Global 2025 Food Retail Outlook: Some Consumer Behaviours Are Permanently Altered

We have a stable 2025 outlook for the global food retail sector. This reflects our expectation that the credit risk profiles of grocers in our portfolio will remain supportive of their current credit ratings.

Key Highlights:
-- At least some pressure on consumer purchasing power and the consumer response to this pressure, will persist well into 2025.
-- Some consumer behaviours have been permanently altered in favour of discount grocers and private-label offerings.
-- We forecast same-store sales growth for grocers in our portfolio to generally be in the low single-digit range on a full-year basis in 2025.
-- We anticipate EBITDA margins of the grocers in our portfolio to generally remain relatively flat on a full-year basis in 2025.
-- We do not expect to take any credit rating actions solely because of the broader sector trends over the next 12 months.
-- We believe that any credit rating actions will largely be driven by the evolution of the credit risk profiles of individual grocers within our portfolio.

"Considering the largely inelastic demand for groceries, we believe that grocers continue to be well positioned to navigate this challenging operating environment", said Moritz Steinbauer, Senior Vice President, Sector Lead, Corporate Ratings, Diversified Industries. "That said, although the sector is more insulated from macroeconomic pressures than most, competition remains intense and failures in operational execution could easily weigh on the credit risk profiles of individual grocers."