Grocery retail across Europe is undergoing rapid transformation, shaped by both changing consumer behaviour and the economic pressures that continue to challenge the sector. Shoppers are more price-sensitive and selective than ever. And the supermarkets that are doing well are the ones who have already adjusted: by lowering costs, rebalancing pricing strategies, and expanding private label ranges.
Indeed, private label is now a central player in the grocery basket, no longer just a cost-saving option but a trusted alternative to branded goods. Across the EU, private label penetration is soaring, with some markets seeing over 40% of grocery sales attributed to store brands.
At the same time, omni-channel shopping is reshaping how consumers expect to shop. Buying groceries online, picking them up at the store, and using apps for deals are now normal. It’s a tough market as shoppers want prices to be the same everywhere, but they also want special offers just for them along with an easy, smooth experience. This makes pricing and promotions more complicated, but it also gives stores new ways to connect with customers and keep them coming back.
What supermarkets are doing to stay ahead
Leading grocers are already responding to these shifts. Ahold Delhaize, a Dutch-Belgian multinational, is aiming to increase private label to 45% of total sales by 2028 (Source: Ahold Delhaize Newsroom). Meanwhile, Carrefour, a French multinational retailer, is continuing its price-cutting efforts, funded by a new cost-saving plan of 1.2 billion euros, in order to sharpen its pricing strategy (Source: Reuters).
Tesco and Sainsbury’s in the UK have improved their loyalty programs, integrating targeted offers through their Clubcard and Nectar schemes. These strategies are designed to keep key value lines competitive with discount players like Aldi and Lidl, who continue to dominate with streamlined assortments and low-cost, private label-focused models.
To stay agile with pricing, many stores are turning to digital shelf labels (ESLs), which lets them update prices across thousands of products in real time. By 2023, more than half of major supermarkets in France and nearly 40% of those in Germany (about 4,000 stores) had already adopted ESLs (Read more here). This widespread adoption across Europe is helping grocers quickly adjust prices and stay competitive in a rapidly changing market.
These trends point to a critical shift in Europe’s grocery sector. As price and value become central to the customer, retailers are leaning into private label growth, technological innovation, and smarter pricing strategies.
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The challenges for retailers
Retailers are under pressure to invest in promotions and adjust pricing to stay competitive, all while keeping their profit margins intact. In today’s world of easy online price comparisons, even small missteps can result in lost sales or damaged customer trust.
Managing all the complexity is another challenge. As private label ranges grow, and promotions become more frequent, it’s harder to keep track of everything. Pricing is no longer a once-a-month task but a constant adjustment act. Retailers also need to adjust prices quickly across different channels — online and in-store — but many still rely on outdated systems that were designed for slower pricing cycles.
Then, there’s the loyalty factor. Shoppers today are more focused on getting the best value rather than sticking to specific brands. If grocers don’t offer tailored promotions, they risk missing out on keeping customers engaged. For many retailers, this means balancing tight margins with the need to keep up with a market where consumers expect more flexibility. Even a small mistake, like a mispriced product or a poorly timed sale, could cause customers to look elsewhere. Grocers need to be quick, smart, and adaptable to keep up with the competition.
Turning pressure into strategic opportunity
So, how can grocery retailers respond?
1. Private label as a strategic weapon
As it was mentioned many times in the beginning of this article, it all starts with elevating private label strategy. Leading grocers are not just expanding their own-brand ranges, they’re investing in premium tiers that can command higher margins. Ahold Delhaize, for example, aims to make private label 45% of total store sales by 2028. This isn’t just about cost-saving, it’s about using private label to define the retailer’s value proposition, from budget-conscious staples to sustainably produced premium lines.
2. Dynamic and responsive pricing
Second, pricing must become more dynamic. This doesn’t just mean automation, but it means using real-time data to understand elasticity, competitor activity, and customer behaviour at a granular level. Dynamic pricing allows for more precise adjustments that protect margin without damaging perception. Retailers like Tesco are testing real-time loyalty pricing (“Your Clubcard Prices”) to offer targeted discounts while maintaining control of baseline pricing.
3. Precise discounts
Grocers need to be smarter about how they invest in price. Rather than blanket promotions, retailers should focus on key value items and support them with data-backed discounts and personalized promotions, particularly through loyalty programs and digital channels. This targeted investment can shift price perception without the margin leakage of bigger price cuts.
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4. Unified omnichannel value
It’s time to fully integrate pricing across channels. Inconsistent pricing between online and in-store can confuse customers, especially when the differences feel random or unfair. Leading grocers are building unified pricing strategies that ensure transparency while still allowing for purposeful differentiation, such as exclusive app-based promotions or digital-only discounts that drive engagement.
5. Using loyalty data to drive profitability
The retailers making real gains are those treating loyalty data as more than a marketing tool. By combining pricing, promotion, and behavioral data, grocers can identify where to lean in with value and where customers are willing to pay a bit more. It’s this type of informed, precise pricing that enables both growth and protection of margin.
6. Elevating sustainability as a value driver
Finally, sustainability is becoming a subtle but powerful pricing lever. While shoppers remain value-conscious, many are still willing to pay more for products that clearly deliver environmental or ethical benefits. Grocers that communicate this well through packaging and storytelling can justify premium pricing and build long-term brand equity, especially within private label.
The road ahead
The grocery market in 2025 demands more than just competitive prices. It calls for smarter, faster, and more customer-centric pricing strategies. Retailers who succeed will be those who treat pricing as a strategic discipline, not just a back-office function. That means investing in private label innovation, embracing real-time tools, and using data to make sharper, more profitable decisions. The pressure may be high, but so is the potential. In this new landscape, pricing isn’t just about reacting, it’s about leading.
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