The Five Forces Shaping 2025 Retail Product Decisions

by Simpactful Senior Partner, Marcy Selva

Retailers are facing a uniquely challenging environment heading into 2025. While inflation has begun to cool, retailer profitability, and supply chain resilience still reverberating, a new set of challenges has emerged. Tariffs are adding more uncertainty for retailers who are trying to fight for share of wallet by keeping prices low for shoppers. The importance of Retailer Media is growing as both retailers launching networks and as established networks create pockets of profit to offset other risks. eCommerce also continues to grow while retailers simultaneously look for ways to maximize the value of their Brick & Mortar footprints. Shrink remains a challenge, as does operational efficiency for the omnichannel. Buyers and merchant teams are navigating this next phase with a sharpened Line Review focus on productivity, profitability, and category growth—fueled by more robust data, investment commitments from vendors, and compelling joint growth plans. Retailers are also increasingly relying on AI-driven tools for inventory forecasting, customer behavior analysis, and personalized shopping experiences to help optimize stock levels and improve operational efficiency.

At Simpactful, our teams of former retail buyers, brand leaders, and cross-functional operators are seeing five key forces shaping what gets carried—and what doesn’t—in the year ahead.

1. Retailer Margin Pressure & SKU Productivity Demands
Retailers are scrutinizing every SKU with a clear mandate: Drive more margin per square foot and pixel, as well as Gross Margin Return on Inventory Investment. They also want to drive trips and traffic (both in-store and online). Said differently, buyers want fewer items that do more—whether it’s delivering traffic, profit, velocity, or category incrementality. The days of “nice to have” innovations are over.

How to Win:

  • Build mathematically sound assortment pitches with reduced redundancy, margin and productivity upside.
  • Embrace AI to analyze market trends, predict consumer preferences, and optimize product offerings. This can help align with retailers’ tech-driven strategies and relevant products.
  • Bring Category stories that show what your SKU adds—not just what it replaces; Go beyond sales and margin to consider traffic or share shift.
  • Ensure supply readiness to avoid costly out-of-stocks or markdowns.

2. Consumer Value Recalibration is Here to Stay
With inflation uncertainty, shoppers are still recalibrating their definition of value. They’re making more intentional choices, balancing indulgence with affordability, while always keeping an eye on quality. Retailers are tailoring their assortments to reflect this mindset—making room for value tiers, multifunctional solutions, and accessible innovation.

How to Win:

  • Bring good/better/best price pack architecture and assortment backed by consumer elasticity insights with real shopper data.
  • Offer innovation with tangible benefit clarity, not just form factor changes.
  • Leverage AI to predict future trends and consumer behavior and to stay ahead of the competition. For example, use it to identify emerging dietary preferences or lifestyle changes that may influence purchasing decisions and give your brand a unique reason to be carried that is tailored to your shopper.
  • Offer trial-driving innovation (bonus sizes, minis, bundles).

3. Think of the Digital Shelf as the Dual Shelf
In 2025, your product doesn’t just need shelf space—it also needs screen space. Digital shelves are now algorithm-driven battlegrounds, and brands that are not designed to win the algorithm war, or don’t show up flawlessly online, will struggle to drive conversion offline too. Retailers expect brand partners to be fluent in driving volume in Brick & Mortar as well as online. Brands must come with shelving and merchandising plans—as well as with search optimization, content that drives conversion, retail media, and inventory-enabled commerce.

How to Win:

  • Create search-ready Product Detail Pages for policy adherence, SEO and imagery optimization.
  • Invest in full funnel and retail media campaigns linked to in-stock, high-converting SKUs.
  • Leverage AI for conversion rate optimization: Analyze data on consumer interactions or use A/B creative testing to identify what works best to drive conversion. Use this information to optimize product titles, descriptions, and online content and to strengthen Point of Purchase materials at the shelf to improve click-through rates and sales.
  • Align demand creation with supply chain execution.

4. Private Brand Growth Elevates the Bar
According to the Private Label Manufacturers Association’s, “2024 Private Label Report,” store brands accounted for nearly 21% of grocery industry unit sales last year which is up roughly 33% since 2019 when the pandemic disrupted supply chains. Retailers are evolving private brands into signature experiences, not just low-cost alternatives—and they are spanning beyond the Value-Tier segments into the Mid-Tier with compelling innovation and quality. This is raising the bar for national brands, who must prove their value in ways that private label can’t replicate. Expect tighter scrutiny on innovation pipelines, trade margins and finding, and premium-tier positioning.

How to Win:

  • Clearly bring to life your brand’s story, purpose, and superior benefit.
  • Focus on and show differentiation through claims, benefits, or experience by highlighting unique selling points, such as superior quality, innovation, or sustainability to stand out against private labels.
  • Deliver innovation that creates incrementality by transforming your existing category or creating a new category.
  • Accelerate the product development cycle by using AI to simulate and test new concepts, product formulations, designs and claims virtually, reducing time-to-market.

5. Operational Excellence
Retailers are elevating their expectations around operations and investment as they focus on delivering bottom-line improvements. They are scrutinizing all costs towards this goal. For instance, we have seen demands for greater supply consistency, especially in high-turn and promotion-sensitive categories. Brands with frequent OTIF (On-Time-In-Full) misses or back-orders were deprioritized, even if they had strong equity. Retailers are also demanding digital shelf accuracy. Incorrect specs, images, or out-of-stock links negatively impacted shopper experience—and vendor scorecards. And buyers are beginning to scorecard brands not only on their retailer media investments, but now on the closed loop brand demand creation impact of those investments.

How to Win

  • Include operational scorecards and optimization plans in reviews.
  • Commit to meet 98% service level expectations on core and new SKUs.
  • Build partnership plans to address joint opportunities like On-Shelf Availability or Shrink reduction.
  • Consider both in-store and warehouse labor requirements to execute plans.
  • Leverage AI-powered tools to streamline supply chain operations by predicting potential disruptions, optimizing routes, and improving logistics. This leads to cost savings and faster delivery times.

Bottom Line
Retailers in 2025 are focused on growth—but not just any growth. They want growth that’s profitable, sustainable, and incremental for both the top and bottom line of your scorecard. Brands that win will come to the table with a sharpened, insight-driven pitch that connects product benefits to retailer outcomes.

At Simpactful, we help brands do exactly that—by combining retailer perspective with functional expertise across sales, marketing, and supply chain. If you’re preparing for your next line review or JBP, now’s the time to ask: What does your brand do for the retailer—not just the consumer?

Let’s build that story together and ensure your teams are prepared for this year’s Line Reviews. Simpactful can help! Contact our team today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com

1. Retailer Margin Pressure & SKU Productivity Demands
Retailers are scrutinizing every SKU with a clear mandate: Drive more margin per square foot and pixel, as well as Gross Margin Return on Inventory Investment. They also want to drive trips and traffic (both in-store and online). Said differently, buyers want fewer items that do more—whether it’s delivering traffic, profit, velocity, or category incrementality. The days of “nice to have” innovations are over.

How to Win:

  • Build mathematically sound assortment pitches with reduced redundancy, margin and productivity upside.
  • Embrace AI to analyze market trends, predict consumer preferences, and optimize product offerings. This can help align with retailers’ tech-driven strategies and relevant products.
  • Bring Category stories that show what your SKU adds—not just what it replaces; Go beyond sales and margin to consider traffic or share shift.
  • Ensure supply readiness to avoid costly out-of-stocks or markdowns.

2. Consumer Value Recalibration is Here to Stay
With inflation uncertainty, shoppers are still recalibrating their definition of value. They’re making more intentional choices, balancing indulgence with affordability, while always keeping an eye on quality. Retailers are tailoring their assortments to reflect this mindset—making room for value tiers, multifunctional solutions, and accessible innovation.

How to Win:

  • Bring good/better/best price pack architecture and assortment backed by consumer elasticity insights with real shopper data.
  • Offer innovation with tangible benefit clarity, not just form factor changes.
  • Leverage AI to predict future trends and consumer behavior and to stay ahead of the competition. For example, use it to identify emerging dietary preferences or lifestyle changes that may influence purchasing decisions and give your brand a unique reason to be carried that is tailored to your shopper.
  • Offer trial-driving innovation (bonus sizes, minis, bundles).

3. Think of the Digital Shelf as the Dual Shelf
In 2025, your product doesn’t just need shelf space—it also needs screen space. Digital shelves are now algorithm-driven battlegrounds, and brands that are not designed to win the algorithm war, or don’t show up flawlessly online, will struggle to drive conversion offline too. Retailers expect brand partners to be fluent in driving volume in Brick & Mortar as well as online. Brands must come with shelving and merchandising plans—as well as with search optimization, content that drives conversion, retail media, and inventory-enabled commerce.

How to Win:

  • Create search-ready Product Detail Pages for policy adherence, SEO and imagery optimization.
  • Invest in full funnel and retail media campaigns linked to in-stock, high-converting SKUs.
  • Leverage AI for conversion rate optimization: Analyze data on consumer interactions or use A/B creative testing to identify what works best to drive conversion. Use this information to optimize product titles, descriptions, and online content and to strengthen Point of Purchase materials at the shelf to improve click-through rates and sales.
  • Align demand creation with supply chain execution.

4. Private Brand Growth Elevates the Bar
According to the Private Label Manufacturers Association’s, “2024 Private Label Report,” store brands accounted for nearly 21% of grocery industry unit sales last year which is up roughly 33% since 2019 when the pandemic disrupted supply chains. Retailers are evolving private brands into signature experiences, not just low-cost alternatives—and they are spanning beyond the Value-Tier segments into the Mid-Tier with compelling innovation and quality. This is raising the bar for national brands, who must prove their value in ways that private label can’t replicate. Expect tighter scrutiny on innovation pipelines, trade margins and finding, and premium-tier positioning.

How to Win:

  • Clearly bring to life your brand’s story, purpose, and superior benefit.
  • Focus on and show differentiation through claims, benefits, or experience by highlighting unique selling points, such as superior quality, innovation, or sustainability to stand out against private labels.
  • Deliver innovation that creates incrementality by transforming your existing category or creating a new category.
  • Accelerate the product development cycle by using AI to simulate and test new concepts, product formulations, designs and claims virtually, reducing time-to-market.

5. Operational Excellence
Retailers are elevating their expectations around operations and investment as they focus on delivering bottom-line improvements. They are scrutinizing all costs towards this goal. For instance, we have seen demands for greater supply consistency, especially in high-turn and promotion-sensitive categories. Brands with frequent OTIF (On-Time-In-Full) misses or back-orders were deprioritized, even if they had strong equity. Retailers are also demanding digital shelf accuracy. Incorrect specs, images, or out-of-stock links negatively impacted shopper experience—and vendor scorecards. And buyers are beginning to scorecard brands not only on their retailer media investments, but now on the closed loop brand demand creation impact of those investments.

How to Win

  • Include operational scorecards and optimization plans in reviews.
  • Commit to meet 98% service level expectations on core and new SKUs.
  • Build partnership plans to address joint opportunities like On-Shelf Availability or Shrink reduction.
  • Consider both in-store and warehouse labor requirements to execute plans.
  • Leverage AI-powered tools to streamline supply chain operations by predicting potential disruptions, optimizing routes, and improving logistics. This leads to cost savings and faster delivery times.

Bottom Line
Retailers in 2025 are focused on growth—but not just any growth. They want growth that’s profitable, sustainable, and incremental for both the top and bottom line of your scorecard. Brands that win will come to the table with a sharpened, insight-driven pitch that connects product benefits to retailer outcomes.

At Simpactful, we help brands do exactly that—by combining retailer perspective with functional expertise across sales, marketing, and supply chain. If you’re preparing for your next line review or JBP, now’s the time to ask: What does your brand do for the retailer—not just the consumer?

Let’s build that story together and ensure your teams are prepared for this year’s Line Reviews. Simpactful can help! Contact our team today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com