Each new year brings with it both the known and unknown — and 2025 will be no different for retail & CPG. We can expect the ever-evolving landscape to go super hyper-personal by way of GenAI, and GenAI’s presence in the industry will expand and elevate how we work. Finally, consumer expectations will continue to shape what companies prioritize and how they prioritize — consumer-defined sustainability will dictate that companies make good on transparency in process and policy. At the center of these 2025 realities is machine learning (ML) and AI and their ability to up the ante for success in the new year.
A New Level of Hyper-Personalization
As we enter into 2025, retail & CPG will be followed by the long-running trend of personalization and the consumer experience. Hyper-personalization is a consumer must-have and GenAI is and will be a key enabler to next-level personalization. And not just the personalization of yesterday that lumps customers together based on similar characteristics like age, location, or income (which remain important attributes to understand), but personalization that goes deeper to a point of really knowing and speaking to the consumer like a friend or family member.
This level of knowing the consumer requires tapping into first-party. Defined, first-party data points are insights into customer preferences and behaviors gained from customers' interactions with brands. Marketers can unlock powerful output from their first-party data that is personalized to the nth degree by providing GenAI models with detailed context. And the use of retrieval-augmented generation (RAG) as a technique to enhance output accuracy further enhances GenAI models by integrating the all important first-party data — RAG pipelines are the facilitators in making use of first-party data in GenAI possible so that what marketers get their hands on, in the end, is more personal. Retrieval of relevant information on the individual consumer before a response is generated makes this level of accurate personalization feasible. In short, a RAG pipeline allows the GenAI model to access up-to-date and special consumer knowledge to provide answers to marketers that are hyper-personalized for the consumer experience.
So what does this deeper level of consumer knowledge and personalization mean to marketers and the brands they support? It means tapping into an estimated $570 billion in incremental growth by harnessing first-party data, and coupling the data with GenAI to level-up on product recommendations, tailored content, promotional and media planning, and rich insights that inform product strategy and innovation (think using GenAI to explore unstructured customer data). The new year for the industry will usher in a new perspective on marketing use cases elevated by GenAI, empowering marketers to get more personal and meet consumer demands to really know them and know how to reach them by fully harnessing the information they share.
The GenAI Transformation
With GenAI and the ability to generate accurate insights and hyper-personalized content at a greater level, marketers are able to assume the expanded role of experience orchestrators thanks to the automated tasks performed by GenAI. As GenAI is integrated and becomes an embedded part of routine business processes, marketing teams no longer have to carry the extra weight of data cleansing, prepping, and mining to painstakingly get to an insightful nugget.
Now, and in 2025, these teams can rely on ML and GenAI to handle the routine, opening the door for marketers to evolve their strategies and tactics to guide how customers consume content and ultimately engage with brands at every moment. And as companies, including retail & CPG companies, continue to adopt GenAI — “more than 75% of organizations plan to adopt AI and related technologies in the next five years” — more and more marketers will be positioned to revolutionize their consumer’s experience. The insights powered by GenAI will bring forth the need to explore what can be gained by launching highly targeted campaigns, using customer data and marketing guidelines to enhance business outcomes.
This will take the form of testing and learning — after all, GenAI-powered insights will beget more insight into the consumer and what works and what doesn’t. And as a result, marketing teams will have the added agility to quickly adjust to the insights. Moderna, a large healthcare company, was able to transform how their teams work with the help of an on-demand AI model leveraged to analyze insights and sentiment from various sources and provide real time insights; these real-time insights have allowed a shift from the manual and tedious to a more efficient and strategic approach that fosters nimbleness and quick decision making.
The transformation GenAI can continue to bring in 2025 not only means improved efficiency and freed-up time for teams, but also the ability for brands to create value and deliver on the promise of a personalized consumer experience at scale.
“Keeping It Real” Transparent With Sustainability
The consumer requires companies to up their game when it comes to engaging with them, and they also demand that companies show up on their long-made sustainability promises in the new year. And consumers are defining the sustainability standard. Just like brands want to know their consumers, consumers want to know brands. They want to know how products are made, where materials and ingredients are sourced and the resulting impact when products reach their end of life. So, in turn, companies that have not already made strides in adding transparency to their supply chain will need to step up in 2025. Sourcing and sustainability actions will need to be as visible as the finished product in store.
Consumers have re-defined greenwashing — ”the act of misleading consumers about the environmental practices of a company” — to challenge companies with the statement, “your definition of ‘more sustainable’ doesn’t meet my definition of ‘more sustainable.’” The clock is ticking for companies to meet the consumer’s definition of more sustainable (17,000 companies have not taken the first step to report their environmental data).
Companies can align to the consumer expectation at speed with AI, making real improved vendor management, elevated productivity, and optimized logistics. These same companies can train models on their data to then be able to discover ways to ensure suppliers meet sustainability standards, minimize production errors (reducing CO2 impact), locate the best materials for products and even select transportation routes that use less fuel — just to name a few ways AI can be leveraged as an enabler to transparency. Marrying AI to supply chain visibility and transparent sustainability will move brands closer to the consumer and the consumer closer to brands, promoting trust and building better experiences.
Next-level personalization, the influence of GenAI, and transparency in sustainability are three trends we can expect to infiltrate the industry in the new year. While they are separate trends, they share a common thread — the consumer experience. And to ensure an improved experience that’s even more personalized and targeted, companies must go deeper with the aid of AI. AI, and more profoundly GenAI, will serve as a core facilitator in keeping pace with and even getting ahead of the evolving retail landscape. In turn, brands that integrate AI as normative in routine process, insight generation and customer engagement will be set apart with a competitive advantage. Tomorrow’s trends will be ushered in by the power of AI and brands that get onboard will reap the benefits.