How CPGs use insights to expand products and categories

In 2026, Consumer Packaged Goods (CPG) companies operate at the intersection of profound economic, technological, and regulatory shifts. Inflation continues to deepen a K-shaped consumer divide, while rapid advances in artificial intelligence (AI) and intensifying marketplace regulations demand unprecedented agility and strategic sophistication. Against this backdrop, CPG leaders are leveraging new AI innovations, retail media evolutions, and operational insights to expand product lines and categories while maintaining profitability and compliance.

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Inflation’s Enduring Impact: Navigating the K-Shaped Consumer Divide with Precision

The persistent inflation environment is solidifying a bifurcated consumer landscape, where spending behaviors sharply diverge:

• Higher-income segments increasingly prioritize premium, sustainable, and convenience-enhancing products.
• Lower-income consumers exhibit heightened price sensitivity, opting for trade-downs and value offerings.

In response, CPG companies are doubling down on dual-track pricing and assortment strategies that differentiate product quality, packaging, and portion sizes across channels. This nuanced segmentation is supported by:

• Volumetric forecasting models that leverage granular consumer data to optimize inventory and pricing dynamically.
• Channel-specific promotions that align with demographic and spending profiles, preserving brand equity and market share across economic strata.

This approach balances margin protection with consumer relevance, a critical imperative in a volatile pricing environment.

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AI-Driven Innovation: From Generative Models to Agentic Automation Transforming Commerce

AI remains a cornerstone of CPG innovation, with recent developments expanding its role from analytics to autonomous decision-making:

• Generative AI now synthesizes complex datasets—including historical sales, consumer behavior, competitor pricing, and macroeconomic indicators—to generate dynamic pricing recommendations and optimize product assortments amid inflation volatility.
• Agentic AI systems are increasingly automating wholesale distribution, personalized product discovery, and real-time promotional adjustments, enabling brands to respond with agility to market fluctuations.
• Google’s expanded AI Mode for Sellers enhances product discovery and pricing optimization within Search, improving conversion rates and marketplace competitiveness.
• Marketplace platforms continue evolving with policy updates:
  • ChannelEngine’s February 2026 mandate enforces stricter controls on non-Brand Registry sellers to enhance marketplace integrity.
  • Amazon’s Rufus AI update introduces comprehensive price history tracking tools accessible on mobile and desktop, increasing transparency and enabling more informed pricing strategies for sellers and consumers.

Together, these tools require brands to continuously recalibrate marketplace strategies, balancing AI-driven opportunities with compliance and transparency demands.

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Retail AI’s Next Frontier: Vertical AI and Overcoming Ecommerce Search Barriers

Emerging AI capabilities target the heart of category management and shopper experience:

• Vertical AI is gaining traction as a specialized form of production AI designed to scale category performance by empowering category managers with predictive analytics and actionable insights tailored to specific product categories. This technology streamlines assortment decisions, promotional planning, and inventory management at scale.
• Despite AI’s promise, ecommerce search remains a pain point. As Rob Gonzalez, Co-founder and Chief Innovation Officer of Salsify, notes, “AI shopping keeps hitting a wall” because of challenges in understanding shopper intent, product attributes, and the complexity of online catalogs.
• However, recent advances in AI are addressing these issues by improving search relevance and discovery, enabling shoppers to find products more intuitively and accurately—a vital step for conversion and category expansion.

These innovations signal a maturing AI ecosystem focused on practical commerce applications beyond hype.

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Retail Media Networks and the Growing “Retail Majority” Opportunity

Retail media continues to be a crucial growth engine, but with evolving complexity:

• Target’s unified retail media and marketplace platform exemplifies integration of advertising and sales tools, facilitating seamless brand engagement across channels.
• Walmart’s Scintilla In-Store platform extends AI automation into physical retail, improving inventory visibility and promotional compliance.
• Amazon and Shopify maintain dominance with roughly 50% of U.S. online sales, while TikTok Shop’s rapid ascent positions it as a future top-3 global retailer by leveraging social commerce and influencer-driven sales.
• Analysts emphasize the critical need for full-funnel measurement solutions that capture shopper journeys beyond last-click attribution, enabling brands to better optimize retail media ROI.
• Regulatory scrutiny intensifies, highlighted by the California Attorney General’s lawsuit alleging Amazon’s price-fixing and coercive practices, which may reshape marketplace pricing and enforcement frameworks.
• Meanwhile, the so-called “Retail Majority”—the vast retail spend outside dominant platforms—offers significant growth potential. Emerging local commerce media platforms, inspired by neighborhood delivery models like DoorDash, enable hyper-localized brand engagement and media spending focused on convenience and community stores.

This environment demands that brands tactically balance investments across established retail media and burgeoning local commerce channels while navigating regulatory risks.

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Operational Realities: Integration Challenges, Inventory Inefficiencies, and Escalating AI Security Risks

The Linnworks “State of Commerce Ops 2026” report highlights that despite AI enthusiasm, significant operational barriers endure:

• Data silos, legacy systems, and talent shortages hinder seamless AI integration into commerce operations.
• Persistent inefficiencies in inventory management, order fulfillment, and omnichannel coordination continue to erode profitability and customer satisfaction.
• The report calls for accelerated adoption of automation coupled with robust data governance frameworks to achieve scalable and agile operations.

Complicating matters, AI’s evolution brings new cybersecurity vulnerabilities:

• Industry data reveals that 80% of retail sites are vulnerable to AI agent spoofing attacks, where malicious bots impersonate legitimate users to manipulate storefronts, pricing algorithms, and inventory.
• These threats risk operational integrity and consumer trust, underscoring the urgent need for advanced AI security controls, fraud detection systems, and governance protocols.
• CPGs and retailers must proactively balance AI-driven innovation with stringent risk management to safeguard their digital commerce ecosystems.

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Physical Retail Innovation: Sensor-Friendly Packaging and Smarter Shelf Strategies Reduce Waste and Boost Efficiency

The rise of frictionless retail formats is driving new product and store innovations:

• Walmart’s Scintilla In-Store platform demonstrates how real-time AI data improves inventory transparency and enhances shopper experiences.
• Brands are redesigning packaging to be sensor-compatible, more durable, and easier to handle, optimizing performance in automated retail environments.
• New studies show that smarter shelf placement strategies can reduce food waste by over 20% without requiring additional shopper effort or complex technology, significantly improving retailer margins and sustainability outcomes.
• Traditional merchandising tactics are evolving to maintain product visibility and shopper engagement within digitally mediated store interactions.

These advances underscore the necessity for CPGs to adapt product design and retail strategies to the demands of automated, sensor-driven ecosystems.

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Hyper-Localized Growth: Unlocking Local Commerce and Media Reallocation

While large retail platforms dominate national commerce media spend, local commerce channels are emerging as vital engines of growth:

• Retail media spending is projected to reach $71.1 billion in 2026, yet much commerce remains underserved by traditional media investments.
• Neighborhood-focused platforms modeled on DoorDash-style delivery and advertising provide brands with precision targeting of convenience and community store shoppers.
• This trend is spurring strategic media budget reallocations toward localized, contextually relevant campaigns that complement broad-based digital and national marketing efforts.

By integrating hyper-local strategies, brands can foster deeper consumer connections and drive incremental category growth.

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The Integrated Playbook: Balancing Innovation, Operations, Security, and Compliance

To thrive amid complexity, CPG brands must embrace a comprehensive, integrated roadmap that includes:

• Applying scientific rigor and operational scalability to inflation-driven consumer segmentation.
• Harnessing advanced AI and analytics for dynamic pricing, volumetric forecasting, real-time advertising optimization, and agentic automation.
• Deploying channel-specific marketing and distribution strategies aligned with retailer automation and evolving consumer behaviors.
• Implementing robust cybersecurity and data governance frameworks to mitigate AI spoofing and safeguard commerce operations.
• Innovating product and packaging design optimized for frictionless retail environments and shopper convenience.
• Maintaining proactive regulatory compliance and marketplace monitoring to navigate antitrust risks and evolving enforcement landscapes.
• Strategically allocating media spend across unified retail media networks, marketplaces, and emerging local commerce platforms.

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Outlook: Leadership Through Balanced AI Innovation and Vigilant Risk Management

As 2026 progresses, the fusion of deep consumer insights, AI-driven innovation, and retailer collaboration is driving a new growth paradigm for CPG companies. The expanding role of agentic AI—from personalized consumer engagement to wholesale operations—heralds a future where AI actively shapes strategic business decisions.

Yet, this transformative potential is tempered by rising cybersecurity threats and heightened regulatory scrutiny, underscoring that innovation must be matched with disciplined risk management.

CPG brands that master this integrated approach—combining scientific rigor, agile AI capabilities, operational excellence, and robust governance—will emerge as resilient leaders, thriving amid relentless market volatility and technological disruption. The companies able to scale AI-powered category management, secure their digital ecosystems, and navigate the evolving retail media landscape will define the next frontier of growth and consumer relevance.