Extreme weather and shifting crop yields driven by the Super El Niño are no longer distant forecasting variables on a calendar for grocery retailers. They are an immediate operational reality. The window for long-term supply chain planning has closed, forcing supermarket chains directly into real-time execution.
Sean Hooper, senior solution principal for Relex, works closely with grocers like Hy-Vee, Sprouts Farmers Market, MOM’s Organic Market, Vallarta Supermarkets and PriceSmart on demand planning and supply chain strategy. Reflecting on how rapidly the retail landscape has shifted, Hooper says that climate disruption has moved from a theoretical model to an active operational challenge.
“El Niño is no longer this forecasted event; we’re seeing it now,” Hooper says. “We’re reaching near-record levels of what this looks like. If you haven’t started planning already, I think the window might already be gone.”
Moving Beyond Historical Forecasting Models
For supermarket operators, traditional demand planning relies on historical sales trends, but decade-old metrics fail to predict modern, climate-driven yield shocks. When severe weather impacts primary growing regions like Florida or California’s Central Valley, grocers must execute alternative sourcing strategies immediately.
“If you haven’t already started planning, that gives you a lot less wiggle room in how you can start thinking about alternate sourcing or alternate forecasting capabilities,” Hooper says.
Rather than absorbing severe inventory shortages or leaving produce fixtures empty, retailers are taking a proactive approach to merchandising. One effective tactic involves altering promotional strategies to highlight crops with reliable, steady supply streams. By placing heavy discounts on available items — such as avocados sourced from alternative regions — grocers can influence shopper behavior to protect inventory levels on constrained items.
Hooper describes this strategy as leveraging “favorable cannibalization” to manage consumer demand.
“If I knock a dollar off of this, what does that do to the cannibalization of products that are supply constrained?” Hooper says. “In this case, it’s a favorable cannibalization because I want to cull some of that demand when we don’t know what the supply is going to look like.”
Protecting Staple Pricing and Store Margins
Navigating input cost increases without alienating inflation-weary shoppers presents another critical challenge. When extreme weather events drive up wholesale costs, retailers carefully isolate everyday essential staples, known in the industry as key value items (KVIs). Grocers work to lock in shelf pricing on KVIs to maintain consumer trust and protect market share, choosing instead to absorb margin losses on those specific products.
To make up for lost margin on staple produce, retailers look for favorable price elasticity across other areas of their store.
“Certain things are very sensitive, so to the best of our ability, we want to lock those things in so we’re not scaring customers away or sending them to competitors,” Hooper says. “If I’m losing margin on my KVIs, where is the price elasticity favorable with other products? Some of that lands within produce, but some won’t be produce-related. So again, we can prioritize produce and the margin.”
Building Supplier Networks for Operational Buffers
Beyond pricing and promotions, climate volatility is pushing grocery chains to re-evaluate their fundamental sourcing structures. Relying exclusively on substantial, centralized growing nodes leaves retail supply chains vulnerable to weather disruptions and regional product recalls. As a result, retailers are actively expanding their vendor networks to include secondary, tertiary and smaller regional growers to act as operational buffers.
“It’s become more important than ever that I have a wider array of suppliers that I can pivot between,” Hooper says. “That is kind of putting the onus back on the retailers to foster these relationships to work with smaller mom-and-pop independents and make sure that some of those expectations and what their demand and supply needs are going to look like are being communicated.”
Embracing Technology and Supply Chain Agility
Managing these complex operational shifts requires supply chain technology that can process weather regressors and replenishment data without relying on outdated patterns. Advanced deterministic forecasting engines provide solid baseline metrics, while modern agentic AI tools help planning teams filter out operational noise.
Ultimately, technology serves as an enabler for human decision-making rather than a complete replacement. In an environment where global supply chains are deeply interconnected, flexibility has become the definitive competitive advantage for fresh food retailers.
“Disruption in some capacity is now the baseline,” Hooper says. “Even the best plan rarely survives first contact with reality, right? So, as a retailer, I think you need to be comfortable being uncomfortable. And I think a large part of that has to do with your technology stack.”
