Discount grocery chains face a massive challenge in that they’re battling against Walmart, Costco, and Amazon, rivals that have the ability to undercut their prices.
Save A Lot and Food 4 Less, for example, are both discount grocery chains, but the first comes in 9% higher than Walmart’s prices while the second is 19.3% more expensive, according to a 2026 Consumer Reports study.
Costco, BJ’s Wholesale, Aldi and Lidl all came in cheaper than Walmart, but every other grocery chain studied, was higher, in many cases much higher.
“Traditional regional grocers struggle to provide strong value, likely due to their lack of scale vis-à-vis mass, discount, and national chains,” according to a 2024 report from BCG.
With margins remaining tight, labor and rent costs rising, and consumers being more careful about where they buy, discount grocery chains have struggled. Best Bargains, a three-store chain, has entered a receivership and will close its stores for good by Oct. 18.
That’s not an isolated closure. It’s part of a broader trend.
Discount grocery chains are closing locations
“It’s very difficult to compete with Walmart on price. They just have structural advantages in their size, their economies of scale, their relationships with vendors” that are hard for retailers other than warehouse operators to keep with, R.J. Hottovy, head of analytical research for Placer.ai, told Grocery Dive.
- Save A Lot has lost roughly 350 stores since 2020. The discount grocer’s store count fell from about 1,000 in 2020 to approximately 650 by 2026. The company cited a challenging economic environment, while industry coverage pointed to inconsistent execution and intense competition, according to Grocery Dive.
- Grocery Outlet is closing 36 stores. The discount chain announced the closures in March 2026, including 24 locations in the eastern U.S. CEO Jason Potter acknowledged the company had expanded too aggressively, reported Supermarket News.
- Grocery Outlet’s sales and margins show the challenge of its turnaround. In the first half of fiscal 2026, comparable-store sales fell 0.6%, and gross margin declined 60 basis points to 29.9%. The company also reported closing 40 stores during the period, including the 36 under its optimization plan. second-quarter earnings report.
Costco has also widened its customer base.
“While the chain continues to over-index on affluent consumers, it is also attracting a growing cohort of younger shoppers,” according to Placer.ai data.
Best Bargains closing its stores
When you visit the Best Bargains website, you see nothing but prices. The problem is that those prices might be lower than conventional grocery chains like Kroger and Publix, they’re probably not consistently competitive with Walmart, Costco, and huge discount chains like Aldi and Lidl.
“Best Bargains Inc., which entered receivership earlier this month, is holding a store-closing sale and the court-appointed receiver said he expects the company’s stores to close this weekend,” Milwaukee Business Journal reported.
While entering a receivership does not require a Chapter 7 bankruptcy, it’s a similar process, although closure is not guaranteed under a Receivership.
“A Receivership is a remedy available to secured creditors to recover amounts outstanding under a secured loan in the event the company defaults on its loan payments. A Receiver may also be appointed in a shareholder dispute to complete a project, liquidate assets or sell a business,” according to PWC.
In this case, the company owes $4.18 million to Bank CMG: The receivership petition also listed $2.35 million in accounts payable and subordinated debt, plus approximately $574,000 in customer deposits.
Milwaukee attorney Seth Dizard was appointed the receiver for the case on Oct. 8.
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