The number of grocery stores in Canada rose in 2024 and food retail chains plan on continuing that growth this year, particularly in the discount space to reach more price-conscious households.

“That's in response to their individual business goals and to changing demographics,” JLL senior vice-president of retail Paul Ferreira told RENX.
 “We're seeing some mainline stores converting to discount banners. A couple of the grocers also have ethnic grocery banners that may suit the particular trade area where that asset is located.”

Loblaw Companies (which owns Loblaws, Real Canadian Superstore, No Frills, Fortinos, Zehrs, Provigo, T&T Supermarket, Maxi and Shoppers Drug Mart), Metro Inc. (which owns Metro, Metro Plus, Super C, Food Basics, Marché Ami, Les 5 Saisons and Marché Adonis) and Empire Company (which owns Sobeys, Safeway, IGA, Foodland, Farm Boy, FreshCo, Thrifty Foods and Lawtons Drugs) combine to control approximately 60 per cent of Canada’s grocery market, according to Ferreira.

“You've still got Costco, Walmart and a whole bunch of independents and others that make up the totality of the market,” Ferreira added.

Ferreira said Loblaw reported opening 52 food and drug stores last year, while Metro reported opening nine, and he estimates Empire opened 30 new outlets.

“These may not be net new openings and may include re-banners and relocations,” Ferreira explained. “Those kinds of conversions don't come without a significant capital investment from the grocery chains.”

According to JLL’s new Grocery Report 2025, Loblaw will continue to grow with Maxi in Quebec and No Frills in the other provinces. Empire will expand FreshCo in Western Canada. Metro will open a dozen new locations, mostly discount stores, including Super C in Quebec and Food Basics in Ontario.

“Grocery-anchored retail is still the most in-demand retail asset for its resiliency in the marketplace,” said Ferreira, who estimates such properties have a three to four per cent vacancy rate in Canada. “There's a perceived security in that type of daily needs shopping centre and I would suspect that's going to continue well into the future.”  

Increased foot traffic in stores

Grocery stores are seeing more foot traffic now than before the COVID-19 pandemic. 

“The reports we've seen are speculating that's a change in consumer habits driven by hybrid workplaces and people being at home,” said Ferreira. “So rather than do one big shop, they're doing multiple shops to complete their grocery store purchases.

“They could also be searching for value and may be more willing post-pandemic than pre-pandemic to shop competitively and not rely on just a single store to meet all their needs.” 

There hasn’t been a lot of grocery-anchored retail transactions. Ferreira said part of this can be attributed to Choice Properties having a significant portfolio of Loblaw properties and Crombie REIT owning a large number of Empire properties. 

There have also been gaps in what owners are willing to sell properties for, and what investors are willing to pay.

“I think transaction activity in the grocery-anchored sector is going to be on a case-by-case basis,” Ferreira said, noting the potential for distress sales by smaller landlords facing liquidity issues.

“Motivation to sell a food store-anchored centre would probably be based on circumstances for that individual owner. There would be demand and they would probably have a long list of buyers.”

While mergers and acquisitions are happening in the grocery sector south of the border, Ferreira said they’re not evident at the moment in Canada.

“Our grocery industry has seen significant consolidation going back to the 1980s that's happened over time, and it's how we’ve arrived today with three major grocery chains controlling a number of banners within their portfolios,” Ferreira said. “I would suspect the Competition Bureau would have something to say about further consolidation in our grocery sector.”

Changes to Competition Act

Grocers are expected to be more careful with property controls in new leases due to recent changes to the Competition Act that limit the use of exclusivity clauses and covenants on who can occupy adjacent spaces. New entrants that were previously off-limits due to exclusivity agreements now have a better chance of securing a prime retail location.

“Within the grocery sector in particular, we have seen at least two of the major grocers expressing openness to collaborate across the industry to reduce these controls,” Ferreira noted. “There has been at least one specific case of a grocer eliminating a restrictive covenant in response to a bureau request.”  

Retail rents are increasing across the board, including at grocery stores, largely driven by limited new supply and increased development costs. 

“Land prices are stabilized now, but we've seen significant inflation in retail-approved land prices,” Ferreira said. “We've seen increases in construction costs and interest rates, so everything seems to be aligning to drive the cost to develop new retail further. 

“We're also seeing a limited amount of new retail space under development at this point in time. A lot of the new retail proposals in our major markets are attached to mixed-use developments that aren't moving forward at pace. 

“Anytime you limit supply, you're going to see an increase in price.”

Potential impact of tariffs

A new downside risk is the U.S.-Canada tariff battle. In addition to creating an uncertain environment for grocers and shoppers, these measures will drive inflation and supply chain disruptions. American tariffs are also leading to strong calls to buy Canadian goods and near-shore supply chains.

Ferreira said it’s too early to tell what impacts a trade war will have on the grocery sector, but he can see construction costs increasing due to imported U.S. materials. That could further limit new development.