AI in trade promotion management: CPG leaders weigh benefits and risks
AI in trade promotion management promises to be a gamechanger, but consumer products companies will need to address AI risks.
With so much change over the past few years within consumer goods—shifting consumer habits, consolidation in the retail grocery space, the rise of private label goods, and spiking commodity prices—the CPG industry has been forced to find new ways to grow. What CPG trends should brands track in 2025 as they create new playbooks for winning market share?
There are some positive signs, including increased consumer optimism and growing retail sales. And by 2030, the global CPG market is expected to reach nearly $245 billion, up from $160.75 billion in 2022.
But consumers have run out of patience with the tactic of raising prices to drive growth, so companies must take a different approach.Here are five key CPG trends for 2025:
- High-quality subscriptions drive loyalty and revenue: In 2025, CPG brands will need to curate subscription experiences and products to boost retention rates.
- Experience-driven commerce: Brands are differentiating themselves by offering unique buying experiences, from virtual stores and try-ons to surprise pop-up shops during holiday seasons.
- Dynamic pricing + real-time personalization: The rise of AI, data analytics, and the resulting real-time personalization has made dynamic pricing a top CPG trend in 2025.
- AI will supercharge product customization, ushering in a new level of personalization: AI and machine learning technologies will help CPG brands predict preferences and customize product offerings, especially in beauty and fashion.
- Conscious consumerism + ethical supply chains: Consumers are thinking hard about how they spend money. In 2025, CPG shoppers will study business processes and supply chains in an effort to buy fewer, high quality products, hoping to reduce waste.
1. High-quality subscriptions propel CPG growth in 2025
Today, there’s a bewildering number of products to choose from online. Subscriptions have become common in recent years, conveniently delivering products to customers’ doorsteps at a regular interval without them having to slog through endless online listings or remembering to reorder.
The subscription box market will grow at a compound annual growth rate of 17.9% from 2024 to 2030, with personalized beauty boxes driving much of this growth, according to Grand View Research.
As the subscription model trends up in 2025, savvy consumer goods can earn reliable, recurring revenue plus a steady stream of customer data to help them create personalized experiences.
Depending on the products offered in the subscription, brands must put in extra effort to surprise and impress consumers. If the offering is a new batch of products in each shipment, customers expect personalized and curated experiences each time. When brands provide this effectively, they can enjoy higher retention rates.
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2. Standing out with unique, immersive commerce experiences
The modern consumer has high expectations. CPG brands can no longer just rely on the strength of their product to attract customers and keep them. They need to offer experiences that set them apart from the competition, making this a top CPG trend in 2025.
From virtual stores and try-ons to surprise pop-up shops during the holiday season, customers drawn to companies that go the extra mile to help them in the buying decision and make the process fun across channels. Brands that use data to provide these innovative experiences are elevating customer loyalty and seeing the benefits in increased customer engagement.
55% of US-based brands and retailers are increasing their investments in immersive experiences, according to Coresight Research. Among their top priorities: virtual events, social shopping, and gamified shopping.
By keeping these experiences on their own digital properties, CPG companies can collect the data from each activation and learn from it for future online offerings and in-person experiences.
3. CPG 2025: Flexible pricing + real-time personalization
Brands have access to more data than ever and when analyzed and acted upon promptly, it can serve as the foundation for pricing and personalized recommendations that are spot-on for each individual customer.
Dynamic pricing has been growing for years in the retail industry, but the rise of AI, data analytics, and the resulting real-time personalization has made it a top CPG trend in 2025. With consumer behavior, demand, and inventory data in hand, brands can offer flexible pricing and personalized offers that make sense for each individual customer.Understanding customers and providing personalized offers at the right time helps mint industry leaders. Personalization leaders grow 10 points faster than laggards in the space, as noted in a study by Boston Consulting Group’s Mark Abraham—these companies put customer satisfaction front and center to continually provide the best customer experiences.
He also found that personalized experiences encourage customers to provide their data willingly—90% of those customers will, compared to the 30% who were presented with generic experiences.
This personalization also extends to marketing. BCG found that personalized marketing can lead to a 5-8x return on investment for CPG companies when compared to blanket marketing campaigns.
For example, when Nike Hong Kong teamed with SAP Emarsys to boost personalization through better segmentation and automation, conversion rates shot up 110%, purchase rates went up by 8%, and website visits increased 33%.
4. AI will supercharge CPG personalization trend
In 2025, AI and machine learning will play a major role in personalizing customer experiences. These technologies help CPG brands predict preferences and create customized product offerings, especially in beauty and fashion.
AI can help with supply chain management, pricing and promotions, messaging, and personalized recommendations with the end goal of creating more customer value.
A McKinsey 2024 survey found that 71% of CPG leaders have adopted AI in at least one business function, up from 42% in 2023. Fifty-six percent use generative AI regularly.
Beauty brands are among those already jumping on the AI trend to offer personalized experiences with tailored product recommendations to boost customer engagement and sales.
BCG found that of the companies that are advanced AI practitioners, 25% of them are using it to set themselves apart from the competition and 24% have been able to use AI as a true source of value creation.
The potential of AI will be fully realized when consumers are presented with customized products they didn’t know they needed, but want to buy.
5. Appealing to the conscious consumer: CPG trend
Consumers want to buy from brands that fit with their values. The conscious consumerism movement takes this a step further and encourages buying fewer, high quality products to reduce waste. This will be a top trend for CPG brands in 2025.
According to an IDC study, 46% of consumers believe that a brand’s sustainability record is an important deciding factor for whom they’ll do business with.
Buyers need transparency to understand how the company sources and approaches their supply chain to build trust. Communicating about fair labor practices used at factories, reducing water consumption, and use of recycled materials are some ways that CPG brands can prove sustainable values and encourage sales from like-minded consumers.
Levi’s is a brand leading the pack in apparel, working to reduce the 85% of textiles that end up in landfills. The brand offers customers the ability to repair damaged products, rework old products into new items, and recycle unwanted products to give them a second life.
Similarly, Unilever has launched initiatives to create a more ethical supply chain and sourcing process in order to protect the environment.
Henkel, a German multinational company, is helping to lead the way in reducing plastic pollution. With a portfolio that includes hair care products, soaps, and laundry detergents, Henkel partners with SAP on its responsible design and production project to offer greener products for its customers.
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How CPG brands will leap ahead in 2025
Customer loyalty has trended down in recent years, as 77% of US consumers changed where, how, and what they bought according to McKinsey and Company. Much of this was due to supply chain disruptions and safety concerns, but the overwhelming fact still stands: consumers need to be catered to to stay loyal.
CPG brands need to stay on top of changing consumer trends to ensure they meet and surpass consumer expectations. That includes presenting products to them when and where they want, and when they need them most.
2025 will be a year of personalization in CPG. Get a head start by using data to provide the experiences customers are after and putting the trends above to work.
