87-year-old grocery chain closes another store amid pressure

Unlike many global markets, the U.S. has long been defined by its large-format supermarkets, offering extensive product assortments, multiple brands, and wide price ranges under one roof.

This model has historically aligned well with American consumer preferences for convenience, bulk purchasing, and variety.

However, operating these large-scale stores requires significant capital investment. When a location underperforms or fails to resonate with local demand, the financial risk can be substantial.

In recent years, the grocery industry has entered a period of recalibration. Inflation, shifting consumer behavior, rising labor costs, and broader economic uncertainty have all pressured margins. In response, many grocery chains have restructured operations, leading to store closures, layoffs, and in some cases, reduced access to fresh food in local communities.

While these decisions are often necessary to maintain long-term financial stability, their impact extends beyond balance sheets. Store closures can reshape neighborhoods, particularly in areas with limited grocery alternatives.

The rise and struggles of small-format stores

To address rising costs and expand into underserved markets, many grocery retailers have experimented with smaller-format stores. These locations are designed to be more cost-effective, quicker to build, and easier to operate than traditional supermarkets.

The model aims to offer several advantages:

Lower upfront investmentReduced operating and staffing costsFaster path to profitability Ability to enter dense or underserved markets

In practice, however, achieving consistent success has proven difficult.

Schnucks closes another small-format location

Schnucks has confirmed it will permanently close its Jasper, Indiana, store on May 24 at 6 p.m., marking the end of nearly five years of operation.

The closure will impact 29 employees, all of whom will be offered transfers to nearby locations or severance packages.

According to the company, the decision was driven by underperformance in the local market.

“Our teammates at our Jasper location have demonstrated exceptional dedication in service to their customers and their community,” said Schnucks Chairman and CEO Todd Schnuck in a statement. “Unfortunately, the store simply has not generated the business it needs to stay open.”

Schnucks reveals plans to close a small-format store in May 2026.

Jeffrey Greenberg/Universal Images Group via Getty Images

Schnucks develops a concept that didn’t scale

The Jasper store, opened in 2021, was part of the company’s “Schnucks Fresh” concept, a smaller-format store of approximately 18,000 square feet. Traditional Schnucks locations average 60,000 square feet.

The goal was to expand into markets with limited grocery access using a lower-cost, more flexible format. Compared to full-size supermarkets, these stores required less space, lower construction costs, and reduced ongoing expenses such as rent, utilities, and labor.

More coverage on grocery store closures:

39-year-old grocery chain closing 17 stores in 2026127-year-old supermarket chain closing more locations100-year-old grocery chain closes another store in major shift

Despite these efficiencies, consumer demand in Jasper was not enough to sustain the location.

Currently, only one Schnucks Fresh store remains open in Oak Grove Village, Missouri. Since its launch in 2023, the company has not shared plans for additional locations using this format.

The closure also follows Schnucks’ earlier decision to shut down its Eatwell Market banner, highlighting the broader struggles grocers face when experimenting with alternative retail concepts.

A pattern for small-format stores across the industry

Schnucks is not alone. Several major retailers have tested small-format store concepts, only to scale them back or abandon them entirely.

Walmart: Launched Walmart Express in 2011 and closed all 102 locations by 2016, Retail Dive reported.Whole Foods: Introduced its 365 concept in 2016, then discontinued it in 2019, Eater reported.Target: Expanded small-format stores in 2016, but began closing them in 2023, Modern Retail reported. Kroger: Opened Main & Vine in 2016 and shut it down less than two years later, Supermarket News reported.

These repeated setbacks point to a deeper structural challenge within the U.S. grocery market.

Why small-format grocery stores struggle in the U.S.

Despite their promise, small-format grocery stores often face a combination of operational and strategic hurdles.

Lack of clear differentiation: Many are simply scaled-down versions of larger supermarkets, without a compelling reason for customers to choose them.Challenging unit economics: Smaller footprints limit assortment and basket size, while urban rents and labor costs remain high.Misalignment with customer expectations: U.S. shoppers often prioritize convenience and variety. When selection feels too limited, they tend to opt for larger stores.Site selection risk: Success depends heavily on hyper-local demand and foot traffic. Misjudging location can be costly and difficult to recover from.Operational complexity: Running a small store requires a fundamentally different merchandising, supply chain, and staffing model than big-box retail.Cannibalization risk: Smaller formats can divert traffic away from a company’s own larger, more profitable locations.
Source: Supermarket News
Scale still dominates U.S. grocery

The continued dominance of large-scale retailers underscores these difficulties. Companies including Walmart, Costco, Kroger, and Albertsons maintain a competitive edge through scale, pricing power, and expansive product selection.

Today, the top four grocery retailers now account for around 69% of total U.S. grocery spending, with Walmart alone representing nearly 35%, according to Farm Action.

This level of concentration suggests that U.S. consumers tend to favor one-stop shopping experiences that combine value, variety, and convenience, advantages that are complicated for smaller-format stores to replicate consistently.

What this means for the future of small-format grocery stores

Small-format grocery stores often fail when treated as smaller versions of traditional supermarkets rather than as distinct retail concepts designed for different customer needs and cost structures.

As Supermarket News industry expert and writer David Rogers notes, these stores may carry lower per-unit investment risk, but they demand far greater precision in site selection and consumer insight. Unlike large supermarkets, which can rely on broad trade areas to drive traffic, small-format stores must succeed at a much more localized level.

Until retailers fully adapt their strategies to reflect these realities, the small-format model will likely continue to fall short unless it is fundamentally redesigned around convenience-first shopping, high-return SKUs, and hyper-local demand.

Related: 72-year-old mall retailer to close more stores in 2026

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