Month: September 2025

• Small-format grocers like Aldi and Grocery Outlet are planning hundreds of store openings.
• Unlike traditional supermarkets, they offer a narrower selection of groceries.
• It might be what shoppers are looking for, experts say.

For supermarkets, less is increasingly more.

Chains such as Aldi and Grocery Outlet, which have fine-tuned selling food in small-format stores, plan to open hundreds more locations in the US over the next few years. Other companies, such as Amazon’s Whole Foods, are also getting in on the action with their own compact supermarkets.

Many of these new stores are half the size of a traditional supermarket. Albertsons says most of its stores take up more than 50,000 square feet, for example. Meanwhile, Aldi lists size requirements of about 22,000 square feet for new stores, and Grocery Outlet says its locations are between 15,000 and 20,00 square feet.

In each case, though, the stores’ small sizes mean that they have to be more selective about which products they stock, said Phil Lempert, a food industry analyst and editor of the website Supermarket Guru.

That can also make for a faster shopping experience — something that appeals to many customers.

“They’re curating these offers for you so you don’t have to spend as much time shopping,” Lempert said.

Traditional supermarkets often have dozens of versions of a single product — consider all the brands of seltzer or ketchup you can find at Kroger. Small grocers, by contrast, have no more than a few options.

“That’s a much better model,” Lempert said. “We’ve gotten carried away with the size of our stores.”

Small supermarkets like Grocery Outlet gain traction

A few decades ago, the idea of smaller supermarkets didn’t appeal as much to shoppers.

Grocery Outlet, which started in San Francisco in 1946 by selling excess military rations, was nicknamed “Gross Out” by some shoppers who didn’t like its selection of mostly processed foods.

The chain’s business model has evolved around its small-format stores, however. It now buys closeout merchandise and other items that food distributors and its retail rivals can’t sell, like discontinued products. That leads to inventory that can change a lot week-to-week, which the company calls “a treasure hunt shopping experience” and has earned the chain a better reputation.

Consumer shopping behavior is also different. Many Americans are dividing their weekly grocery spending between multiple trips to multiple stores instead of making one big trip. “It’s more like the European model, where you shop every day,” Lempert said.

Though food inflation isn’t as intense as it was a few years ago, many consumers are still feeling the pinch of high grocery prices.

Those two factors have favored chains with smaller stores, which operate more efficiently than big supermarkets, focus on low prices, and offer a few quirky products to keep customers interested. Grocery Outlet had 533 stores at the end of 2024 and plans to add 42 more stores to that total by the end of 2025.

Ellen Khalifa, a health coach in Berkeley, California, who said she’s been shopping at Grocery Outlet since the early 2000s, told Business Insider that she used to hear other customers laugh at the chain because of its strange product selection. Now, it’s usually the first stop on her grocery runs.

Though eclectic, she said that she often likes the products, from Italian pasta sauce to wine. The quick turnover of inventory leads her to buy strategically, she said. “If I do like something, I tend to try and stock up on it,” Khalifa said.

While Khalifa said that she also shops at stores like Costco, she’s met other people who do much more of their food shopping at Grocery Outlet, despite its small size.

“It really seems like a place where anybody can shop,” she said. “There will be people there for the wine sale, and then there are people who are on SNAP.”

Aldi helped fine-tune the small-store strategy

Aldi has also grown up, Lempert said. The chain had about 2,400 US stores at the end of 2024 and plans to add 200 more by the end of this year.

Aldi spent the years after its 1976 entry into the US fine-tuning its approach. Its first-ever American store, located in Iowa, closed the year after it opened. The chain’s focus on store-brand groceries helped it save money and space in its small stores, but they often scared away customers who saw the products as inferior to equivalents from big brands like Kraft, Heinz, and Nestlé, Lempert said.

Like Grocery Outlet, Aldi keeps its product selection slim enough to fit in its small stores. Many of Aldi’s products, such as specialty cheeses and cold foam for your coffee, are now competitive with big brands when it comes to quality, Lempert said.

But there’s a more basic reason Aldi’s strategy works: Relying on store brands reduces shoppers’ choices, making the stores easier to navigate.

Many shoppers walk into traditional supermarkets with a list of a couple of dozen items that they need — often the same items as last week — and waste time looking through stuff that they’ll never buy, Lempert said.

“In order to acquire those, I’ve got to walk past 40,000 products,” he said. “That’s a little absurd.”

Whole Foods experiments with small stores

Not all of the small grocery stores are as focused on low prices.

Whole Foods is also making another attempt to open small stores. The chain previously operated small stores under the name Whole Foods 365.

Last year, the Amazon-owned grocer started opening stores between 7,000 and 14,000 square feet in New York City under a new name: Whole Foods Daily Shop. In addition to a curated selection of groceries, the stores also offer pre-packaged grab-and-go meals.

Daily Shop shows another reason some small-format stores have caught on, Elizabeth Lafontaine, the director of research at Placer.ai, told Business Insider: They’re easy places for city-dwellers to pick up a few groceries or a full weeknight meal in a pinch.

“Consumers can come in after work, just grab dinner for that night, and then go home and enjoy it,” she said.

Foot traffic data for the first half of 2025 compiled by Placer.ai showed that visits to such fresh-format stores grew faster than at value-focused chains such as Aldi and rival German discounter Lidl.

“Value can come in different forms when we think about the service elements or convenience,” Lafontaine said.

Do you have a story idea to share about Aldi, Grocery Outlet, or another retailer? Contact this reporter at abitter@businessinsider.com.

• The Pentagon gutted its independent weapons testing office, decreasing the number of programs it oversees.
• Experts warn this could result in US military personnel in the field receiving problematic weapons.
• DOT&E’s oversight has ensured problems with new systems are known about before they enter full-production.

The recent gutting of a Pentagon office created to prevent troops from being handed rifles that jammed in combat has raised concerns among oversight experts worried history could repeat itself.

Substantial cuts that halved the staff of the Pentagon’s independent weapons testing office have dramatically reduced the number of programs it oversees, resulting in less supervision on how a new system is performing before it ends up in the hands of US military personnel.

Secretary of Defense Pete Hegseth says the overhaul of the Office of the Director of Operational Test and Evaluation, or DOT&E, promotes efficiency so “that warfighters get what they need faster.” Outside experts who have studied the office and its work for decades warn that by reviewing roughly 40% fewer programs, many faulty weapons will slip through to troops.

“An incredibly important part of the duty of DOT&E is to make sure we are not fielding weapons that don’t work,” Greg Williams, the director of the Project On Government Oversight’s Center for Defense Information, told Business Insider. “It does us no good to field weapon systems that we either don’t know work or that do not work.”

Testing, transparency, and safety

Established by Congress in 1983, DOT&E oversees a vast portfolio of weapons systems and approves the different stages of testing for them. Then it ensures those tests have been conducted and reviews the results. It can also conduct its own tests under realistic conditions.

Information on a program’s successes and failures are made public and help the Pentagon and Congress make decisions on the next steps for that particular program before it goes into production and then later is issued to troops. The defense secretary and lawmakers can still move forward with a program even if DOT&E brings serious problems to light.

Broadly, the agency’s work helps inform everyone, the taxpayers included, on what can be a murky process. It also holds the military and manufacturers accountable. It can reveal an unforeseen problem, like a gun jamming, before that gun is being carried by a soldier in combat with potentially fatal consequences.

With less capacity now, DOT&E’s portfolio of programs is a lot smaller. As Williams highlighted in a Project on Government Oversight report last month, DOT&E will provide operational testing for 152 programs, 99 fewer than the 251 it oversaw last year. One critical program not included in its portfolio is the Army’s new XM7 rifle, the successor to the M16 and M4 series of rifles.

The M16 had an early history of deadly failures when it was introduced during the Vietnam War. When it was first fielded, it jammed frequently, and there are many reports of soldiers dead with jammed M16s in their hands,” Williams said. Such malfunctions were front of mind with the later creation of DOT&E.

There are noticeable parallels between the M16 and XM7 in that the weapons are the only rifles since World War II to introduce new standard-issue rifle cartridges, as well as new requirements for tactics and training. “The revolutionary nature of the XM7 would seem to merit more testing, not less,” he added.

A weapon going into the field while still having potential problems and not being fully evaluated to ensure optimal function raises safety concerns for the troops using it. The case of the M16, Williams said, “is absolutely something we do not want to repeat.”

A gutted DOT&E

When Hegseth announced sweeping staff reductions, leadership changes, and a shift in focus at DOT&E in May, experts were alarmed at the cuts and potential impacts. It marked the largest cut to the office in its history.

Past administrations and some in the defense industry have previously attempted to curb DOT&E’s effectiveness, as it can make it easier to push programs through and field new systems. The Trump administration actually did it, and without Congress needing to disband the office. Hegseth said the cuts aimed to reduce the bureaucracy and more rapidly deploy new weapons to troops.

“What the administration has done now is salami slicing the office’s capacity to reduce the amount of oversight it can provide,” Dan Grazier, senior fellow and the director of the national security reform project at the Stimson Center, told Business Insider.

There are plenty of stakeholders that benefit from a weakened watchdog, he said, from military programs and defense companies to Trump administration officials, all of which “don’t want an independent agency providing the receipts to justify skepticism about their projects that more than not are flawed.”

A Pentagon official told Business Insider that the Pentagon and defense secretary remain “committed to adhering to the statutory requirement for the DOT&E to provide independent analysis, evaluation, and reporting of operational test and evaluation for programs on the DOT&E oversight list.” The official added that any changes to the programs being overseen are solely DOT&E’s responsibility.

Grazier, Williams, and other military reform experts often point to the F-35 stealth fighter as a case study in what can happen if programs move forward with unresolved issues. Others could easily be the Zumwalt-class destroyers or the Air Force’s new Sentinel intercontinental ballistic missile.

DOT&E has flagged hundreds of design flaws with the advanced fifth-generation fighter, and many were ignored as the services plan to buy over 2,400 F-35s across the three variants. Now, it’s looking like some problems, such as poor availability, spiraling costs, and delayed deliveries, can be traced back to that moment, Williams said.

Had DOT&E’s insight been taken more seriously, it might have created a smoother path forward, he explained. With deep cuts to the office, there is now much less capacity to even gather that insight in the first place.

Quicker fielding, less safety

The Pentagon under the second Trump administration is pursuing a massive transformation to rebuild the military’s forces from the Iraq and Afghanistan wars, that is focused on fast-tracking emerging technology like combat drones or AI-enabled platforms. With decreased oversight, the Department of Defense can move faster, just with greater risk of a problem down the line.

Of the 152 programs DOT&E is still overseeing, some big ticket projects stand out, like the B-21 Raider long-range strike bomber, Columbia-class nuclear-powered ballistic missile submarine, Sentinel, a variety of uncrewed vehicles, missiles, and the Golden Dome for America anti-ballistic missile system. Many of these have been deemed top priorities by defense officials.

For evaluating these, DOT&E’s workforce is stretched thin. Prior to Hegseth’s memorandum on DOT&E, the office had 94 employees, consisting of 82 civilians and 12 service members. Now, there are just 30 civilians, 15 military personnel, and one senior leader — and no contractor support.

There’s a growing push within the armed forces to test and experiment in the field, with the operational forces learning from mistakes and iterating quickly. It embraces a “failing fast” mentality drawn from the tech world, but Williams argued that organized, independent oversight is still necessary to prevent some lessons from being learned at the wrong time.

“Failing fast with a piece of software is one thing,” he said. “Failing fast with weapons in combat is a very different thing.”

• Blackstone’s president, Jon Gray, gave a presentation to investors about AI last week.
• His remarks illustrate who could be the biggest winners and losers of the AI economy.
• Some jobs, like software engineers or customer service agents, may already be at risk.

In a recent meeting with investors, Jon Gray, the president of Blackstone, played a clip of the 1967 classic film “The Graduate.” It was the famous scene where Dustin Hoffman’s character gets pulled aside by one of his parents’ friends at his own college graduation party for some awkward career advice.

“I just want to say one word to you,” says the Mr. McGuire character, “Power.”

In the original scene, McGuire said, “plastics,” reflecting the space-age economy of the 1960s. The message behind Gray’s edit was that power is the new plastics in an age of electricity-hungry AI.

Gray made the comments as part of a presentation to explain Blackstone’s plan to generate returns off the AI boom while avoiding reckless, overexuberant investments. In doing so, he made a case for which professions are most likely to thrive in the AI boom, which won’t likely be affected, and which stand to be massively transformed.

The September 17 comments, which the firm later uploaded to YouTube, reflect a larger societal conversation about the coming AI revolution that is still unfolding.

Gray compared the AI revolution to two other massive economic changes: the industrial revolution and the dot-com boom. Both eras reshuffled the deck for labor, with farmers laying down their shovels and moving to the factories and software developers growing at the expense of encyclopedia salespeople, causing some industries to boom, some to contract, and previously unimaginable jobs, like social media influencer, to be created.

The main difference this time around is that the change will be even more rapid, said Gray, noting that ChatGPT was the fastest product to reach 700 million consumers in history.

Here are some potential winners and losers of the AI economy, based on Business Insider’s reading of Gray’s September 17 presentation. Blackstone declined to comment.

Winners

Instead of directly investing in Generative AI companies, Blackstone has adopted a “picks and shovels” approach, investing in the infrastructure that will power the boom.

“If you have young college graduates, I would tell them power is the way to go,” Gray said.

Massive labor shortfalls among the electricians and plumbers necessary for the growth in data centers puts these jobs in a favorable position. Relatedly, a LinkedIn study recently found that oil and gas jobs are one of the fastest-growing areas for new grads, alongside skilled trades.

Blackstone’s $100 billion data center platform, led by its US data center giant QTS, showcases how growth can lead to jobs as well. Gray said the company has grown from $10 billion when it was purchased in 2021 to $70 billion, and while Gray didn’t directly mention the people who staff data centers, these skilled professionals will surely be in high demand.

Blackstone and QTS have been investing in a homegrown talent pipeline to train these workers, amid a labor shortfall in these data centers.

For now, investors in AI are also winners of this boom, with stocks at all-time highs.

“There is no question that when you get this kind of excitement, you are going to get excesses,” Gray said, warning of speculatively-built data centers that don’t have a tenant in mind.

“Will it start to create bubbles?” he asked, “We’ve got to keep our eyes on this.”

Historically, crashes caused by overexuberant investing have led to widespread layoffs in the financial industry. The finance and insurance industry saw record-high layoffs in 2008 and then 2009 following the subprime mortgage crisis, reaching nearly 100,000 separations in both years per the Bureau of Labor Statistics.

Losers

During the presentation, Gray showed some slides suggesting AI may already be disrupting some industries. The slides were based on a recent Stanford study that suggested AI may already be replacing the least-experienced workers (ages 22 to 25) in certain white collar jobs, including software developers and customer service agents.

The slide showed that hiring for young people in these roles started to lag 40-to 49-year-olds at the end of 2022. By contrast, the employment rates of young stock clerks and health aides kept pace with their older peers during this time period.

“Early programmers are being displaced,” said Gray, calling it “a Claude code effect,” referring to Google’s generative AI coding tool.

The same is happening in customer service, “as AI gets better at answering phones” and “answering questions.”

Gray highlighted the firm’s investment in “rules-based businesses” as another place where AI has the power to transform “legacy businesses.” AI’s ability to follow rules in businesses like accounting, healthcare claims, or marketing compliance is part of the opportunity that led Blackstone to invest in AGS Health, Citrin Cooperman, and Norm AI, he said.

While Gray’s comments were only about efficiency, they raise questions about the implications for workers. While some experts have suggested that AI could simply increase efficiency for companies, allowing them to do more with the same number of workers, AI disruption still raises the prospect of job cuts.

It’s still “early days,” said Gray, but the technology is already having an impact at Blackstone. The investment giant has built out an in-house video team to do everything from shoot its infamous holiday videos to make its presentations, like Gray’s September 17 talk, more sleek. Generative AI isn’t up to par just yet, but it’s much cheaper, Gray said.

To highlight this, he played two versions of the same Blackstone commercial set in the 1849 Gold Rush. The first was filmed outside of Vancouver, and cost $1 million when tallying up the cost of travel, lodging, wages, and video editing, Gray said. The second commercial is “not quite as good yet,” but costs “a lot, lot less,” Gray said. “It was made on the eighth floor here with two guys in a couple of hours,” Gray said.