Retailer Confidence Drops 15 Points Since 2024; 73% See Private Label as Priority

Uncertainty and pessimism are rising major among U.S. retailers as labor challenges and inflation have dampened future outlook, according to a report by Progressive Grocer last week.

In a survey conducted between February 19 and March 10, 2025, a majority (60%) of retailers are still optimistic for the remainder of the year, but confidence is down from 75% in the same period last year as “economic volatility and inflation are dragging down expectations,” said Lynn Petrak, senior editor of Progressive Grocer, during a webinar hosted by the trade publication on Thursday.

Beth Brickel, VP of research at EIQ Research, which conducted the survey in partnership with Progressive Grocer, said that only one in three retailers were “highly optimistic” on the future, down 21 points from last year. While 42% were somewhat optimistic (up 6 points from last year), those who are not optimistic grew 15 points to 26%.

“[It is a] clear signal that confidence is slipping across the sector, with more retailers taking a cautious or even concerned stance heading into 2025,” Brickel said.

Labor is the top concern for stores, with 54% pointing to it as an issue, while 49% reported higher costs, supply chain disruptions and wages and benefits as worry points.

Petrak highlighted decisions by retailers like Kroger, which announced at the top of the year it was taking a “cautious financial outlook” and “pulling back on discretionary investments,” while Southeastern Grocers has slowed new store expansion in order to maximize “productivity at existing locations amid uncertain demand patterns.”

While inflation is slowing for now, grocers still anticipate it will cut into margins and “slow capital expenditures,” Petrak added, with Sprouts recently noting during its last earnings call that “pricing pressures on center store and protein categories impacted the margin planning.”

Grocers are now “doubling down on what matters most – the customer,” said Bridget Goldschmidt, managing editor of Progressive Grocer. Increasing in-store signage as a marketing tactic was the top strategic priority (85%) for retailers this year, with promoting “signature products” coming in second at 76%.

Private label products continue to be a strong sales driver for retailers, with 69% of retailers calling it their top sales category and 73% called it a major strategic priority going forward.

“Private brands are not just growing, they’re evolving,” said Goldschmidt, noting Costco’s Kirkland Signature line and Ahold Delhaize USA’s private label portfolio have begun entering more categories, including premium products and meats.

Prepared foods may also be another source of competition for packaged brands, with 75% of retailers citing it as a priority.

“Established retailers must stay agile – agility is more important than ever,” said Progressive Grocer editor-in-chief Gina Acosta. “We’re seeing that those who lean into clear shopper-focused strategies, whether through value differentiation or localization … these retailers [who] are leaning into these shopper-focused strategies are finding growth in this environment.”