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Add These to Your Cart: 6 Strategic Priorities for Grocery Retailers

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Modern retail aisles are fast-moving, action-packed spaces where multiple forces compete for shoppers’ attention. Everywhere consumers look, there are new products, standby favorites, private labels, promoted items, end caps and freestanding displays. It can be hard to know where to focus.

Similarly, today’s grocery industry landscape can seem overwhelming at times for retailers. Rising operating costs, labor scarcity, sustainability, product freshness, in-store fulfillment, curbside pickup and home delivery — the world’s grocery retailers are also challenged to stay focused. It can be hard to optimize day-to-day operations, let alone considering strategic, longer-term priorities.

Every day, Blue Yonder supports 76 of the world’s top 100 retailers, including leading grocers. That deep industry knowledge and hands-on experience provide Blue Yonder with an expert perspective on the most pressing challenges facing grocers. Based on our unique vantage point, we’ve developed this list of the top six strategic priorities grocery retailers should focus on today. 

1. Achieving fresh food excellence

Fresh food is a key differentiator for grocers as demand keeps growing for fruits, vegetables, deli items, meat and seafood. Ninety percent of consumers say buying fresh food makes them happy, as they equate these products with nutrition and health. Nearly two-thirds (64%) of grocery retail executives say fresh food is the most strategically important category for their company’s sales growth over the next 12-36 months.

But managing fresh food comes with complexities, including spoilage, unpredictable demand and rising consumer quality standards. Significant labor is needed to prepare and restock products, as well as manage the demands of markdown.

However, as fresh foods have increased in importance, digital solutions have simultaneously grown in their capacity to manage them. High levels of automation, dynamic demand forecasting, synchronized supply and demand planning, profitable inventory clearance, and dynamic ordering and replenishment are taking fresh foods management to new levels of speed and precision, enabled by software innovations.

A fresh take: Grocery retailers who aren’t leveraging digitalization aren’t just throwing away spoiled produce. They’re also wasting opportunities for revenue growth and differentiation.

2. Delivering a seamless omni-channel experience

A recent study showed that over 90% of shoppers purchase groceries both in-store and online — so it’s critical for retailers to offer a consistent, unified experience across channels.

A primary obstacle? Traditional retail solutions aren’t built to integrate digital and physical operations, as well as facilitate real-time connectivity across channels. A seamless omni-channel experience requires real-time data sharing, cross-channel inventory visibility and fulfillment flexibility. To win in today’s omni-channel marketplace, grocery retailers must integrate store and online operations, seamlessly enabling options like click-and-collect, same-day delivery and personalized digital promotions.

Since omni-channel retail complexity exceeds human cognition, artificial intelligence (AI) is critical. The payback is significant. When B2C brands combine AI with first- and third-party data, 84% boost their conversion rates.

 

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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 shortages, rising operating costs and geopolitical tensions weren’t challenging enough, U.S. import tariffs are the latest force to severely impact food production and grocery supply chains. Supplier disruptions and fluctuating demand are also driving up operating costs and reducing product availability.

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, in which planning and execution are synchronized. 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 their already thin margins, grocers also must control the costs of labor and inventory.

As labor scarcity drives up retail and service wages, grocery retailers must reduce or replace labor to the greatest extent possible — while also focusing their existing labor resources on value-added activities. Cost of goods sold (COGS) management is also becoming much more complex. Faced with inevitable demand shifts and economic trends, grocers need to improve cost efficiencies and reduce waste to minimize their COGS metric under every demand condition.

While demand volatility and rising labor costs seem here to stay, so are software innovations created specifically 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

Retailer 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 highlights the increasing role of sustainability in shoppers’ purchasing decisions. For 78% of consumers, sustainability considerations are somewhat or very important.  Nearly a third (65%) of consumers will pay more for a sustainable product.

Regulatory pressures are also mounting. New regulations such as the Food Safety Modernization Act (FSMA) require enhanced traceability for certain food categories, adding new complexity to grocers’ compliance efforts.

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.

The 2025 consumer survey results are in

We asked over 5,000 consumers across major global markets what they really think about sustainability. Find out the answers here. 

 

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6. Elevating the role of private brands

Inflation has led to a shift in consumer purchasing behavior, with more shoppers opting for private-label products. In fact, a staggering 99.9% of consumers say they’ve purchased a private-label grocery product in the past year. Today over 80% of U.S. shoppers believe private-label food products are the same as, or better than, national brands.

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.

Equipped with real-time data and intelligent decision engines, retailers can refine their private-brand assortments, optimize pricing and enhance supplier relationships. They can dynamically adjust to change and continuously improve in 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 2025 — 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.