Tungsten marker layers and X-ray computed tomography were used to monitor the compaction of spray-dried alumina. Local density changes and compaction curves show that the well-known Stage I-II transition indicates an alteration in the direction of transmitted pressure through the uppermost layer. Stage I pressure is dispersed in local agglomerate contacts until "pockets" of low density are eliminated. In Stage II, these deformed/fragmented agglomerates behave as a continuous body and interact with wall friction to transmit pressure nonuniformly into the bulk. Discrete element simulations reproduced the compaction curves and provided clear explanation of the density distribution development.