Source: McKinsey & Company

After a tumultuous 2022, grocery executives hoped rampant inflation and snarled supply chains would soon recede, signaling the return to a more traditional landscape. In some ways, they got their wish: inflation has fallen significantly, and supply shortages have moderated. Yet the lingering effects of these trends and consistent pressure on margins have dampened the outlook. Leaders may be wondering when the days of greater predictability and higher profits will return.

Despite their weariness, CEOs should be prepared to act aggressively. As we have discussed in years past, the best-performing grocery retailers are those that consistently focus on innovation and pursue new ways to create value.1 Indeed, the very constraints that keep executives up at night also contain the seeds to jump-start growth, diversify revenue streams, and achieve greater operational performance.

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