Add these to your cart: 6 strategic priorities for grocery retailers

3. Optimizing the supply chain

Like all retailers, grocers need to optimize their supply chains for service, accuracy, speed and efficiency to win in an increasingly competitive market. But they face significant challenges. 

As if labor costs, rising operating costs and geopolitical tensions weren’t challenging enough, about 90% of food retailers and suppliers report negative impacts from international trade and tariffs, and two-thirds of retailers report negative supply chain impacts in 2025. Grocery inflation has cooled, with food-at-home prices up 2.2% year over year in August 2026, which means the fight has moved from headline price to margin, availability and waste.

How can grocery retailers maximize efficiency in an industry characterized by uncertainty? AI-enabled digital solutions provide the answer, empowering grocers to identify changing conditions, run what-if scenarios, and pivot their operations efficiently in response.

Optimizing the grocery supply chain requires an end-to-end approach that synchronizes planning and execution. Real-time data, AI-driven insights, and automation improve forecasting accuracy, increase product availability, reduce excess stock and stockouts, and enhance responsiveness to demand shifts, supply shortages, and other changing supply chain conditions.

4. Controlling the costs of labor and inventory

Operations efficiency and synchronized execution are essential, but they’re not the only components of supply chain performance retailers should prioritize. To protect already thin margins, grocers must also control labor and inventory costs.

Food retail profit margins were 2.1% in 2025 and about 11% of food retailers posted a loss, with payroll and benefit costs still rising. Grocery retailers must automate wherever possible while focusing their existing labor resources on value-added activities. Cost of goods sold (COGS) management is also becoming much more complex.  With 82% of suppliers expecting economic pressure to change how consumers shop, grocers need to improve cost efficiency and reduce waste to minimize COGS under every demand condition.

While demand volatility and rising labor costs seem here to stay, so do software innovations designed to address these challenges. Advanced workforce planning, automation of repetitive tasks, real-time supplier collaboration, and intelligent procurement help grocers increase efficiency, minimize costs, and maximize margins.

5. Operating sustainably, transparently and ethically

Retail grocers are pursuing increased sustainability for a number of reasons — including the fact that minimizing food waste, road miles, packaging and other resources simply makes good business sense. But they’re also responding to external forces.

Blue Yonder’s fourth annual Consumer Sustainability Survey (2025) highlights the increasing role of sustainability in shoppers’ purchasing decisions. For 78% of consumers, sustainability considerations are somewhat or very important. Nearly two-thirds (65%) of consumers will pay more for a sustainable product, and food and beverage is the category where they are most willing to do so (48%).

Regulatory pressures are also mounting. FDA’s Food Safety Modernization Act traceability rule (FSMA 204) now carries a compliance date of July 20, 2028, giving grocers a fixed window to build lot-level traceability for foods on the Food Traceability List.

The good news? A digital supply chain enables full traceability from source to shelf, transparent reporting, and robust waste reduction. By leveraging advanced technology, retailers can more easily track products, ensure ethical sourcing, and meet evolving regulatory requirements—while also reducing costs, minimizing waste, and improving their financial performance.

6. Elevating the role of private brands

Value pressure has shifted consumer purchasing behavior toward private-label products, and the shift is sticking. 92% of U.S. grocery shoppers now have store brands in their homes, up from 89% a year earlier, and 94% say they would keep buying them even if grocery prices fell. Store brands reached $282.8 billion in 2025, growing 3.3% in dollars against 1.2% for national brands. Quality (39%) and taste (37%) are now the top reasons shoppers give for buying more, both up sharply since 2023.

While private-label sales represent a major opportunity for grocery retailers to grow revenues and strengthen shopper loyalty, they must optimize the supply chain to ensure consistent quality, high availability, and competitive pricing.

With real-time data and intelligent decision engines, retailers can refine private-brand assortments, optimize pricing, and strengthen supplier relationships. They can adjust dynamically and continuously improve their capabilities to combine product affordability and quality with seamless availability.

Stop shopping around. Partner with Blue Yonder.

To achieve results in these six strategic areas, grocery retailers need a modern, connected supply chain that enables smarter decision-making, faster responses, and connected outcomes.

If you want to add digital transformation to your shopping cart in 2026—and unite your teams and workflows to make smarter, faster decisions, from source to shopper—the time to act is now. Schedule your strategy call with a Blue Yonder expert today. You’ll learn how our AI-driven, end-to-end solutions can help you transform your retail grocery supply chain from a challenge to a competitive differentiator.