ARLINGTON, Va. — The U.S. food retail industry is forging ahead with innovation and investment despite ongoing macroeconomic pressures, elevated costs, and policy uncertainty, according to The Food Retailing Industry Speaks 2025, the latest annual report by FMI – The Food Industry Association.
The report provides a comprehensive overview of the grocery sector’s current realities and emerging strategies, highlighting how food retailers and suppliers are adapting their business models while navigating trade and regulatory pressures. Notably, FMI’s signature research shows food retailers’ average profit margins holding steady at a slim 1.7%, while food product suppliers reported a net income of 7.7% — a reflection of both resilience and persistent structural challenges.
“Our industry, long accustomed to operating on narrow margins, is once again feeling economically squeezed,” said FMI President and CEO Leslie Sarasin. “The outlook presented in our recent analysis highlights a broader trend – a sharp rise in costs associated with regulatory actions at the federal and state levels.”
According to the report, approximately 80% of both retailers and suppliers expect tariffs and trade policy disruptions to continue driving price volatility and supply chain complications in the year ahead. At the same time, more than half of suppliers and over a third of retailers are bracing for increased costs tied to regulatory compliance in 2025.
Despite these headwinds, the food industry is seeing meaningful progress on the workforce front. Recruitment and retention challenges, which were cited by 85% of retailers in 2022, fell to 52% in 2024. Among suppliers, that figure dropped from 65% to just 28% during the same period — a significant shift attributed to investments in wages, benefits, training, and incentive programs. Industry-wide employee turnover also declined sharply, from 65% in 2022 to 48% last year.
“While it’s too early to know how changes in immigration and deportation policies will affect these gains, the data reflects a clear and positive trajectory in workforce stability,” the report notes.
The report also highlights consumers' evolving expectations about food and wellness. Nearly half of both retailers and suppliers reported seeing increased consumer interest in using food as a tool for health management. As a result, grocers are expanding their assortments of products with beneficial nutritional attributes, and enhancing in-store experiences with wellness hubs, fresh foodservice options, and curated offerings aligned to health, convenience and personalization.
“While being sensitive to the budgets of consumers, our members are reimagining the grocery store as a destination and one that reflects how today’s shoppers want to live and eat,” Sarasin said.
FMI’s findings underscore the continued evolution of grocery retail into a more integrated, modern experience—one where food meets function, exploration, and personal values, even as the industry operates in a landscape marked by thin margins and regulatory complexity.
