Key CPG Industry Challenges and Solutions in 2025

The consumer packaged goods (CPG) industry is undergoing rapid transformation. Shifting consumer expectations, rising costs, and increasing competition have made retail execution more complex than ever.  

For CPG brands, success no longer depends solely on product quality or brand recognition; it relies on how effectively products are represented on shelves. The global CPG market is projected to reach USD 2246.8 billion in 2025 at a CAGR of 3%, indicating the need for brands to recognize the importance of data-driven insights to make decisions in real time. 

By utilizing AI-powered solutions, CPG companies can ensure their products are always visible, correctly placed, and compliant with merchandising guidelines in physical stores. However, as market dynamics evolve, these challenges continue to intensify, requiring brands to adopt innovative solutions to maintain a competitive advantage. 

In a nutshell:

• Adapting to Consumer Preferences: Brands must continuously adjust products and placement to align with changing trends and consumer expectations.
• Optimizing Shelf Visibility: Proper display, planogram compliance, and competitive positioning are essential for a strong in-store presence.
• Managing Costs and Innovation: Efficient monitoring ensures accurate pricing, smooth SKU rotation, and better handling of short product life cycles.
• Leveraging Data and Technology: AI and analytics provide real-time insights, helping teams maintain compliance and improve shelf execution.

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7 Key Challenges Impacting CPG Brands in 2025

The retail shelf is where the consumer first interacts with a brand, and this is where many CPG brands face their toughest challenges. From keeping products visible to ensuring compliance with planograms, brands must manage multiple variables to achieve consistent shelf execution across stores. 

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Below are the seven key challenges shaping the industry in 2025 and practical ways to address them.

1. Evolving Consumer Preferences

Retail shelves must adapt to changing product trends and seasonal offerings. Products that are not prominently displayed or fail to meet planogram standards risk losing valuable shelf space.

This constant evolution forces CPG companies to adapt their in-store strategies frequently. Failing to align with consumer preferences can result in lost sales, underperforming SKUs, and missed opportunities for brand growth.

Potential Solutions

• Monitor On-Shelf Availability: Regularly review which SKUs are consistently available and visible to ensure products meet consumer demand.
• Optimize Product Placement: Adjust placement strategies based on performance trends and in-store observations to enhance visibility.
• Adjust Offerings Dynamically: Ensure top-selling products are prioritized on the shelf to align with evolving preferences and maximize purchase likelihood.
  
  

2. Digital Shelf Visibility and Brand Competition

Competition on the shelf is intense. Products can be overshadowed by competitors if planograms are inconsistently executed or shelf data isn’t updated in real time.

Without precise data on shelf conditions, it is challenging to ensure that every product receives the attention it deserves.

Ideal Solutions

• Identify Execution Gaps: Regularly check for misplaced or missing products to ensure each SKU is presented according to plan.
• Regular Shelf Audits: Conduct frequent checks to verify that products are displayed according to the intended planograms.
• Monitor Market Presence: Monitor competitor product placements and adjust your own shelf strategy to maintain visibility.
  
  

3. Rising Costs and Inflation

Increased production, distribution, and in-store costs are a major concern for CPG brands. Price adjustments can disrupt promotions or cause inconsistencies if not monitored accurately across stores.

Managing these changes while ensuring that every store reflects pricing accuracy and promotional compliance is a major challenge.

Proven Solutions

• Verify Promotional Accuracy: Ensure that discounts, offers, and price tags match intended marketing campaigns.
• Standardize Pricing Checks: Regular checks at the store level help identify mismatched pricing before it impacts sales.
• Cost-Efficient Auditing: Implement streamlined monitoring practices that reduce time spent on manual shelf checks.

Also Read: How CPG Brands Can Transform COGS with Better Shelf Intelligence

4. Product Innovation Fatigue and Shorter Life Cycles

The pace of innovation in CPG is relentless. Brands frequently launch new SKUs, limited editions, or promotional packs. While innovation drives growth, it also creates challenges in keeping every product visible and well-placed.

Shorter product life cycles also leave little room for optimisation, increasing the risk of underperforming launches.

Practical Solutions

• Track New SKU Placements: Keep track of recently launched products to make sure they are on the right shelves.
• Monitor product Rotation: Ensure older or seasonal products are rotated out to avoid overcrowded shelves.
• Review Product Performance: Analyze sales and placement data to adjust strategies for fast- or slow-selling products.

Also Read: How Are CPGs Addressing In-Store Product Availability Challenges in 2025

5. Workforce and Talent Challenges

Field teams responsible for retail execution often run into everyday challenges such as limited manpower, inconsistent training, and high turnover. These challenges can cause delays in audits or corrective actions.

Simple Solutions

• Simplify Audit Processes: Create uniform guidelines for field teams to follow, ensuring consistent shelf monitoring.
• Prioritize High-Impact Stores: Assign manpower strategically to focus on stores with the most sales potential or compliance issues.
• Utilize Time-Saving Tools: Use structured methods to reduce repetitive tasks, allowing teams to spend more time on corrective actions.
  
  

6. Data, Analytics, and AI Adoption Gaps

Many CPG brands recognize the value of AI and data analytics, but struggle to adopt them effectively at the shelf level. Traditional methods, such as manual audits or basic reporting tools, don’t give accurate, real-time insights that teams need to act quickly.

Actionable Solutions

• Real-Time Alerts: Set up instant notifications for any issues with product placement, stock visibility, or promotional execution.
• Focus on Actionable KPIs: Track on-shelf stock, share of shelf, and planogram compliance to make informed in-store decisions.
• Centralized Data Access: Bring all shelf information into one place so teams can easily track compliance and visibility across locations.

Read more: Exploring the Impact of AI Tools on the CPG Industry.

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7. Regulatory Compliance and Management

CPG brands often operate in highly regulated industries, such as OTC pharmaceuticals or packaged foods, where compliance with labeling, placement, and display regulations is mandatory. Keeping every store compliant can be very challenging without precise monitoring.

Viable Solutions

• Regular Compliance Checks: Conduct frequent checks to ensure products meet placement, labeling, and display requirements.
• Document Compliance Issues: Keep clear records of any deviations and the corrective actions taken to lower regulatory risks.
• Train Field Teams on Standards: Ensure that all staff are familiar with regulatory requirements to avoid mistakes in stores.

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How ParallelDots Can Help CPG Brands to Overcome These Challenges?

The challenges faced by CPG brands are complex, but the solution lies in accurate, actionable data from the shelf itself. ParallelDots bridges the gap between store strategy and on-ground execution through AI-powered shelf intelligence solutions that give brands full control over visibility, compliance, and performance.

Below is how our technology helps CPG teams address each of these key challenges effectively.

1. Tackling Evolving Consumer Preferences with Real-Time Shelf Monitoring
With ShelfWatch, brands can continuously monitor on-shelf availability and product placement across thousands of stores. This helps identify which SKUs align with current consumer trends and ensures top-performing products are always visible. Dynamic placement recommendations also help brands adapt quickly to changing preferences and seasonal demand.

2. Strengthening Digital Shelf Visibility and Staying Competitive
Through planogram compliance tracking, Paralleldots ShelfWatch verifies whether each SKU is displayed according to the planogram. Deviations are flagged immediately, allowing field teams to correct them on-site. This consistent execution across stores helps brands maintain optimal visibility and safeguard their share of shelf against competitors.

3. Managing Rising Costs and Inflation with Smarter Auditing
ParallelDots’ automated shelf audits reduce manual workload and improve efficiency. With AI-generated insights, CPG teams can verify pricing compliance and promotional accuracy across multiple stores, minimising errors, cutting unnecessary travel time, and lowering auditing costs while keeping execution consistent.

4. Keeping Pace with Product Innovation and Shorter Life Cycles
With Saarthi, ParallelDots enables rapid SKU integration within 48 hours of product launch. This ensures every new or seasonal item is recognised, tracked, and properly displayed on shelves. Brands can seamlessly manage product rotations and avoid gaps in visibility, keeping innovation from becoming an execution challenge.

5. Overcoming Workforce and Talent Challenges with Automation
ParallelDots’ AI solutions empower field teams with actionable insights and visual guidance. Instead of spending hours collecting data, agents can focus on corrective actions that matter most. Streamlined dashboards and mobile accessibility make it easier to maintain consistency, even with smaller or less experienced teams.

6. Data-Driven Decision Making
Access to accurate shelf-level KPIs helps marketing and sales teams make informed decisions about product placement, promotions, and inventory prioritization. This leads to smarter, more responsive retail execution that keeps brands aligned with both market demand and regulatory requirements.

7. Ensuring Regulatory Compliance and Accurate Documentation
Through continuous monitoring and visual verification, brands can ensure compliance with product placement, labelling, and display standards. ShelfWatch enables automatic documentation of deviations, supporting both regulatory readiness and brand consistency across locations.

With ParallelDots, achieving perfect store execution becomes effortless and measurable. Request a demo today to see how your brand can gain full control over on-shelf visibility, compliance, and promotional execution.

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Frequently Asked Questions

1. What strategies help CPG companies deal with shifting consumer preferences?

CPG brands can use data analytics and in-store insights to track trends and adjust product placement accordingly. Agile merchandising, regular planogram reviews, and responsive in-store promotions help ensure products are appealing and accessible to shoppers.

2. How can smaller CPG players remain competitive against larger global brands?

Smaller CPG players can focus on niche store formats, emphasize unique product offerings, and leverage agility to adjust in-store displays quickly. Collaborating with local retailers and maintaining strong shelf visibility helps create shopper recognition and loyalty.

3. What solutions exist for reducing out-of-stock and on-shelf availability issues?

CPG brands can leverage AI-driven shelf monitoring and in-store audits to ensure products are visible and placed correctly. Regular planogram checks and merchandising reviews help maintain on-shelf availability and a strong in-store presence, minimising gaps and maximising sales opportunities.

4. How can CPG brands ensure price compliance across retail channels?

Brands should focus on in-store price compliance by conducting regular audits and coordinating closely with retailers to maintain consistent pricing on shelves. This ensures brand value is protected and shoppers encounter the intended pricing in physical stores.