CPG-Retail

CPG and Retail Industry Trends and Outlook for 2025-2026

Ankit Singh
July 18, 2025
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The Consumer Packaged Goods (CPG) and retail sectors are facing a pivotal moment as they enter 2025. After years of rapid price increases and inflationary pressures, the industry is now dealing with the aftermath—slower sales growth and shifting consumer behaviors. As price hikes reach their limits, CPG brands are grappling with stagnant volume growth, prompting them to reassess their strategies and explore new opportunities. A major hurdle is the need for digital transformation to stay competitive in a marketplace that is increasingly driven by technology and evolving consumer expectations.

In this article, we will explore the key trends shaping the CPG and retail landscape for 2025-2026, including the rise of AI, the growing importance of digital-first strategies, and how DTC models are reshaping the industry. We will also discuss how CPG brands can optimize their retail strategies to remain competitive, improve on-shelf availability, and drive sustainable growth. 

Key Takeaways

  • Slower Growth in the CPG Sector: The CPG sector is experiencing slower growth, with modest volume increases expected through 2025. Brands must adapt to these shifts and focus on optimizing in-store performance to maintain growth.
  • Rise of Direct-to-Consumer (DTC) Models: DTC models are rapidly growing, offering brands opportunities to capture more consumer data, enhance personalization, and build stronger customer relationships. The U.S. DTC market is projected to reach $186 billion by 2025.
  • AI Revolutionizing CPG and Retail: AI is revolutionizing the CPG and retail sectors by enabling more accurate demand forecasting, enhancing customer experiences, and streamlining in-store operations. Real-time shelf monitoring and automated planogram compliance are key to staying competitive.
  • Sustainability Driving Market Growth: Sustainability trends are driving the growth of challenger CPG brands. Companies that focus on eco-friendly products and sustainability can gain a significant market share by meeting the growing consumer demand for ethical and responsible products.

‍

Current Landscape of the CPG and Retail Industry

While both CPG brands and retailers play integral roles in the retail ecosystem, they also face a series of challenges, driven by slow sales growth, changing consumer preferences, and rising operational costs. To navigate these pressures, brands must adopt innovative solutions and adapt to the evolving retail landscape. Here’s a breakdown of the industry’s current scenario:

1. Sales Growth Slowdown and Modest Volume Gains: While the overall market continues to grow, the rate of growth has slowed, with modest volume increases expected through 2025. According to McKinsey, the global growth rate in the consumer goods sector has slowed to approximately 1-2% annually, down from the 3-4% growth rates seen before the pandemic. This means CPG brands must find new ways to enhance their in-store performance and ensure optimal on-shelf availability, strategically positioning their products in high-traffic areas to attract consumer attention and drive sales.

2. Challenges of Unsustainable Price Increases: Rising production costs and inflation have compelled many brands to raise their prices, yet this often results in consumer resistance. In fact, according to NielsenIQ, 53% of consumers reported that they are more price-conscious than before, with many actively seeking out deals, making it difficult for CPG brands to pass on cost increases simply. To maintain competitive pricing, CPG brands must leverage consumer data insights to refine their pricing strategies and ensure they don’t alienate cost-sensitive shoppers.

3. The Importance of In-Store Digital Transformation and Technology Integration: As consumer expectations evolve, the need for seamless in-store experiences has become crucial. With more shoppers relying on digital tools to guide their purchase decisions, CPG brands must leverage technology to enhance their in-store strategies. By implementing real-time data solutions to track product placement, stock levels, and consumer behaviors, brands can streamline their in-store operations. 

By understanding and responding to these current challenges, CPG brands and retailers can better position themselves for success in the evolving retail landscape, using technology and data to stay competitive and relevant in an increasingly crowded marketplace.

‍

Key Trends Shaping the CPG and Retail Industry

In the world of CPG and retail, emerging trends are reshaping how products are placed, marketed, and sold. Below are the key trends shaping the industry:

1. Growth of Direct-to-Consumer (DTC) Models

The DTC model continues to gain momentum, disrupting traditional retail by enabling brands to sell directly to consumers through their own platforms, thereby bypassing third-party intermediaries. This shift not only helps brands capture more consumer data but also strengthens customer relationships and enables personalized shopping experiences. According to a report by Statista, the DTC market in the U.S. is expected to reach $186 billion by 2025. To remain competitive, CPG brands must focus on leveraging their digital presence and integrating in-store placement strategies with their DTC efforts to meet the demands of digitally-savvy consumers.

2. Emergence of New CPG Challenger Brands & Sustainability Trends

Challenger brands in the CPG sector are increasingly driven by sustainability and health-conscious trends. These agile brands are quickly capitalizing on the growing consumer preference for eco-friendly and ethically sourced products. In fact, a recent survey revealed that 66% of U.S. consumers are willing to pay more for sustainable products, indicating a growing demand for brands that prioritize sustainability in their sourcing, packaging, and production processes. This trend, particularly strong in categories like plant-based and organic products, creates significant opportunities for challenger brands to capture market share and challenge established competitors. CPG companies focusing on sustainability can strengthen their appeal to environmentally conscious consumers, driving both loyalty and growth.

3. Shift Toward Private Label and Value-Seeking Goods

A significant trend in the CPG sector is the growing preference for private label products, as consumers seek better value without compromising on quality. According to NIQ’s Mid-Year Consumer Outlook: Guide to 2025, 50% of global consumers are purchasing more private label products than ever before. This trend is particularly strong in markets such as Germany (61%), Saudi Arabia (59%), India (56%), and Colombia (56%), surpassing the global average. As consumers increasingly opt for store brands, CPG companies must focus on strategically placing these products in high-traffic, visible areas to capture the growing demand.

4. Shifts in Regulations and Compliance 

As global regulatory frameworks evolve, CPG brands face increased pressure to comply with changing standards, including those related to product safety, environmental impact, and data privacy laws. This has led brands to invest in regulatory technology to stay ahead of compliance requirements. As consumers become increasingly concerned about transparency and corporate responsibility, staying compliant with evolving regulations is crucial for maintaining consumer trust and mitigating legal risks.

5. Loyalty Programs and Subscriptions

As retaining consumer loyalty becomes more challenging, many CPG brands are turning to subscription models and personalized loyalty programs to enhance customer engagement. These programs offer exclusive benefits, including discounts, early access to new products, and special offers, which not only enhance brand loyalty but also improve customer retention. According to Paytronix's Annual Loyalty Report 2024, 66% of convenience stores and 57% of restaurants already offer loyalty programs, showcasing their growing importance in the retail landscape. By integrating these programs into their strategies, CPG brands can foster direct, long-term relationships with consumers, driving increased lifetime value and reducing churn.

‍

Role of Technology for CPGs and Retailers

Technology is the backbone of innovation and operational efficiency in the CPG and retail sectors. As brands strive to meet consumer demands in a rapidly evolving market, technology plays an important role in streamlining processes, enhancing customer experiences, and driving more effective retail execution. Here's a look at how different technologies are reshaping the industry:

Adoption and Impact of Artificial Intelligence

Artificial Intelligence (AI) is transforming how CPG brands manage retail execution, with 86% of C-suite leaders planning to increase investment in generative AI in 2025, recognizing its potential to drive positive business impact. AI tools help brands predict demand, optimize shelf placement, and automate compliance checks in real-time, ensuring that products are always available and placed correctly. AI’s ability to automate these processes ensures that brands can scale their in-store operations with speed and accuracy, reducing reliance on manual audits and improving overall execution.

Analytics for Demand Forecasting and Consumer Insights

AI-driven forecasting is transforming how CPG brands approach demand prediction and promotional planning—even in data-limited environments. Instead of relying solely on manual updates and historical trends, brands are applying machine learning models that adapt to real-time shelf data and external variables, such as weather or regional foot traffic. 

These models don’t just react to changes; they anticipate them. This means fewer stockouts, more accurate sales forecasts, and better-aligned promotions. For CPG teams, this shift leads to stronger on-shelf availability and smarter promotional timing, even when internal data is limited. 

Integration of AI in Enhancing Customer Experiences

AI plays a critical role in transforming in-store customer interactions, allowing brands to improve product placement and optimize shelf visibility in real-time. By leveraging AI and big data, CPG brands can make data-driven decisions on how products are positioned based on consumer behavior patterns and demand forecasting. This ensures products are always available and visible where consumers are most likely to make a purchase, creating a seamless and engaging shopping experience. As consumer expectations continue to evolve, integrating AI into retail execution strategies is essential for maintaining competitiveness and ensuring better customer experiences.

ParallelDots offers AI-driven solutions that enable CPG brands and retailers to optimize on-shelf availability and product placement. With tools like real-time shelf monitoring, automated compliance checks, and predictive analytics, ParallelDots helps streamline in-store execution for CPGs and retailers.

‍

Challenges and Opportunities in the CPG Sector

The CPG sector faces numerous challenges in optimizing retail execution; however, these challenges also present significant opportunities. Here’s a look at what CPG brands must consider when planning for future growth:

The challenges outlined above highlight the complexities CPG brands must navigate to stay competitive in the evolving retail landscape. However, the opportunities to innovate, expand into new markets, and leverage advanced technologies like AI and data analytics provide a clear path forward.

‍

Projected Growth and Future Outlook

The future outlook for the CPG retail sector is promising, with significant opportunities for growth despite ongoing challenges. As consumer expectations evolve and market dynamics shift, CPG brands are increasingly turning to digital transformation and technology-driven solutions to stay competitive. 

This digital evolution presents brands with the opportunity to reinvent their business models, particularly through the integration of personalized consumer experiences, streamlined operations, and more agile supply chains that can respond quickly to market changes. 

Agility will be a key factor in future growth, as brands that can adapt swiftly to evolving consumer preferences and changing retail environments will be better positioned to succeed. 

Additionally, anticipated trends such as increased investments in AI, data analytics, and real-time shelf monitoring will continue to shape the industry, enabling brands to optimize their product placement, forecast demand accurately, and ensure consistent on-shelf availability. By embracing these technologies, CPG brands can drive improved performance and higher return on investment, ultimately leading to a more effective and profitable retail strategy.

‍

How Does ParallelDots Help CPG Brands with On-Shelf Monitoring and In-Store Execution?

ParallelDots offers powerful AI-driven tools to optimize your retail execution. By leveraging real-time shelf monitoring, predictive analytics, and automated planogram compliance checks, ParallelDots enables CPG brands to ensure that their products are consistently visible, correctly placed, and ready for purchase. With features like SKU-level product recognition and seamless integration into existing systems, ParallelDots makes it easy to monitor and optimize in-store performance.

Key features include:

‍

Conclusion

The CPG retail sector is evolving rapidly, driven by consumer demand for convenience, personalized experiences, and technology-enabled solutions. By embracing AI-driven tools and data-backed strategies, CPG brands can optimize product placement, enhance shelf visibility, and create a more effective in-store experience. ParallelDots' AI-powered solutions provide brands with the tools they need to monitor in-store execution, streamline operations, and remain competitive in a rapidly evolving retail landscape.

To learn how ParallelDots can help you optimize your product placement and enhance in-store execution, schedule a demo today!

‍

FAQs

1. What is planogram compliance, and why is it important for CPG brands?
 Planogram compliance ensures that products are displayed according to a predefined layout, optimizing shelf space and enhancing product visibility, which drives higher sales.

2. How does AI help with planogram compliance?
 AI uses computer vision and machine learning to monitor product placement in real-time, ensuring products are in the correct positions, complying with planograms, and maximizing shelf space.

3. What role does technology play in improving shelf visibility?
Technology, including AI-driven tools like ParallelDots, helps brands monitor and optimize shelf placement, ensuring that products are always visible, available, and in the right location to boost sales.

4. How can CPG brands optimize their retail execution?
 CPG brands can use AI-powered tools to track product availability, ensure compliance with planograms, optimize pricing, and monitor the effectiveness of in-store promotions, ultimately improving store performance.

5. What benefits does ParallelDots provide for CPG brands?
 ParallelDots offers real-time shelf data, automated planogram compliance, SKU-level product recognition, and inventory tracking to optimize product placement and enhance in-store execution.

‍

The Consumer Packaged Goods (CPG) and retail sectors are facing a pivotal moment as they enter 2025. After years of rapid price increases and inflationary pressures, the industry is now dealing with the aftermath—slower sales growth and shifting consumer behaviors. As price hikes reach their limits, CPG brands are grappling with stagnant volume growth, prompting them to reassess their strategies and explore new opportunities. A major hurdle is the need for digital transformation to stay competitive in a marketplace that is increasingly driven by technology and evolving consumer expectations.

In this article, we will explore the key trends shaping the CPG and retail landscape for 2025-2026, including the rise of AI, the growing importance of digital-first strategies, and how DTC models are reshaping the industry. We will also discuss how CPG brands can optimize their retail strategies to remain competitive, improve on-shelf availability, and drive sustainable growth. 

Key Takeaways

  • Slower Growth in the CPG Sector: The CPG sector is experiencing slower growth, with modest volume increases expected through 2025. Brands must adapt to these shifts and focus on optimizing in-store performance to maintain growth.
  • Rise of Direct-to-Consumer (DTC) Models: DTC models are rapidly growing, offering brands opportunities to capture more consumer data, enhance personalization, and build stronger customer relationships. The U.S. DTC market is projected to reach $186 billion by 2025.
  • AI Revolutionizing CPG and Retail: AI is revolutionizing the CPG and retail sectors by enabling more accurate demand forecasting, enhancing customer experiences, and streamlining in-store operations. Real-time shelf monitoring and automated planogram compliance are key to staying competitive.
  • Sustainability Driving Market Growth: Sustainability trends are driving the growth of challenger CPG brands. Companies that focus on eco-friendly products and sustainability can gain a significant market share by meeting the growing consumer demand for ethical and responsible products.

‍

Current Landscape of the CPG and Retail Industry

While both CPG brands and retailers play integral roles in the retail ecosystem, they also face a series of challenges, driven by slow sales growth, changing consumer preferences, and rising operational costs. To navigate these pressures, brands must adopt innovative solutions and adapt to the evolving retail landscape. Here’s a breakdown of the industry’s current scenario:

1. Sales Growth Slowdown and Modest Volume Gains: While the overall market continues to grow, the rate of growth has slowed, with modest volume increases expected through 2025. According to McKinsey, the global growth rate in the consumer goods sector has slowed to approximately 1-2% annually, down from the 3-4% growth rates seen before the pandemic. This means CPG brands must find new ways to enhance their in-store performance and ensure optimal on-shelf availability, strategically positioning their products in high-traffic areas to attract consumer attention and drive sales.

2. Challenges of Unsustainable Price Increases: Rising production costs and inflation have compelled many brands to raise their prices, yet this often results in consumer resistance. In fact, according to NielsenIQ, 53% of consumers reported that they are more price-conscious than before, with many actively seeking out deals, making it difficult for CPG brands to pass on cost increases simply. To maintain competitive pricing, CPG brands must leverage consumer data insights to refine their pricing strategies and ensure they don’t alienate cost-sensitive shoppers.

3. The Importance of In-Store Digital Transformation and Technology Integration: As consumer expectations evolve, the need for seamless in-store experiences has become crucial. With more shoppers relying on digital tools to guide their purchase decisions, CPG brands must leverage technology to enhance their in-store strategies. By implementing real-time data solutions to track product placement, stock levels, and consumer behaviors, brands can streamline their in-store operations. 

By understanding and responding to these current challenges, CPG brands and retailers can better position themselves for success in the evolving retail landscape, using technology and data to stay competitive and relevant in an increasingly crowded marketplace.

‍

Key Trends Shaping the CPG and Retail Industry

In the world of CPG and retail, emerging trends are reshaping how products are placed, marketed, and sold. Below are the key trends shaping the industry:

1. Growth of Direct-to-Consumer (DTC) Models

The DTC model continues to gain momentum, disrupting traditional retail by enabling brands to sell directly to consumers through their own platforms, thereby bypassing third-party intermediaries. This shift not only helps brands capture more consumer data but also strengthens customer relationships and enables personalized shopping experiences. According to a report by Statista, the DTC market in the U.S. is expected to reach $186 billion by 2025. To remain competitive, CPG brands must focus on leveraging their digital presence and integrating in-store placement strategies with their DTC efforts to meet the demands of digitally-savvy consumers.

2. Emergence of New CPG Challenger Brands & Sustainability Trends

Challenger brands in the CPG sector are increasingly driven by sustainability and health-conscious trends. These agile brands are quickly capitalizing on the growing consumer preference for eco-friendly and ethically sourced products. In fact, a recent survey revealed that 66% of U.S. consumers are willing to pay more for sustainable products, indicating a growing demand for brands that prioritize sustainability in their sourcing, packaging, and production processes. This trend, particularly strong in categories like plant-based and organic products, creates significant opportunities for challenger brands to capture market share and challenge established competitors. CPG companies focusing on sustainability can strengthen their appeal to environmentally conscious consumers, driving both loyalty and growth.

3. Shift Toward Private Label and Value-Seeking Goods

A significant trend in the CPG sector is the growing preference for private label products, as consumers seek better value without compromising on quality. According to NIQ’s Mid-Year Consumer Outlook: Guide to 2025, 50% of global consumers are purchasing more private label products than ever before. This trend is particularly strong in markets such as Germany (61%), Saudi Arabia (59%), India (56%), and Colombia (56%), surpassing the global average. As consumers increasingly opt for store brands, CPG companies must focus on strategically placing these products in high-traffic, visible areas to capture the growing demand.

4. Shifts in Regulations and Compliance 

As global regulatory frameworks evolve, CPG brands face increased pressure to comply with changing standards, including those related to product safety, environmental impact, and data privacy laws. This has led brands to invest in regulatory technology to stay ahead of compliance requirements. As consumers become increasingly concerned about transparency and corporate responsibility, staying compliant with evolving regulations is crucial for maintaining consumer trust and mitigating legal risks.

5. Loyalty Programs and Subscriptions

As retaining consumer loyalty becomes more challenging, many CPG brands are turning to subscription models and personalized loyalty programs to enhance customer engagement. These programs offer exclusive benefits, including discounts, early access to new products, and special offers, which not only enhance brand loyalty but also improve customer retention. According to Paytronix's Annual Loyalty Report 2024, 66% of convenience stores and 57% of restaurants already offer loyalty programs, showcasing their growing importance in the retail landscape. By integrating these programs into their strategies, CPG brands can foster direct, long-term relationships with consumers, driving increased lifetime value and reducing churn.

‍

Role of Technology for CPGs and Retailers

Technology is the backbone of innovation and operational efficiency in the CPG and retail sectors. As brands strive to meet consumer demands in a rapidly evolving market, technology plays an important role in streamlining processes, enhancing customer experiences, and driving more effective retail execution. Here's a look at how different technologies are reshaping the industry:

Adoption and Impact of Artificial Intelligence

Artificial Intelligence (AI) is transforming how CPG brands manage retail execution, with 86% of C-suite leaders planning to increase investment in generative AI in 2025, recognizing its potential to drive positive business impact. AI tools help brands predict demand, optimize shelf placement, and automate compliance checks in real-time, ensuring that products are always available and placed correctly. AI’s ability to automate these processes ensures that brands can scale their in-store operations with speed and accuracy, reducing reliance on manual audits and improving overall execution.

Analytics for Demand Forecasting and Consumer Insights

AI-driven forecasting is transforming how CPG brands approach demand prediction and promotional planning—even in data-limited environments. Instead of relying solely on manual updates and historical trends, brands are applying machine learning models that adapt to real-time shelf data and external variables, such as weather or regional foot traffic. 

These models don’t just react to changes; they anticipate them. This means fewer stockouts, more accurate sales forecasts, and better-aligned promotions. For CPG teams, this shift leads to stronger on-shelf availability and smarter promotional timing, even when internal data is limited. 

Integration of AI in Enhancing Customer Experiences

AI plays a critical role in transforming in-store customer interactions, allowing brands to improve product placement and optimize shelf visibility in real-time. By leveraging AI and big data, CPG brands can make data-driven decisions on how products are positioned based on consumer behavior patterns and demand forecasting. This ensures products are always available and visible where consumers are most likely to make a purchase, creating a seamless and engaging shopping experience. As consumer expectations continue to evolve, integrating AI into retail execution strategies is essential for maintaining competitiveness and ensuring better customer experiences.

ParallelDots offers AI-driven solutions that enable CPG brands and retailers to optimize on-shelf availability and product placement. With tools like real-time shelf monitoring, automated compliance checks, and predictive analytics, ParallelDots helps streamline in-store execution for CPGs and retailers.

‍

Challenges and Opportunities in the CPG Sector

The CPG sector faces numerous challenges in optimizing retail execution; however, these challenges also present significant opportunities. Here’s a look at what CPG brands must consider when planning for future growth:

The challenges outlined above highlight the complexities CPG brands must navigate to stay competitive in the evolving retail landscape. However, the opportunities to innovate, expand into new markets, and leverage advanced technologies like AI and data analytics provide a clear path forward.

‍

Projected Growth and Future Outlook

The future outlook for the CPG retail sector is promising, with significant opportunities for growth despite ongoing challenges. As consumer expectations evolve and market dynamics shift, CPG brands are increasingly turning to digital transformation and technology-driven solutions to stay competitive. 

This digital evolution presents brands with the opportunity to reinvent their business models, particularly through the integration of personalized consumer experiences, streamlined operations, and more agile supply chains that can respond quickly to market changes. 

Agility will be a key factor in future growth, as brands that can adapt swiftly to evolving consumer preferences and changing retail environments will be better positioned to succeed. 

Additionally, anticipated trends such as increased investments in AI, data analytics, and real-time shelf monitoring will continue to shape the industry, enabling brands to optimize their product placement, forecast demand accurately, and ensure consistent on-shelf availability. By embracing these technologies, CPG brands can drive improved performance and higher return on investment, ultimately leading to a more effective and profitable retail strategy.

‍

How Does ParallelDots Help CPG Brands with On-Shelf Monitoring and In-Store Execution?

ParallelDots offers powerful AI-driven tools to optimize your retail execution. By leveraging real-time shelf monitoring, predictive analytics, and automated planogram compliance checks, ParallelDots enables CPG brands to ensure that their products are consistently visible, correctly placed, and ready for purchase. With features like SKU-level product recognition and seamless integration into existing systems, ParallelDots makes it easy to monitor and optimize in-store performance.

Key features include:

‍

Conclusion

The CPG retail sector is evolving rapidly, driven by consumer demand for convenience, personalized experiences, and technology-enabled solutions. By embracing AI-driven tools and data-backed strategies, CPG brands can optimize product placement, enhance shelf visibility, and create a more effective in-store experience. ParallelDots' AI-powered solutions provide brands with the tools they need to monitor in-store execution, streamline operations, and remain competitive in a rapidly evolving retail landscape.

To learn how ParallelDots can help you optimize your product placement and enhance in-store execution, schedule a demo today!

‍

FAQs

1. What is planogram compliance, and why is it important for CPG brands?
 Planogram compliance ensures that products are displayed according to a predefined layout, optimizing shelf space and enhancing product visibility, which drives higher sales.

2. How does AI help with planogram compliance?
 AI uses computer vision and machine learning to monitor product placement in real-time, ensuring products are in the correct positions, complying with planograms, and maximizing shelf space.

3. What role does technology play in improving shelf visibility?
Technology, including AI-driven tools like ParallelDots, helps brands monitor and optimize shelf placement, ensuring that products are always visible, available, and in the right location to boost sales.

4. How can CPG brands optimize their retail execution?
 CPG brands can use AI-powered tools to track product availability, ensure compliance with planograms, optimize pricing, and monitor the effectiveness of in-store promotions, ultimately improving store performance.

5. What benefits does ParallelDots provide for CPG brands?
 ParallelDots offers real-time shelf data, automated planogram compliance, SKU-level product recognition, and inventory tracking to optimize product placement and enhance in-store execution.

‍

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