s press release announcing the deal. Giant Eagle establishes a presence for Kroger in Pennsylvania, where it doesn’t currently have stores.

Giant Eagle, meanwhile, does about $9 billion in sales, according to Kroger’s press release announcing the deal. It had been investing in its products and stores through a new business strategy called “Because it Matters,” which it announced last year. The strategy was designed to position itself as both a growing supermarket and pharmacy retailer, Justin Weinstein, Giant Eagle’s evp and chief merchandising and marketing officer, told Modern Retail at the time.

The “Because it Matters” campaign included a new brand campaign, seasonal pricing initiatives, expanded employee training and store remodels. That campaign also followed a significant shift in strategy away from convenience stores and toward pharmacies, after last year acquiring prescriptions for 78 Rite Aid locations and selling its $1.6 billion GetGo convenience store business.

Brad Jashinsky, director analyst at Gartner, expects the deal to face less regulatory scrutiny than Kroger’s previous attempt to acquire Albertsons because of its smaller size and less overlap in store footprint.

“The acquisition helps Kroger continue to scale up as competitors like Amazon and Walmart continue to expand their grocery market share,” with the added benefit of being able to finance the deal with cash, Jashinsky said.

The acquisition will also bring Giant Eagle’s retail media network, Giant Eagle Leap, into Kroger’s ecosystem. Giant Eagle has been investing in the retail network to leverage its local specialization with advertisers.

“While we are not the largest grocer in the country, we have a real role to play in a market like Pittsburgh or Cleveland, and brands want to leverage Giant Eagle as that platform,” Weinstein told Modern Retail last year. “We’ve been focused on things like omnichannel programming, custom campaigns, personalized offers — those are things that actually add value to the customer.”

Marlow Nickell, CEO and co-founder of Grocery TV — an in-store retail media tech company that had worked with Giant Eagle on its digital screen network — said in an email that Giant Eagle ran one of the most successful in-store media rollouts his company has seen. An in-store media campaign for Rockstar Energy Drink at Giant Eagle earlier this year generated 6.2 million total impressions and an 18% lift in sales for the Rockstar brand, for example.

“Giant Eagle’s loyal shopper base is exactly the kind of high-frequency, high-trust audience that makes in-store media work well,” Nickell said. “That’s a trait of regional grocers more broadly. They’re embedded in their communities in a way national chains aren’t, and that closeness is what builds the kind of loyalty that makes the store such a powerful media environment.”

Giant Eagle’s team “understood the value of the store as a media channel well before most of the industry caught on,” Nickell said. “There’s real opportunity for Kroger and Giant Eagle to learn from each other’s approach to in-store execution as they grow.”

Michael Gunther, svp of research and market Intelligence at Consumer Edge — which tracks consumer spending through credit card data — said Kroger is likely pursuing the deal in response to some of the challenges that traditional supermarkets are facing in consumer spending. He said traditional supermarkets have been losing market share to discount grocers and specialty grocers.

“Consumers of all types, not just lower-income, seem to be shifting toward more value channels to make their dollar stretch further,” while specialty grocers like Trader Joe’s are among the best performing,” Gunther said. “Supermarkets in the middle are getting attacked from both directions.”

Foran recently acknowledged this on the company’s first-quarter earnings call.

“We’re outperforming many traditional grocery competitors, and we’re proud of that, but beating other grocers isn’t the same as leading the industry,” Foran said. “Customers today are shopping across more channels with more of their spend going outside of traditional grocery. But I don’t see that as a problem. I see it as an opportunity.”

Kroger’s expansion through Giant Eagle also comes as Walmart has been opening its first stores in years after pausing construction from 2021 to 2023, and Aldi has been opening hundreds of new stores.

Another potential attraction of Giant Eagle to Kroger, Gunther found, is that Giant Eagle’s sales with shoppers 55 and older have skewed higher when compared to the overall grocery market. “That group has been more resilient in terms of overall spending in multiple sectors,” Gunther said.

Kroger will gain incremental market share because most Giant Eagle stores are in markets without a Kroger presence, according to an analyst note from Joe Feldman, senior managing director and assistant director of research at Telsey Advisory Group. It will also help Giant Eagle by enhancing its operations, merchandising, technology and e-commerce abilities, Feldman said.

“We like this deal and believe selective acquisition is the right strategy in the grocery industry, given the difficulty in securing prime real estate locations and the time needed to open stores organically,” Feldman wrote.