Iridio’s latest research highlights five key insights from decision-makers at leading grocery brands
To understand how grocery leaders are responding to modern industry pressures, Iridio’s research team conducted interviews with grocery executives across the country. Five key themes stood out, showing how key industry players are competing, growing, and connecting with shoppers.
Key Themes
Report Highlights
01 Health trends and economic pressure are changing
how grocery shoppers buy
Health-conscious behaviors, persistent inflation, and shifting household dynamics are affecting how consumers shop for food. Grocery leaders describe shoppers who are more selective, value-driven, and increasingly drawn to convenience formats that fit their dietary priorities and budgets.
These trends are increasing consumer demand for prepared foods, private label products, and flexible meal solutions.
GLP-1 medications, restrictive diets, and economic strain are also affecting demand. Meanwhile, “ready to eat” prepared foods are taking share from restaurants as shoppers seek relief from rising restaurant costs. Social media is also influencing purchasing behavior, driving demand for trend-driven, impulse ingredients.
Additionally, inflation has driven growth in private label brands, which have evolved into a quality alternative that shoppers are actively seeking out. These offer grocers a lower cost basis and greater margins, but sacrifice traditional "CPG money" from legacy brands.
WHAT GROCERY DECISION-MAKERS HAD TO SAY:
A top priority is continuing to understand the impact of GLP-1 on food … because if the entire country is on it, they are buying less food.
Grocery has become seen as a good alternative to a restaurant … because sometimes you can find better value and better quality in the grocery store.
Instead of picking up a $100 meal from a restaurant, customers can pick up something from the prepared foods area for a lot less.
Now private label has turned into a whole different beast … it was always the cheapest baked beans … and now it's like, ‘Hey, these baked beans have this and this in them.’
Expert take
“To drive growth, grocers should prioritize reallocating shelf space toward premium, ready-to-heat meal solutions that directly capture the 'restaurant alternative' dollar. They should also strategically expand high-margin private labels to protect overall profitability, ensuring those gains offset the inevitable drop in legacy CPG funding."
— Panos Anadiotis, VP of Integrated Strategy & Solutions, Iridio by RRD
02 Grocers are expanding ecosystems and evolving
formats to maintain loyalty and wallet share
Shopper loyalty is becoming fragmented as consumers spread purchases across multiple stores, apps, and fulfillment options. They are chasing convenience, value, and availability wherever they find it. Grocers are responding by building ecosystems designed to give shoppers fewer reasons to look elsewhere. They're also deploying hyper-efficient, stripped-down store models to drive volume — or investing heavily in premium destinations to combat the massive scale of big-box competitors.
Grocers are focused on becoming customer-for-life destinations through pharmacy services, fuel rewards, prepared foods, loyalty programs, and ecosystem partnerships. Private label brands are also moving beyond price to become differentiated products that shoppers prefer.
WHAT GROCERY DECISION-MAKERS HAD TO SAY:
We've done the work to know that people who shop the pharmacy are more loyal and come in more because they're not only buying groceries … they're getting their prescriptions filled.
We are ... more dimly lit than a traditional store. There are low sight lines, so you can see across the store. The color palette is warm, comforting tones. We play classical music. There's a balance there that we're trying to figure out.
A lot of people like grocery shopping ... But to make that happen, you have to spend a lot of money to make the store experience ... dynamic and, you know, potentially even entertaining.
If you lose out on the loyal customer, then getting that customer back is even more [costly].
Expert take
“Shoppers are becoming less likely to have a ‘default destination.’ The question, then, is: How can you turn your brand into an essential, everyday ecosystem? Capturing pharmacy patients, expanding fuel rewards, and creating unique store formats are some examples that can help execute this ‘customer for life' strategy as baseline loyalty deteriorates.”
— Andy Johnson, Senior Vice President, Principal, Iridio by RRD
03 E-commerce growth and third-party apps
are pushing grocers to rethink fulfillment
and operations
Digital grocery adoption is growing, and shopper expectations for seamless digital and e-commerce experiences aren't slowing down. The challenge for grocers is making this evolution profitable.
Retail leadership must weigh the capital allocation trade-off between in-store business and online fulfillment, recognizing the importance of rapidly modernizing legacy tech to make e-commerce profitable.
E-commerce growth has also created internal tension, with some store leaders viewing online sales as a threat to in-store revenue.
Additionally, third-party apps like Instacart actively reduce retailer loyalty by conditioning shoppers to prioritize the app's convenience and price over grocery brand affinity.
WHAT GROCERY DECISION-MAKERS HAD TO SAY:
Leaders identified labor costs and internal tension with stores as the biggest challenges associated with e-commerce growth.
The labor you spend to take care of those relatively few customers … is a substantial investment … The labor spend isn't compensatory right now to what you're getting on the back side.
Still, the number-one challenge I got is always from a store. ‘Hey, are you trying to fight me with the sales portion?’ Because they're [looking] at the e-commerce business as market cannibalization.
I think that [third-party apps have] helped to reduce loyalty across customer segments where I can get it from anyone, whoever is giving me convenience and price.
Expert take
“The e-commerce challenge revolves around unit economics. To achieve profitability, grocers should prioritize modernizing legacy systems to protect their margins. In terms of overcoming third-party app challenges, brands must build proprietary omnichannel experiences to reclaim customer data.”
— Michelle Garcia, Director of Integrated Strategy, Iridio by RRD
04 RETAIL MEDIA AND BACKEND AI ARE BECOMING TOP
OPERATIONAL INVESTMENTS
Interviews reveal AI skepticism about consumer-facing applications, but enthusiasm for backend uses such as forecasting, labor optimization, inventory management, and operational efficiency.
Retailers see the greatest AI value in backend efficiency and operational support.
Optimizing Retail Media Networks (RMNs) is a top priority because these networks uniquely allow suppliers to convey an emotional experience for their products directly at the point of sale. However, for most grocers, these platforms are still in an "adolescent" phase.
Scaling these programs demands governance, operational discipline, and accurate digital infrastructure. Print is still being utilized for geo-targeted demographics and as an entry point for digital app adoption, but the shift toward digital is accelerating.
WHAT GROCERY DECISION-MAKERS HAD TO SAY:
Grocery leaders consistently identified forecasting, labor optimization, inventory planning, and backend automation as the highest-value AI applications.
That means I require less people … to do that sort of computational or data aggregation work for me. AI can do it and it's gonna save money.
There's not a lot [that] AI can do for them [on the floor], but there is on the back side of the operation, right? So [it’s about] the efficiencies, the inbound logistics.
Installing video screens [for an RMN] would be the easy part of the equation. Managing the content and ensuring that the content sort of sits well within your brand is, I think, a little bit more of a challenge.
We actually got rid of [print] completely, [and] had a little bit of a backlash from some of our long-term customers. They want the paper in their hand.
Expert take
“Grocers are skeptical of flashy, consumer-facing AI and are instead relying on the technology for its ability to solve backend challenges. The most cited uses include demand planning and the tedious data management required to mature retail media networks.”
— Kevin Bell, VP of Data & Analytics Strategy, Iridio by RRD
05 GROCERS ARE FAVORING SINGLE-SOURCE VENDORS
ACHIEVING MEASURABLE OUTCOMES TOWARD
HYPER-FOCUSED KPIS
As grocery organizations face increased complexity, the challenges they expressed revolved around how vendor relationships can make that complexity worse. This includes front- and back-of-store fragmentation across reporting, disconnected tools, and generic pitches from vendors who don’t take accountability for outcomes.
WHAT GROCERY DECISION-MAKERS HAD TO SAY:
The leaders we interviewed described widespread "analysis paralysis" caused by data overload. They’re increasingly focusing on partnerships that can help achieve KPIs on actionable metrics like customer retention, basket size, and the time shoppers spend in-store.
And I think if anything, we have almost more data than we know what to do with.
[The ideal partner] asks questions about the business and understands it ... [They must be willing to adjust to] a moving target all the time ... owning the work that they did.
You need custom everything ... there has to be a high level of trust there. So immediate troubleshooting ... a way to immediately show that value. .. [and] accountability.
Expert take
"Take inventory of your current vendors across the board. Are there opportunities to simplify execution, integrate operations, and improve results by pivoting toward single-source vendor relationships? Additionally, are you gaining insights or just gathering data? Be precise about your actionable KPIs and seek tailored support to achieve them."
— Beth Johnson, Director, Vertical Strategy, Grocery, Iridio by RRD
TURNING INSIGHTS INTO ACTION
Iridio by RRD supports the core priorities in this research — providing strategic support to reduce operational friction and drive measurable outcomes.
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What’s next
This research shows that forward-thinking grocers are expanding their ecosystems, modernizing fulfillment operations, investing selectively in AI and retail media, and pushing for partnerships that make execution easier. Early accountability and swift adaptability are critical to success amidst evolving industry benchmarks.