U.S. grocery is splitting into two workable models. Discounters like Aldi win by carrying a small, mostly private-label assortment and taking cost out of every step. Scale players like Kroger compete by spreading complexity across enough stores and data to pay for it. Regional grocers that carry a full assortment without national scale are caught between them, and Kroger’s July agreement to acquire Giant Eagle shows how that squeeze often ends.
What does the squeeze look like from inside a regional chain?
Once an Aldi opens nearby, the carts at your registers may start to look a little lighter. Some regulars still come in for the deli, the pharmacy, and the national brands Aldi does not carry, while the pantry staples and the weekly produce run move somewhere else. Meanwhile, the national chain down the highway is sending those same households personalized digital offers that CPG brands pay for.
Many regional grocers are in exactly that position, and the market data suggests it is getting tighter. According to Numerator, Kroger, Albertsons, and Ahold Delhaize USA all lost grocery market share in the twelve months ending June 30, 2026, while Amazon, Costco, and Walmart gained. Discounters such as Aldi and specialty chains such as Trader Joe’s took share as well.
Aldi built the simplest version of grocery on purpose
Aldi carries a small fraction of what a conventional supermarket stocks, with published estimates ranging from about 1,300 to 2,000 items against 30,000 or more at a traditional store. More than 90 percent of its assortment, and roughly the same share of its sales, comes from its own private label. That structure removes most slotting negotiations and shortens the supply chain.
Because a chain like Aldi typically carries one version of each product, such as a single spaghetti, the entire category’s volume lands on one item instead of being split across ten brands and sizes. That concentrated order gives the retailer real bargaining power with its suppliers, and because the savings come from the size of the order, the product on the shelf can still hold its own against the national brand.
The model is scaling quickly. Aldi opened nearly 200 U.S. stores in 2025, ended the year with 2,614 locations, and plans more than 180 openings in 2026 on the way to about 3,200 stores by the end of 2028. It is also converting the Southeastern Grocers stores it acquired in 2024, so a number of regional supermarkets are literally becoming Aldis.
Kroger built the most complex version, and complexity is expensive to carry
Kroger sits at the opposite end of the aisle. It runs loyalty data science through its 84.51° subsidiary, sells advertising to CPG brands, operates pickup and delivery, and until recently was building a network of robotic fulfillment warehouses with Ocado. Each layer adds revenue, and each one also adds cost and coordination.
In November 2025, Kroger said it would close three of those automated fulfillment centers and take a $2.6 billion impairment. It shifted more online orders back to store-based picking, aiming to improve e-commerce profitability by about $400 million in 2026. The results have not turned into growth yet. After a second quarter in which comparable sales excluding fuel rose just 0.2 percent, Kroger lowered its 2026 outlook to a range of 0.2 to 0.8 percent, and CEO Greg Foran said shoppers are buying based on need rather than want.
Kroger’s answer is scale. On July 1, it agreed to acquire Giant Eagle for $1.65 billion. Numerator estimates the deal would lift Kroger’s food and beverage share from 8.3 to 8.7 percent and move it past Costco into second place nationally.
Giant Eagle shows how the middle gets absorbed
Giant Eagle is a respected, family-owned regional grocer with about $9 billion in annual sales and 197 supermarkets across Ohio, Pennsylvania, West Virginia, Maryland, and Indiana. Kroger’s own announcement praised its fresh departments, pharmacy, private label, and customer loyalty. In 2025, Giant Eagle sold its roughly 270 GetGo fuel and convenience stores to Alimentation Couche-Tard so it could focus on its core supermarket and pharmacy business, and the two companies kept the myPerks loyalty program running across both.
Giant Eagle had the loyalty and quality most regional chains would envy, and it still found its future inside a larger company. An analyst quoted in coverage of the deal noted that specialty banners are outperforming and discounters are capturing trade-down traffic, which describes the pressure on both flanks of a regional chain at once.
Where can a regional grocer compete without choosing a side?
The first move is deciding where to be simpler than Kroger. Center store is where Aldi’s model is most effective, and it is also where many regional chains carry the deepest assortments and the thinnest differentiation. Editing those categories and putting private label in front of shoppers there reduces cost and makes the store easier to shop.
The second move is deciding where to be better than Aldi. Aldi’s produce is often on par with other grocers’, and it carries a wide range of ready-to-eat items, so the advantage has to come from the service departments its format skips, like a full-service deli, a staffed meat counter, a pharmacy, and food made fresh in the store. Those are the reasons a shopper keeps a regional grocer in the rotation even after the discounter opens nearby. Those are the reasons a shopper keeps a regional grocer in the rotation even after the discounter opens nearby.
The third move is making both decisions visible in the store. A shopper should be able to walk in and immediately understand which aisles are built for a fast, low-price trip and which departments are worth slowing down for. Layout, wayfinding, and the number of choices on each shelf are where a simplification strategy either shows up for the shopper or stays in a planning deck.
Technology helps most when it removes decisions instead of adding them. According to Stylus research, Walmart’s app now maps a shopper’s grocery list to the store they are standing in and sorts it by aisle. Walmart data cited in the same report shows that customers who use the app while shopping in-store spend 25 percent more on average.
The last move is being careful about what to borrow from the complex model. Retail media produces real revenue, and grocers are building it quickly. Albertsons is expanding its in-store screen network from an 80-store pilot to 800 of its more than 2,200 stores this year, and Hy-Vee announced plans in late 2024 to add more than 10,000 screens across more than 400 locations.
As Phil Lempert argued recently in The Robin Report, where a screen sits matters more than how many there are. A March 2026 shopper survey by Grocery TV, the retail media company that powers Hy-Vee’s screens, found that screens in natural waiting spots like the entrance, checkout, deli, and pharmacy scored well, while formats that blocked products or crowded aisles created the most friction. Lawmakers are paying attention as well: Maryland and Connecticut signed laws this year restricting how retailers use shoppers’ personal data to set prices, and bills in Congress and several states would ban electronic shelf labels in larger grocery stores outright.
Aldi is still adding stores on its way to 3,200 by 2028, and Kroger expects to close the Giant Eagle deal in fiscal 2027. The regional chains still independent at the end of that stretch will most likely be the ones that decided, category by category, where they are simple and where they are special, and then built stores that make that choice obvious to the person pushing the cart.
