The 2025 outlook: Key predictions from industry leaders

Jan 21, 2025 • 5 min

Retailers and consumer goods companies face a challenging landscape as they enter 2025, one shaped by persistent economic pressures, rapid technological change, and fast-evolving consumer behaviors. As we look forward to the coming year, RELEX industry experts examine how the companies they’ve been speaking with are transforming crisis-era adaptability into sustainable growth strategies, even as they tackle inflation, digital transformation, and changing shopper expectations. Their insights reveal how successful organizations are turning challenges into opportunities through smarter planning, technological innovation, and operational excellence.

Amanda Oren, VP of Industry Strategy, Grocery

Rebalancing retail: From crisis response to strategic growth

After years of rapid adaptation – from pandemic pivots to supply chain breakdowns to labor shortages – grocery retailers have built impressive capabilities for agile response. But operating purely in crisis mode isn’t sustainable – or necessary – for 2025. Whether it’s managing through another Panama Canal drought, adapting to Gen Z shopping habits, or navigating the next cold chain disruption, the challenge now is evolving these hard-won agile capabilities into a strategic advantage. Forward-thinking retailers are taking the nimbleness they developed during turbulent times and integrating it into smarter long-term planning.

This means rethinking how grocers operate across the board. Leading retailers are using AI and advanced analytics to connect real-time data with strategic planning — so when they need to adjust labor scheduling due to workforce shortages, rationalize assortments to add prepared foods, or rapidly shift sourcing due to climate impacts, those decisions support rather than derail long-term goals. You won’t have time to spend six months getting something to market because in modern retailing, the opportunity might already be gone by then. The winners in 2025 will be those who successfully merge their new speed with strategic smarts, turning crisis-era adaptability into a foundation for sustainable growth.

Dynamic pricing comes to brick-and-mortar

Dynamic pricing is transforming brick-and-mortar retail in 2025 as AI and digital price tags bring e-commerce-style capabilities to physical stores. Advanced AI systems now integrate real-time demand forecasting, inventory levels, and competitive data to optimize pricing continuously. The key is to ensure that all your fast-changing data is housed within a unified platform that enables the business to continue responding quickly to market signals — but success hinges on consumer trust and transparency.

The key challenge for retailers in 2025 isn’t implementing the technology, but building and maintaining shopper trust. Early dynamic pricing efforts often faced backlash when consumers felt they were being manipulated into paying more. Smart retailers are using end-to-end visibility tools and real-time adjustment capabilities to demonstrate genuine value creation, from better deals during off-peak hours to optimized markdowns that reduce food waste. Those who effectively leverage AI-driven pricing tools while maintaining consistent transparency will turn dynamic pricing from a potential liability into a competitive advantage that benefits both their bottom line and their customers.

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Madhav Durbha, Group Vice President, CPG & Manufacturing

Premium vs. value: Supply chain strategies for a bifurcated economy

2025 will tell a tale of two economies: The Rich Economy of a minority of consumers, for whom stock markets and post-COVID travel and shopping are at all-time highs, and the Value Economy of the majority, who struggle to pay bills and fill gas tanks, and are gravitating towards value channels.

Fortunately, supply chain optimization leads to outcomes that appeal to each of these distinct consumer groups. For one group, optimization leads to reduced emissions and environmental sustainability, a brand differentiator that generates good will, consumer loyalty, and possibly even premium pricing. For the other, that same optimization improves operational costs enough to maintain low prices — and any associated waste reduction is an added bonus, accretive to the bottom line. Companies need to make smart business decisions that ultimately impact and appeal to a range of shopping segments.

Defending margins in an inflationary market

Though not quite as high compared to the recent years retailers and manufacturers still navigate persistent inflationary pressures in 2025. They face sizeable challenges in maintaining profitability while meeting consumer expectations. Major manufacturers are grappling with rising input costs they can’t fully pass on to price-sensitive consumers, leading to widespread adoption of “shrinkflation” strategies. Meanwhile, retailers are scrutinizing end-to-end costs as they face potential margin erosion, with Forrester predicting grocery retailers could see a 1.5% decline in operating margins this year.

In response, both retailers and manufacturers are fundamentally evolving their operations through AI-driven strategies that enable increased automation, strategic range rationalization, and more focus on waste reduction. Companies are also investing in advanced AI for better visibility of true costs and profits throughout their value chains, recognizing that maintaining competitiveness in this environment requires a more sophisticated understanding of their operational economics. With potential tariff impacts that can risk inflationary pressures, these strategic adaptations are becoming essential rather than optional for maintaining profitability while managing consumer price sensitivity.

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Mark Pettigrew, Industry Strategy Director, Category Management

Less is more: Strategically shrinking retail and CPG assortments

Range rationalization will continue in 2025, with retailers and CPGs strategically refining product variety as they gain deeper insights into true profit drivers. By leveraging advanced analytics to understand the full cost-to-serve across the value chain, businesses can identify which products truly earn their shelf space. This goes beyond simple SKU reduction to consider handling costs, inventory efficiency, and space optimization.

Leading retailers are embracing this shift, having learned during COVID that customers readily adapt to streamlined assortments. In 2025, they’ll use multiple levers – from case pack optimization to complete category rationalization – to create space for assortment innovation at both macro and micro levels. This data-driven approach replaces the traditional “more is more” philosophy with precision assortment engineering that enables rapid response to changing customer needs while improving operational efficiency and profitability.

Digital disruption is reshaping physical retail

The evolution of retail stores into hybrid shopping and fulfillment centers is exposing the limitations of traditional space and assortment tools. While current solutions were built for simple in-store shopping flows, the reality of serving both in-store customers and online fulfillment requires more sophisticated approaches. Retailers face a critical challenge: their space and assortment tools can’t effectively balance shelf space and inventory between in-store shopping and online fulfillment needs.

Leading retailers are beginning to adopt new space and assortment solutions that optimize store mapping for both the shopping experience and picking efficiency, while enabling truly localized assortments that respond to omnichannel demand patterns. This evolution will drive significant business value – reducing fulfillment costs through more efficient store layouts, improving the in-store experience through better space utilization, and increasing sales through assortments that better match local customer preferences across channels. The retailers who adapt their space and assortment capabilities to this new reality will gain a significant competitive advantage in both customer experience and operational efficiency.

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A year for opportunities

As we look ahead to 2025, it’s clear that the retail and consumer goods industries are at an inflection point. The companies poised to succeed are those that can balance competing demands: speed with strategy, premium with value, efficiency with experience. While economic pressures and technological disruption create challenges, they also open opportunities for organizations to reimagine their operations. The winners will be those who can harness advanced analytics and AI not just to react faster, but to make smarter strategic decisions that create lasting competitive advantages and sustainable growth.